Lloyds warns of Ireland debt impact
One of Britain's biggest banks has issued a warning over the impact that Ireland's debt crisis will have on its performance this year.
Part-nationalised Lloyds Banking Group announced it will have to write off more of its 31.3 billion euro portfolio of loans in the country due to the deteriorating economic situation in Ireland.
It now expects bad debt losses of five billion euro this year, compared with the 1.87 billion euro reported in June.
Lloyds shares fell 5%, accelerating losses seen across the banking sector earlier in the session after Moody's cut the country's credit rating.
Fears over eurozone contagion were amplified by a report from the Bank of England, which warned Britain's banks were not entirely safe from the eurozone debt crisis.
Lloyds said: "We are concerned that any economic recovery in Ireland may take longer to achieve, and that asset prices will remain depressed for longer than previously anticipated."