Bank of England research shows that Lloyds has the most risky property loans in the UK.
According to the latest Financial Stability Reporter, more than half of Lloyds secured lending - specifically, mortgage lending and commercial property - has either a high or very high ‘loan-to-value ratio’. These levels are defined as 70-90 per cent and above 90 per cent, respectively. On the other hand, being willing to loan to people with smaller deposits is not necessarily a bad thing, especially from a first-time buyer’s point of view.
The second riskiest was the Royal Bank of Scotland with 40 per cent of its loans being high loan-to-value, followed by Santander UK with 35 per cent and Nationwide with 30 per cent. The official statement from the Bank of England was that “Significant variation in the proportion of high LTV borrowers across banks suggest that exposure to vulnerable households are likely to be concentrated in a few banks.”
This news comes just as Lloyds is about to publish a strategic review and is expected to deliver many important announcements. These include, among others, its independence from the emergency state funding provided in 2008, a cost-saving scheme that could mean the end of 15,000 peoples’ jobs, a large sale of assets and a decision to vacate several countries. On top of all this, there are rumours of the bank giving up its shares in housebuilding.
