Lloyds Banking Group has warned that Halifax Bank of Scotland (HBOS) will report a pre-tax loss of £10bn for 2008.
In a trading statement the company, which took control of the beleaguered Edinburgh-based bank earlier this year, said that the main impairment on the accounts was a £7bn loss from HBOS’s corporate division.
There was also an impairment of around £4bn caused by the decline in the economy.
Lloyds said its ‘more conservative provisioning methodology’ and the rapid deterioration of the economy meant the losses were £1.6bn worse than it had predicted to shareholders at the beginning of November last year.
Further losses were caused by losses on the sale of businesses (£850m), goodwill impairment, (£150m), the Financial Services Commissions Scheme levy (£200m) and short term fluctuations (£250m).
Lloyds TSB reported that its profits before tax for 2008 were expected to be in the region of £1.3bn.
Lloyds Banking Group’s share price fell by more than 40% to 55p following the announcement today.