Lloyds Banking Group said Friday its short-term outlook is challenging as it unveiled that HBOS, which it bought in January, is expected to post a £10bn (€11.2bn) pretax loss in 2008, driven by massive impairments in corporate lending and on credit investments.

The group's stock dropped sharply after the announcement, hitting a low of 54.9 pence a share. At 14.21 GMT, it had recovered some of that, down 26 pence, or 29%, at 64.9 pence, still by far the biggest decline on the FTSE 100.