Write-offs for HBOS as vote passed

HBOS today confirmed it was writing off a further £3.2bn in credit crunch related losses as shareholders voted in favour of the proposed takeover deal with Lloyds TSB.

Ahead of the meeting this morning, at whcih shareholders voted for the deal, HBOS said it was operating in “increasingly difficult market conditions” and that over recent weeks there had been “an acceleration in the deterioration in credit quality”.

HBOS said overall impairment charges were an estimated £8bn in the first 11 months of the year, up £3.2bn since the end of September.

HBOS’s bad debts on mortgage debts and unsecured lending have soared to around £1.7bn in the year to date.

HBOS estimated the figure on secured lending to be in the region of £700m in the 11 months to November 30.

The company’s estimated impairment charge for unsecured lending arrears reached £1bn, up from £800m at the end of September.

As well as the bad debts relating to the retail business, HBOS said the rapid deterioration in credit conditions resulted in an estimated charge of £3.3bn on corporate investments, compared with £1.7bn in September.

The takeover deal has already been backed by Lloyds TSB shareholders.

A legal challenge to the takeover concerning competition concerns was rejected on Wednesday.

Fears have been raised that if the deal with Lloyds TSB goes through, thousands of HBOS employees, working in branches and at centres in Halifax and Leeds, in Yorkshire could face the axe.

In a trading update this morning ahead of the shareholder meeting, which was  held in Birmingham, HBOS said: “Global market and economic conditions, UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment.”
 
“However, through the injection of capital and liquidity facilitated by the UK government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group.”

If the deal is completed, it will lead to the creation of a banking giant with 145,000 staff and 3,000 branches.

Although the majority of HBOS shareholders have already voted online, a minority had been expected to attend today’s meeting.