HBOS faces scrutiny

LONDON (Reuters) - HBOS, already hit by the impact of a slowing housing market on growth prospects, may take writedowns on its holdings in troubled housebuilders when it unveils a trading update this week.

HBOS owns 50 percent of private housebuilding firm Crest Nicholson, and the value of that stake could be marked down to reflect a slump in the value of its debt and in the share price of listed housebuilders, analysts said.

The value of Crest Nicholson's 745 million pound property loan tranche fell in value by over 15 percent to 63.5 percent of face value last week, RLPC data showed.

HBOS, owner of Britain's biggest home lender the Halifax, is this week due to update investors on recent trading as part of its prospectus for a 4 billion pound rights issue. It declined to comment ahead of the update.

HBOS expanded its exposure to residential property developers in recent years in the wake of ambitious government housebuilding targets, especially in and around London.

In addition to Crest Nicholson it has equity stakes in several smaller firms, including retirement homes builder McCarthy & Stone, Countryside Properties, Miller Group, and Tulloch.

HBOS has a debt exposure of about 3 billion pounds to housebuilders, representing about 3 percent of its total corporate loan exposure.

HBOS shares have more than halved this year as concern has grown about the impact of a UK housing market slowdown - it has taken big markdowns on assets tarnished by the credit crunch - and as investors face dilution from its cashcall.

Its shares dipped 1.8 percent to 316 pence on Monday, valuing the bank at 12 billion pounds.