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UK banks 'caused their own decline'
Paul Waugh, Deputy Political Editor27.01.09
BRITAIN'S banks have only themselves to blame for the collapse in their share price, senior hedge fund executives said today.
Speaking to the Treasury select committee, the bosses of four of the biggest funds denied that short-selling was responsible for the huge falls.
Their claims coincide with news today that US hedge fund manager Paulson & Co made at least £100 million by "shorting" Royal Bank of Scotland in which the taxpayer now has a 70 per cent stake. Last week RBS shares fell to 11p; two years ago they were 700p each.
Short-selling, which was banned for three months, allows investors to bet on a share declining. But Stephen Zimmerman of hedge fund NewSmith Capital Partners suggested the banks themselves were responsible for their falls.
He said: "You can see the huge destruction of wealth that has taken place in these companies. I do not believe that it's down to short-selling of their shares."
Reader views (6)
Bank Directors pay themselves too big a salary and bonuses.Something has to be done about it.
- Stan White, leeds
Short selling speeded up the collapse of the banks.
Bad investment policies, 125% mortgages and self certification helped make the collapse happen.
Not to mention greed, arrogance and a reliance on spurious accounting practices.
- Andrew W1, London
BUT STILL CRASH GORDON IS GIVING THEM MORE MONEY.
- Jacqueline, Hampstead, London
Moreover, if the short-sellers hadn't been banned, HBOS and RBS wouldn't have been able to trick widows and orphans into subscribing to their rights issues at inflated prices.
- Ollie, London, UK
If a banks stock goes down by 90% it's very hard to argue that it's solely due to some short selling. If it is so grossly undervalued where are the buyers? The banks do indeed only have themselves to blame. As do the borrowers and shareholders of said institutions......
- Mark, London
Very true.
- Dave Davies, Basingstoke
