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Lloyds share price continues to slump

12 August 2009 / by Rebecca Sargent

Shares in Lloyds Banking Group continued to tumble yesterday, opening this morning at just over 90p.

The bank's sudden drop in favour is down to rumours and speculation that Lloyds Banking Group is preparing to reveal a further cash call that could allow the bank reduce its exposure to Government support.

The 43 per cent taxpayer owned banking giant announced losses of £4billion last week in its interim results – mostly due to its takeover of bad-debt riddled HBOS.

And, despite Lloyds shares rallying at the time, The Share Centre warned last week that further rights issues are likely within the sector – particularly Lloyds, as it now has the biggest exposure to UK consumer debt – The Share Centre consequently listed the bank as a tentative weak hold.

Speaking last week, the BBC's business editor Robert Peston had a more optimistic long-term view for the bank, he said: "As for when the recovery will come, Lloyds believes that bad debts may have peaked, which is earlier in the economic cycle than is normal for banks.

"Lloyds will however generate a loss for the year as a whole and bank experts expect only a slow economic recovery in 2010.

"But the day will dawn – sooner than seems credible right now – when it'll be the magnitude of the profits being generated by this Tesco-size market leader in retail financial services that will be sparking controversy, rather than the horror of its losses."

© Fair Investment Company Ltd
 

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