Jamie McGrigor, who has been constantly active on the matter of the Bank Continue reading
Tag Archives: Lloyds
McGrigor rejects Bank’s response on Islay situation and asks for hard facts
Jamie McGrigor has the bit between his teeth. The response he received Continue reading
Islay business banking crisis: updates from Mather and McGrigor
Jim Mather, Argyll’s MSP and Minister for Enterprise, Energy and Tourism, is in touch Continue reading
Bank of Scotland statement on withdrawal of Islay Business Manager
The following statement – from a spokesman for the Bank of Scotland – Continue reading
Almost £215bn of Lloyds £260bn toxic dump on state can be tracked to HBOS
The first of a double whammy on the Scottish taxpayer is our share of the debt burden of £260 billion of toxic ‘assets’ (as expensive mistakes are known in the upside-down world that is banking) that Lloyds have just dumped on the state for ‘insurance’.
The second hit is on pride rather than pocket. It is the traceability of around 5/6ths of this debt to HBOS – or what we still think of as the Bank of Scotland. This amounts to around£215 billion.
And in doing this neat transfer, Lloyds have arranged a valuable bonus not given to RBS in its own dump of £365 billion on the ‘state asset protection scheme’. In exchange for its generosity in this ‘asset’ insurance, Lloyds has negotiated a tax concession likely to cost the exchequer at least £7 billion in lost corporation tax.
The deal is that Lloyds ‘pays’ (and yes, this is no more a payment than the ‘assets’ are assets) the Government £15.6 billion as its insurance premium to protect the £260 billion of assets now lodged in the ‘scheme’ (now there’s an accurate word).
Lloyd’s will then be responsible for the first £25 billion of any – inevitable – losses but will be allowed to offset these losses against taxable income, a revenue loss to the exchequer of £7 billion.
Lloyds will also bear 10% of losses over £25 billion, with the state carrying the other 90%.
And the ‘paynent’ that isn’t a payment? Well, it’s payment in kind. Lloyds is giving the Government new ‘B’ shares in the bank with the right to convert these later into ordinary shares.
Quite how £15.6 billion can be translated to any particualr number of Lloyds ‘B’ shares in today’s gravity-affected market in banking shares is another matter.
MAG’s last stand for HBOS fails at Competition Appeal Tribunal
The six-member Merger Action Group brought a last-minute legal challenge to the UK Government-brokered Lloyds TSB takeover of Halifax Bank of Scotland (HBOS).
The Competition Appeal Tribunal was asked to decide if the UK Government had been right to bypass competition concerns in allowing HBOS to be rescued by a Lloyds takeover. The resulting superbank will inevitably leave some villages and small towns, which once had a choice between Lloyds TSB branch and an HBOS branch will now have only one local banking service.
The challenge was heard this week by the tribunal, in London under Scots law – and rejected today.
The last ritual in what was pretty well fore-ordained when the Government stepped in to broker the Lloyds takeover of the bank, will be played out on Friday 12th December. HBOS shareholders will vote on the takeover deal on that day and there is only one way the vote will go. The huge overall stake of the institutional shareholders will certainly be voted in favour.
Before national mourning breaks out, it is worth remembering that the contents of the HBOS books remains largely unknown to the public. As For Argyll reported very early in the bank’s collapse, it is said to have a worryingly high exposure to what has proved the most toxic of all mortgage products – not sub-prime but the little spoken-of Alternative A – or Alt A mortgages.
Read For Argyll’s earlier report on this matter.
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HBOS – Jim Spowart leaves the field
Scots financier, Jim Spowart, has announced the end of his personal efforts to retain the independence of HBOS. He is retiring disillusioned by the inability of UK ministers to put party politics and ego second to the drive to save jobs in Scotland and Halifax.
As it happens, the key ministers uninterested in exploring alternative options that might maintain the independence of the bank and protect Scottish jobs are all themselves Scots – Prime Minister Gordon Brown, Chancellor Alistair Darling and Scottish Secretary Jim Murphy.
