Liam Proud joined Breakingviews in 2016. He previously worked as digital content editor at the Natural History Museum, and as deputy business features editor at the London newspaper City A.M. Liam graduated from the University of Exeter in 2013 with a degree in philosophy.
European supervisors in March halted payouts so that lenders could keep credit flowing and absorb losses. Yet earnings and capital have held up, while bond markets are booming. Regulators can drop the restrictions, as long as banks keep big shock absorbers and don’t cut lending.
Lloyds CEO António Horta-Osório hopes a home-loan boom will offset pain from lower central-bank interest rates. But the spike in credit applications is partly pent-up demand from lockdowns. And stiff competition from HSBC and others may force lending margins downwards again.
Despite a recent trading boom, boss Christian Sewing will soon have to scrap his 2022 profit target. Since further cost cuts are tricky, reviving a 2019 aborted union with Commerzbank is the logical Plan B. It helps that his bank is now healthier, and regulators more forgiving.