Lloyds TSB in no rights rush

Published on Saturday 3 May 2008 14:56

LLOYDS TSB is expected to say it has no need for a rights issue when it updates the market this week, though it will announce upwards of £500m in write-downs due to the credit crunch.

A largely UK customer base has cushioned the bank from the worst of the crisis, alongside good cost control and lower exposure to risky debt instruments. The bank reported a 280m provision for 2007 but some claim the first-quarter figure, due on Tuesday, will be nearer 1bn. RBS reported 5.9bn of write-downs, while HBOS took a hit of 2.84bn.

Lloyds, however, has a healthier balance sheet, with its core equity tier one ratio – a key measure of reserves – at 7.4%. This is not only higher than its UK rivals but also above the European average. The bank holds its annual general meeting in Glasgow on Thursday.

Barclays, which will give a trading statement on May 15, is under greater pressure and may be forced to find 3.5bn from a rights issue.

The bank is also struck by infighting after Paul Idzik, chief operating officer, left last week. Jim Moylan, managing director and head of Barclays Capital's European loan trading division, has also departed.