Spowart says that he had asked for confidentiality in his talks with Jim Murphy, the UK Scottish Secretary, over the emergence of a potential alternative bidder for the bank. However, details unhelpfully appeared quickly in the media, some in the BBC blog written by Financial Editor, Robert Peston.
Throughout the financial crisis, starting with the nationalisation of Northen Rock, Peston has been treated by the UK Treasury as an unofficial conduit of information to the public domain and he seems comfortably to have accepted all the compromises that come with such a role.
Beyond acts of casual sabotage by familiar leaking tactics, Spowart also found official obstruction. The Sunday Herald reports that its understanding is that a senior official of the Bank of China contacted the UK government over a possible bid but was seen off by Alistair Darling who was afraid that speculation over a bid might detail the Lloyds TSB takeover. As the originators of the Lloyds deal, UK government ministers are committed to it regardless of the change in financial circumstances since their initiative. They have also allowed the matter to become over-invested with personal ego.
On one hand there have been the leaks, the deep freeze treatment of potential alternative bidders and the swift rubbishing of the HBOS independence campaign by two leading Scots bankers, Sir Peter Burt and Sir George Mathewson. On the other there have been public assurances from the UK Government that there will be a level playing field for any alternative deal. The two do not sit together in harmony – and, as always, actions speak louder than words,
Writing on the matter in the business columns of The Sunday Herald, Kenny Kemp says: ‘These are surreal days, when 18 Scottish Labour MPs and MSPs can find time to support a UK football team in the London 2012 Olympics but utter not a dicky bird about the probable job losses caused by Lloyds TSB’s proposed takeover of HBOS’.
In signing off his campaign, Jim Spowart expresses his disappointment that he has not had contact from a single Labour MP or MSP thanking him for his efforts to protect such jobs.
Unless Burt and Mathewson can pull something off, this will be the end of HBOS and there will branches and staff of both HBOS and Lloyds TSB lost in Argyll, as elsewhere. But whatever happens, they did what they could for the bank, for its workers and for Scotland.
Footnote: There is a new element to the scenario that has left Jim Spowart so disillusioned. Following Gordon Brown’s criticism of those opposed to the Lloyds TSB takeover deal, the trade union, Unite, representing bank workers, leapt into action in dismissing Sir Peter Burt and Sir George Mathewson. This was immediately strange since, were HBOS to retain independence, it would be the best outcome for bank workers. As usual, the devil is in the detail. Unite’s Political Director is Charlie Whelan, Gordon Brown’s former Spin Doctor.
First Minister tells BBC time for rethink on HBOS – as Burt and Mathewson develop independence initiative
First Minister, Alex Salmond, Speaking on BBC Radio’s Today programme this morning, that the present circumstances in the banking industry indicate that HBOS could be helped into independence rather than into the Lloyds TSB takeover. He said that the picture of the financial world is now different from the picture when the Lloyds deal was rushed onto the table.
Mr Salmond said: ‘if the public money is going in to support the financial sector then it’s reasonable to find out whether we can do that and avoid consequences like thousands of job losses, the loss of decision-making and what we already know from the Office of Fair Trading – a substantial diminution of competition throughout the economy, affecting businesses and households’.
Sir Peter Burt and Sir George Mathewson are pursuing their initiative, reported earlier, to be appointed together to manage the bank into independence and to recruit credible senior management to take their places as soon as possible. They say they have no deal to offer, but unchallenged experience to take the bank back to stability, in contrast to the current HBOS board which has brought the bank to its knees.
The failed HBOS Board has rejected the Burt/Mathewson offer saying that HBOS will be stronger as part of a superbank with Lloyds. However, Mr Salmond’s point is that the creation of the superbank is recognised to be anti-competitive and was accepted only as an emergency measure to save HBOS. If such a measure is now avoidable, it is in the interests of the banking industry at large that an alternative option be considered seriously.
Of course – for Scotland and for Yorkshire, the issue of job protection in these difficult times is a major factor in the attraction of an independent HBOS.
