Lloyds TSB takes small hit from credit crunch

AFP - Tuesday, May 6 01:16 pm

LONDON (AFP) - Lloyds TSB, the nation's fourth-biggest bank, said on Tuesday that it had emerged relatively unscathed from the credit crunch in the first three months of the year.

The collapse of the United States high-risk home loan market last year has seen many major commercial banks tighten their lending criteria after suffering heavier losses in complex subprime investments.

Strains from the global credit crunch cost Lloyds TSB about 387 million pounds in the first quarter of 2008, the bank said in a trading update on Tuesday.

Many of Lloyds' competitors have suffered heavier multi-billion-pound losses due to their larger exposure to securities that were effectively bets on high-risk US homebuyers repaying their mortgages.

"Lloyds TSB continues to have no direct exposure to US sub-prime mortgage asset backed securities and limited indirect exposure," the bank said on Tuesday.

Chief executive Eric Daniels added: "Despite the more challenging market conditions, the group remains firmly on track to deliver a good performance for the first half of 2008, excluding the impact of market dislocation and insurance related volatility."

Last week, Britain's biggest mortgage lender HBOS said it would ask shareholders for 7.9 billion dollars (5.0 billion euros) to strengthen its balance sheet after more heavy credit-crunch writedowns.

Royal Bank of Scotland was also seeking to raise fresh funds of 24 billion dollars to shore up its finances in Britain's biggest-ever share rights issue, following subprime-related writedowns and its part in the takeover of ABN Amro.

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