February 20, 2007

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  NEWS: Brit Banks Write Off "Pounds" of Bad Debt

  It appears that Britain is facing a debt crisis that is unprecedented in its severity. This revelation comes with the news of the nation's biggest banks taking staggering losses in the form of written-off bad debt, as they come to terms with the apparent fact that insolvency is still on the rise.
  
  Barclays, parent of Britain's biggest credit card lender, led the pack with a record £1.67 billion loss. Lloyds TSB was hit with £1.26 billion, followed by HBOS (£1.24 billion), Royal Bank of Scotland (£1.34 billion) and HSBC (£943 million). Luckily for the lenders, success with retail products sales and corporate-level business has bolstered the damage caused by debt write-offs, and the banking industry will face an estimated surplus of £40 billion for the 2006 year. That celebratory milestone, however, does little to temper the unease felt by experts about the dire straits faced by British consumers.
  
  Per reports, anywhere from one to two million British households are "permanently" in debt, meaning that, short of a windfall from an inheritance or lottery, they will never realistically catch up on the amount of debt they have incurred. With unemployment rates not particularly high and interest rates relatively low, experts are predicting that the epidemic of overdrafts and defaults can only go higher. Bank execs may be too busy counting their gains to pay much attention, but all the warning signs of serious danger are nigh. Monthly minimum payments on credit cards average 2.5% in Britain, significantly lower than the full 4% that some issuers have begun charging in America. Despite this, a huge chunk of the population evidently cannot make their monthly payment. Time will tell how the crisis pans out.
  
  
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