Sir Peter and Sir George have one immediate objective – to see the HBOS books in order to determine its current situation. So far only Lloyds and the FSA have seen the books – not a situation enabling alternative bids to come forward.
The key priority in the Burt / Mathewson plan is to get an extraordinary meeting of HBOS shareholders called. They need the support of only 10% of the shareholders to achieve this – around half of the small private investors. However the two men do not have access to the identities and addresses of HBOS investors so cannot contact them direct.
They are planning to launch a website today which will be the point of contact between the and the HBOS shareholders. It is to be live tonight and we will publish the address when it is known.
Former chiefs of HBOS and RBS support HBOS independence and offer to take over as interim management – now rejected
Sir Peter Burt, former chief of the Bank of Scotland credited with creating HBOS and Sir George Mathewson, credited with transforming the Royal Bank of Scotland to a world power in banking, have entered the debate on the future of HBOS.
They say that HBOS and its shareholders would be better off if the bank were to remain independent rather than entering into the proposed, almost done-deal, of the £12.2 billion takeover by Lloyds TSB.
They have written to HBOS demanding the resignation of both its CEO, Andy Hornby and Chair Sir Dennis Stevenson, neither of whom have been adopted into the proposed management structure of the new superbank, if the takeover goes ahead.
The two men argue that, with the government and Bank of England offering vital funds to replace those that could be withdrawn by money managers and other creditors, there is no longer any need for HBOS to be taken over by Lloyds TSB.
Their letter, sent to Sir Dennis Stevenson, says: ‘It is our intention to create a detailed alternative plan that we believe will represent better value for both the HBOS shareholders and stakeholders alike by keeping HBOS as an independent bank’.
Given the individual and combined experience of the men in question, the HBOS board will not find it easy to ignore such a proposal. Their call for the resignation of the CEO and Chair of the bank will also find a response in the public anger with those who have brought the bank to its present predicament.
Their proposal to the HBOS board is that they would step in and stay in post until the bank is on a stable footing as an independent, recruiting credible top management to replace them. The scenario put forward is that Sir George Mathewson would become the new Chair of the bank and Sir Peter Burt would be its CEO.
They intend to canvas shareholders to requisition an emergency meeting to have Stevenson and Hornby removed, if they refuse to choose to resign.
9th November Story Update: The HBOS Board have unanimously rejected this approach but Sir Peter and Sir George say they still intend to call for an extraordinary general meeting for HBOS shareholders to express their views. Sir Peter Burt has confirmed that he has had a letter from Chancellor Alastair Darling confirming that the funds available to support HBOS in the Lloyds takeover will equally be available to an independent HBOS.
As For Argyll has pointed out before, the Fat Lady is still her dressing room.
Bank of Scotland name may survive as Scottish high street brand
Lloyds TSB have now said that, while the name of the new merged bank will be Lloyds Banking Group, it has not yet made up its mind whether that will be the name of its universal high street presence. It has suggested that it is possible that Bank of Scotland and Scottish Widows may remain as sub brands, as may Halifax and Lloyds TSB.
This naming strategy raises the possibility that their retained high street bank branches north of the border might all be rebranded as Bank of Scotland, with all thsose retained south of the border rebranded as Halifax.
Lloyds TSB say that it is too early to say if this might be the case – but the strategy has a certain emotive appeal.
I the subsidiary names disappear Scotland will have lost the traces of not one but two of its banking institutions. The Trustee Savings Bank (TSB) was founded in the early 1800s by a clergyman from Dumfriess and was a significant force in Scottish banking until it merged with Lloyds thirteen years ago in 1995.
Lloyds say that they are still not in a position to put a figure on the redundancies expected. Expectations vary widely from 40,000 of the combined UK workforces of 132,000 to almost no compulsory reduncancies since the streamlining will take place over a three year period.
It is easy to forget that Scottish jobs are not only at risk within HBOS. The Lloyds TSB branches north of the border are also employing Scots.