Lloyds struggles to rationalise Cummings’s toxic legacy

June 3rd, 2010

Lloyds Banking Group is so bamboozled by the toxic legacy of Peter Cummings, the former head of corporate banking at HBOS, that it seems prepared to consider just about anything.

Already we’ve seen ultra-forgiving debt write-offs in the case of Remo Dipre’s Gladedale Holdings and Cala Homes, handy pre-packs in the case of Donald Macdonald’s Aviemore Highland Resort, and debt-for-equity swaps that appear to offer astonishingly poor value for the bank in the case of Sir David Murray’s Murray International Holdings and David Sutherland’s Tulloch Group. Then there’s been a string of administrations and receiverships for genuine basket cases like John Kennedy’s Kenmore and Iain Wotherspoon’s Kilmartin Property Group.

After this catalogue of inventiveness — some of which revolves around a dangerous mixture of “extend and pretend” and “delay and pray” — what more can one expect of those creative genuises at Gresham Street?

Well according to the journalist Dominic Walsh, writing in the Times City Diary, Lloyds insiders are now toying with idea of cobbling together an unwieldy new hotel group from the ashes of Cummings’s legacy.

Apparently they’re considering grouping a number of hotel investments under a single brand and embarking on a significant asset disposal programme. “All options are on the table,” Walsh quoted a Lloyds insider as saying.

Since about March 2009, Lloyds has been wondering what to do with  HBOS’s billions of pounds of debt and equity investments in some of Britain’s best-known hotel companies.

To date, the bank has treated the businesses individually, as it did with the £650 million debt-for-equity swap at the Alternative Hotel Group, the De Vere operator, and the loan extension granted to the luxury Rocco Forte Collection. But the word is that “Lloyds is now considering a more holistic approach,” writes Walsh.

Short URL: https://www.ianfraser.org/?p=1243

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