Morning:
6°c
Once again, this Government has created a beast it cannot control. When Lloyds TSB, HBOS and Royal Bank of Scotland turned to the Treasury for their combined £37 billion bailout last year, wiser voices than mine argued for full rather than part privatisation.
Brown and Darling clearly favoured, and got, partial state-ownership. Then, cleverly they thought, they put the taxpayers' 43% stake in Lloyds Banking Group and 70% holding in RBS at arm's length into the new UK Financial Investments.
"Its overarching objectives will be to protect and create value for the taxpayer as shareholder, with due regard to financial stability and acting in a way that promotes competition," Darling told us.
The truth is that under former Treasury mandarin John Kingman, UKFI is behaving more independently than either Brown or Darling might have hoped.
There have been more phone calls between Downing Street, the Treasury and UKFI's headquarters in Horse Guards Road in the past few weeks than most of those involved ever expected.
First off, UKFI called for, and got, Sir Victor Blank's head as chairman of Lloyds despite Brown presumably pleading for his left-leaning friend's job. After all, it was at an infamous City cocktail party that Brown assured Blank competition rules would not stand in the way of Lloyds' takeover of HBOS. How could Brown endorse the sacking of the man he had backed to see the merger through?
But Blank announced he would leave, and then Kingman added insult to injury by pointedly saying UKFI would vote for chief executive Eric Daniels' reappointment, making it doubly clear that Blank was carrying the can.
Kingman next let his views be known once again on a controversial matter - that of RBS chief executive Stephen Hester's £9.7 million potential pay and bonus package.
The size of the sum attracted all the fat-cat headlines that Brown and Darling had been praying to avoid. The manner of its earning, even if deferred for five years, contradicts much of what the Government has said on bankers taking short-term decisions to earn huge rewards.
UKFI emphasised the "create value for the taxpayer" clause in its brief when it said it backed Hester's share price-based incentives. If he doubles the share price to 70p, the taxpayer is in profit to the tune of £8 billion or so.
Then came this week's story that veteran City banker Win Bischoff had been put forward by UKFI to become the next chairman of Lloyds. The tale had all the hallmarks of the truth.
However, UKFI then comes along with a public denial that it has put Bischoff up for the job, and a resounding statement that it is up to Lloyds to find its own new chairman and then, and only then, will the taxpayers' guardian let its views be known.
The truth lies somewhere between the two. Bischoff would be a great catch not just for Lloyds but also for Standard Chartered, which is looking for a chairman, and indeed for UKFI itself, where Glen Moreno is insistent he is only acting chairman following Sir Philip Hampton's departure to chair RBS.
Given the power UKFI has created for itself in just a few months, I know which one I would prefer if I were a wily 67-year-old who knows the City like the back of his hand.
Now we have the tale that the Government would like to sell off the good part of Northern Rock (to Tesco?) before the general election. A cynic might suggest that it wants to agree such a sell-off before the taxpayers' stake in the former building society is also transferred to UKFI by the end of this year.
When it comes to flogging off Lloyds and RBS, the battle between Government and UKFI on timing and price will be a right royal one.
* Usually referred to as the lightly regulated or junior stock market, AIM bares its teeth from time to time, and shows just why its motto for investors should very clearly be Caveat Emptor.
One of the strictest rules for companies on AIM is that they must produce their annual report within six months of their year end. If they can't, trading in their shares is suspended and eventually they face delisting.
That means 30 June and 30 September are the essential dates for the vast majority of companies because they have either calendar or tax-year ends.
So in the past few days, we have seen 30 companies' shares suspended because they have failed to come up with their annual report for 2008.
In one of those quirks of fate, exactly the same number were suspended at the end of June 2008.
It's worth taking a look back to see what happened to those ones. Out of the 30, as far as I can see, only nine are ongoing businesses with shares still trading on AIM. One has been taken over. The majority, 16, have either been delisted, restructured out of all recognition or, worst of all, gone bust. Four have again been suspended this year as they were last.
They deserve their names in lights. Handmade, the owner of classic British films including Withnail & I, Mona Lisa and A Private Function, hopes to pull off a big deal soon. Inveresk, the Scottish papermaker, is embroiled in legal actions. TEP Exchange, an endowment policies trader, is just late. Central African Gold has accounting sign-off issues.
As my old Latin teacher translated it: "You have been warned."
* For the time being, I don't care who wins the auction for T-Mobile. In the end, and the way Deutsche Telekom is playing it that end is a long way away, the highest bidder will gain that extra 15% UK market share. Whether that's O2, which has 27%, Vodafone, with 25%, or Orange, with 22%, doesn't really matter.
Those are the market shares as the analysts and industry boffins see them based on direct and indirect customer and subscriber numbers. They cut differently when measured by revenues or earnings.
More importantly those liberal voices that claim reducing the number of mobile networks in the UK from five to four (and down to three when 3 finally does a deal) is too awful to contemplate are wrong.
Consumers have much greater choice than that because the virtual networks like Virgin, Tesco and Carphone's, who between them have several million customers, set their own prices, services and deals.
They act at arm's length from their wholesale network provider. And if they don't like their provider they can in most cases shift pretty sharpish.
The consumers won't lose. Indeed they should get a better service.
