British bank Lloyds raises cost of Irish bad debts

17th December 2010, Comments 0 comments

Britain's Lloyds Banking Group said Friday it expected bad Irish loans to cost the lender 4.3 billion pounds (5.0 billion euros, 6.7 billion dollars), nearly three times an earlier estimate.

State-rescued LBG had put the cost at 1.557 billion pounds earlier this year.

"The board anticipates that, compared to 30 June 2010, approximately a further 10 percent of the 26.7 billion-pound Irish portfolio will become impaired by the 2010 year end," LBG said in a statement.

"Furthermore, the board believes that it is prudent to increase the level of provisions against the portfolio, and currently anticipates an increase in the impairment charge relating to Irish exposures for the full year 2010 to approximately 4.3 billion pounds."

The announcement sent LBG's share price tumbling 6.0 percent to 64.83 pence in late London trade and came after Moody's on Friday slashed its credit rating on debt-stricken Ireland.

Moody's Investors Service cut its rating on Ireland by five notches from Aa2 to Baa1, citing increased uncertainties over the country's economy and public finances.

Ireland has sought an 85-billion-euro (113-billion-dollar) rescue package from the European Union and International Monetary Fund after massive debt and deficit problems left the country on the verge of collapse.

© 2010 AFP

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