2008 Corporate Losses

Yesterday, the Lloyds HBOS group, Britain's biggest mortgage lender, warned the markets that for the year 2008, it was likely to make a 10 billion pound sterling loss. The loss was largely due to its subsidiary Halifax-Royal Bank of Scotland group, which had had its fingers badly burnt in the subprime market. Thus, Lloyds, a respectable, typically solid British bank, had actually made a profit of just over a billion pounds in profit, but had been dragged down by the massive 11 billion pound loss suffered by HBOS.

Here are the corporate losses by some of the leading banks and automotives in 2008. The sums are dollar equivalents.

Bank Losses

Royal Bank of Scotland- 41 billion
UBS-22 billion
Citigroup- 19 billion
Merrill Lynch-15 billion
Lloyds-HBOS- 14 billion
Credit Suisse- 7 billion
Deutsche Bank- 5 billion
ING- 1.3 billion

Automotive Losses

Ford- 14.6 billion
Toyota- 1.6 billion
Pugeuot-Citroen-0.44 billlion

Ford made a loss of 11.8 billion and 12.6 billion dollars in 2006 and 2007, and has thus lost 39 billion dollars in the last 3 years.GM and Chrysler are yet to declare their full year results but losses will be substantial. GM lost over 4 billion in the third quarter alone, while Chrysler lost over 5 billion in the first 6 months of 2008.

Some companies did make a profit. Barclays, despite huge writedowns and its acquisition of Lehmanns, made a profit of 10 billion dollars in 2008, While French banks BNP Paribas, Socgen and Credit Agricole made profits of 4 billion, 2.6 billion, and 1.3 billion respectively. British banks HSBC and StanChart, which have large operations in the East, are likely to make sustantial profits.

Similarly, Honda is likely to be in the black despite fourth quarter losses, and VW made 4.8 billion in profits in the first 9 months of the year.

Senior bank executives have once again demonstrated what a sucker's game finance is. They have claimed millions in bonuses, walked off with multi million dollar pensions, but offered no accountability for their follies. During a recent grilling by British MPs, the current Lloyd's chief described his annual pay of a million pounds as "relatively modest". It is well known that between 1993 and 2007, Dick Fuld of Lehmann Brothers, earned half a billion dollars in compensation.

How did we land up in this situation, where such utter mediocrity is rewarded with unimaginable riches? Those of us who slog our butts off to make ends meet, struggle with our mortgages and childrens' education, having worked diligently throughout our lives at Medicine, Engineering or IT, will never understand.