“The Long and Winding Road” was a ballad written by Paul McCartney (credited to Lennon–McCartney) from the Beatles’ album Let It Be. It became the group’s 20th and last number-one song on the Billboard Hot 100 chart in the United States in June 1970, and was the last single released by the quartet.
For those of us who are Lloyds Bank shareholders Paul McCartney’s song seems the most appropriate one to recall given that it was in the autumn of 2008 that Gordon Brown and Alastair Darling begged Lloyds to help bail out the busted Halifax Bank of Scotland – who were the cause of most of the PPI claims.
Today, Lloyds Banking Group has announced a further £350m provision to compensate customers for mis-sold loan insurance. The new charge will be reflected in the bank’s first quarter results to be announced at the end of April. The latest provision comes after Financial Conduct Authority pushed back the length of time that consumers have to claim compensation to 29th August, 2019.
Today Lloyds Banking Group are a strong safe banking operation. Mr Hammond is pursuing his “trading plan” selling off the taxpayer’s shareholding in the bank. This is vital for Lloyds to cease being listed as a state supported bank by the EU.
As the UK’s largest mortgage lender, the fortunes of Lloyds are tied with the fortunes of the UK economy. This means that if there is a hard Brexit, Lloyds will be hit and hit hard.
However, looking at the prospects of a “Hard Brexit” from a purely investor orientated and non political view point, a “Hard Brexit” would be a buying opportunity for those wanting to pick up some shares on the cheap with the view of a capital gain and a high dividend yield. This is because a “Hard Brexit” – i.e.; the UK crashing out of the EU without a “trade deal” – would be so severe and would bring about so much chaos and disruption the situation would not last that long.
We would estimate around 6 months. This is because of the following political and diplomatic developments:
1. The UK government would fall and a new government would be elected. Most likey a Labour Liberal Democrat coalition.
2. The EU would quickly offer an “emergency” “rapid re-entry” [into the EU] treaty which the new government would accept subject to a referendum of the UK electorate. This would involve re-joining the EU and joining the Eurozone.
3. The new UK government would lower the voting age to 16 and allow EU citizens resident in the UK a vote.
IF Madam May invokes Brexit by making formal Article 50 notification on Friday 31st March 2017, then on April Fool’s Day, Monday 1st April 2019, the UK will have left the EU. If it is a “Hard Brexit”, expect the UK to have re-entered the EU and have entered the Eurozone by Halloween or All Hallows Eve, Thursday 31st October 2019.
Halloween is traditionally the time when evil spirits are abroad. Nick Clegg take note!
For Lloyds Bank, like for all other UK based businesses the six months would be a turbulent time but stability would follow afterwards.