Brazilian deal frees Lloyds funds
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Your support makes all the difference.A DEBT restructuring signed this month by Brazil will provide Lloyds Bank with part of the pounds 1.8bn cost of buying Cheltenham & Gloucester building society, writes Peter Rodgers.
At the end of last year, the market value of the bank's holdings of developing country debt totalled pounds 1bn more than book value, but the Brazil deal has significantly raised the surplus.
Brian Pitman, Lloyds' chief executive, confirmed that this will allow Lloyds to release developing country bad debt provisions when it announces its interim results in the summer. A release of provisions goes straight to profits.
With Brazil sorted out, Lloyds now has no other other large country debt problem. A Polish debt restructuring has been agreed in principle, and Panama and Ecuador are the only other holdings of any size, Mr Pitman said.
Lloyds has provided against 80 per cent of its risky loans to developing countries. Loans to Brazil account for pounds 1.13bn of its total of pounds 3.13bn of such loans.
In 1993, Lloyds released only pounds 46m, against pounds 132m in 1992, but the Brazil deal paves the way to releases that could run into hundreds of millions of pounds.
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