Business Irish

Sunday 17 December 2017

Lloyds claims one-fifth of mortgages here are in trouble

Donal O'Donovan

Donal O'Donovan

UK lender Lloyds Bank says more than one-in-five of the Irish mortgages it holds are impaired or unlikely to be repaid in full.

In Ireland, 67pc of Lloyds loans were classified as "impaired" at the end of March, the bank said yesterday.

The bank is thought to hold as much as €30bn of Irish loans in total -- much of the tally inherited when the UK's biggest mortgage lender Lloyds went through an emergency merger with Halifax Bank of Scotland at the height of the financial crisis in the UK.

The latest figures show that Lloyds' Irish impairment charge -- the amount the bank writes off as a provision for expected losses -- was £526m (€644m) at the end of March compared to £1.144bn for the year-earlier period and £711m for the last quarter of 2011, it said.

"Impairment coverage has increased in Ireland, primarily reflecting further falls in the commercial real estate market, and further vulnerability exists," it said.

Headache

Soured Irish loans are proving to be a major headache for Lloyds. The UK bank recently hired Deloittes to advise on plans to sell a €400m loan portfolio to third-party investors.

It has also agreed a deal with hotel management company BDL -- making the company the preferred candidate for hotels being taken into receivership as the bank works through a staggering €1bn of Irish hotel loans.

Despite difficulties here, shares in Lloyds rose a whopping 8.3pc in London yesterday after the bank said it had moved into profit in the first quarter of this year following a year-end loss.

The surprisingly strong results defied the latest weakness in the UK economy, which slipped back into recession last month.

The bank swung back into profit following a programme of cost cutting and asset sales.

The bank is 40pc owned by UK taxpayers, making even a modest £2m net profit for the first quarter of the year a major news story in Britain.

(Additional reporting Bloomberg)

Irish Independent

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