Departing Lloyds chief upbeat as bank returns to profit

DEPARTING Lloyds Banking Group chief executive Eric Daniel yesterday insisted that time would prove the merits of its rescue of Halifax Bank of Scotland as the lender reported a return to annual profitability for the first time since its Government bailout.

Mr Daniels, who led Lloyds through its shotgun marriage with HBOS at the height of the financial crisis in 2008, said failure to rescue the bank would have cost “tens of thousands of jobs” and caused further turmoil in the sector.

He said the banks’ integration is going “exceedingly well” and will be proved to be a “very good deal” for the 41 per cent taxpayer-owned lender.

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Had Lloyds not rescued HBOS, “we would have seen tens of thousands of people with no jobs”, added Mr Daniels. “We would have seen banks in even further turmoil. We saw what happened with Northern Rock which was (equivalent to) a very small fraction of HBOS’s portfolio.”

While he refused to draw a line under job losses, he said the bank does not expect to see anywhere near the 26,000 job cuts its has made so far.

He added: “The end is in sight and I’m highly confident we will meet the £2bn of synergies by the end of 2011.”

The American said he was leaving a “much stronger business” behind, as the bank reported pre-tax profits of £2.2bn in 2010, a marked improvement on the £6.3bn loss in the previous year.

The bank’s high street division, which deals with current accounts, credit cards and mortgages, more than tripled profits from £1.4bn in 2009 to £4.7bn last year, while bad debt losses nearly halved to £13bn from £24bn. But bad debts in Ireland, acquired as part of HBOS, rocketed from £2.9bn in 2009 to £4.3bn.