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HBOS reveal depth of debts as shareholders vote

HBOS has revealed the depths of its debt crisis, including a £200m bill from the FSCS to cover the recent Bradford & Bingley crash.

As its shareholders convene today to vote for or against the merger with Lloyds TSB, the bank revealed that its secured lending impairment is up £400m from September, to £700m. HBOS predicts these losses will continue.

It also reported that as at 30 November the estimated losses due to market dislocation totalled £2.2bn, which included impairment losses in the banking book of £600m.

HBOS also revealed that the FSA has issued draft guidance regarding the levies to be made by the FSCS in wake of the B&B bailout. Based on the information currently available, HBOS says it is likely to accrue a charge of around £200m in 2008.

It says: “UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment.

“However, through the injection of capital and liquidity facilitated by the UK Government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group.”

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