Five questions answered on Lloyd Bank’s large pre-tax losses

£570m loss for 2012.

Lloyd Banking Group today posted huge pre-tax losses for 2012. We answer five questions on Lloyd’s current losses.

What’s the amount of Lloyd’s pre-tax losses?

The 39 per cent state owned group is reporting a £570m loss for 2012.

Why so much?

The bank set aside a £1.8bn rise in mis-selling provisions last year, which has dented its profit margins. Last week, it was also fined £4.3m for delaying compensation payments to customers over PPI mis-selling.

However, take away the money set aside for the mis-selling claims - £1.5bn for payment protection insurance and £310m for interest rate swaps – the lender said underlying pre-tax profit jumped from £638m to £2.6bn.

The consumer association Which? estimate that the bank’s latest update took the total amount set aside for PPI by the industry to £15bn.
Will Lloyd’s bankers still be getting their bonuses? 

Most likely. The bank has set aside £365m to pay staff bonuses and would hand its chief executive, Antonio Horta-Osorio, a deferred share award worth £1.49m.

"I came here with the main objective of getting taxpayers' money back and, therefore, I thought it would be appropriate to make my bonus entirely conditional to us getting to the taxpayer entry price," Lloyd’s Chief Executive Mr Horta-Osorio told journalists.

What else has he said in regards to this pre-tax loss?

In Lloyds’s annual report statement he said:

"Since setting out our strategy in June 2011, we have significantly strengthened the balance sheet and substantially improved efficiency and focus, while continuing to work through legacy issues.

"We are investing in our simple, lower-risk, customer-focused UK retail and commercial banking model, and in value-for-money products and better capabilities to continue to support UK households, businesses and communities."

What have the experts said?

The figures provided good news for the government former investment banker Heather McGregor told the BBC . "We hear that the government is looking to exit sooner rather than later, and if I was the government I would be doing that. I'd be looking at these figures going 'yes, I can get my money back much quicker'," she said.

Lloyd Banking Group today posted huge pre-tax losses for 2012. Photograh: Getty Images

Heidi Vella is a features writer for Nridigital.com

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Labour's Eurosceptics should steer clear of loaded language

Phrases such as "wholesale importation" leave the impression Labour will not speak for migrant workers.

Nothing reflects Britain’s division over Brexit than the Labour party. Do we want soft or hard Brexit? What do we prioritise? The fractures within the party’s ranks is a portrait of the divisions splintering the country.

Labour’s ambiguity over Brexit helped it in the general election in appealing to everyone. It convinced Remain voters that they could hold the Tories to account while promising the Leave voters that the referendum decision would be respected. But now clarity is needed. 

The Labour leadership seems to be angling for a hard Brexit, wishing to leave the single market and customs union on the grounds that this honours the wishes of the 52 per cent. Ironically, they are at odds with everyone in this situation, from the general public – who favour access to single market over immigration controls – to a poll in LabourList showing that 72 per cent of readers prioritised inclusion within the single market.

Jeremy Corbyn's lukewarm attitude to the EU is well documented. If the Labour Party are serious about their public ownership plans for the railways and energy, it’s likely they envision it being made difficult within the EU because of directives which create competition between the state and the private sector. There are unexplored alternatives to this, as seen in Germany and Italy where private companies are made and run the industries with the states acting as the major shareholders of the company. However it’s unlikely to see the hard left ever accepting this, given its disdain for both the private sector and the idea of it interacting with the state to deliver services.

But this is not all that should trouble progressives regarding the Labour leadership’s stance on Brexit. During a recent Andrew Marr programme in which he appeared on, Corbyn claimed that mass immigration had been used to denigrate the conditions for British workers, saying that there was a “wholesale importation” of workers from parts of Europe which would then undermine the rights of British workers. It’s an argument that has been regurgitated by British politicians consistently in recent years – but from the right, not the left.

The idea that migrants are taking British jobs and depressing wages does not hold up to evidence at all. The London School of Economics carried out a research which illustrated increases in migration from the EU did not result in depression of British wages. That’s not to suggest that wages have not stagnated, but rather the trend is linked to the financial crash in 2008, rather than migration. Corbyn’s defenders insist that there were no deliberate racist overtones in his argument, and that the villains are employers deliberately taking advantage of an easily exploited labour market. But the manner in which Corbyn framed his speech was worrying.

The reason for this is that Brexit has created an unbelievable sense of uncertainty, insecurity and fear amongst migrants. Their position in society is now being contested by politicians with different stakes in society to them. Xenophobic abuse – legitimised as an acceptable part of political discourse by Brexit – has been climbing swiftly. Immigrants are seen as threats to British jobs and that is a narrative consistently drummed out – not just since last year but for possibly the past decade.

This is not to say that Labour should not address how some employers might seek to cut costs by hiring foreign workers on a cheap rate. But phrases such as “wholesale importation” or even using the heavily demonised “mass migration” simply sketches the idea that Labour are swinging towards the hard Brexit voters, and in doing so leaving migrant workers to be defended by no one. If the intended idea was to castigate employers, it simply entrenched the idea of immigration as a problem. Rather than bringing British and migrant workers together, you know with that whole “workers of the world unite” idea, Corbyn’s framing of the argument keeps them pitted against each other.

If Brexit has shown us anything it’s that language matters in politics in how it transmits its message to people. Slogans such as “take back control” were attacks on multiculturalism and immigration, stoking white nationalism, even if the Leave campaign insisted it wasn’t about that. Likewise, Corbyn might insist it wasn’t about migrants, but his message sounded a lot like he was blaming freedom of movement for the suppression of wage growth in Britain.

Needless to say, Labour need a rethink on what kind of Brexit it pursues.