Tonight:
5°c
TO the name of Sir Fred Goodwin in the banking hall of shame can be added Sir Victor Blank and Eric Daniels.
They took a good bank and made it bad. Pure and simple. We now know that on its own Lloyds TSB made an annual profit of £807 million.
Instead, Blank and Daniels' stomachs got the better of them, and they decided to gobble HBOS. The result is a stonking loss of £10 billion for the new combined Lloyds Banking Group.
What was once the bank of the black horse - a sleek, smartly-turned out creature - is reduced to a bloated, wallowing beast, forced to fall on the charity of the taxpayer. But Blank and Daniels did not act alone. There were others in the plot, notably Gordon Brown, who, fearful he might have to nationalise HBOS encouraged them to merge with the larger Scottish bank. And he waved a fat juicy carrot, disregarding usual competition rules.
Goodwin fell because he led Royal Bank of Scotland into a disastrous marriage with ABN-Amro. Ignoring warning signs the market was turning, he pressed on regardless and paid top dollar for a Dutch bank that was a shambolic wreck.
Blank and his team steered Lloyds into the ruin of HBOS knowing what they were getting into. Their excuse, that in the end a new superbank called Lloyds Banking Group will emerge, doesn't wash. Before they can go from A to C they have to pass B - and that is a forced rescue by its 43 per cent government shareholder.
They should also try telling it to Lloyds shareholders. Before the HBOS merger was announced, their shares were 240p. Today they are 66p.
But that wasn't the end of it.
The City reaction to the RBS bailout was to heap praise on the bank and its advisers Morgan Stanley, and UBS for securing a good price from the Treasury. In return for having up to £325 billion of its assets insured by the Government, the bank was charged just £6 billion. Given the City expects around half of this toxic stuff to be written-off, that was some steely negotiating by the RBS side (and less smart by Alistair Darling and his colleagues).
Stung by the acclaim for RBS - which was evidenced by a rise in the bank's share price - Darling and his lot dug in their heels: Lloyds is not going to get away as easily as RBS. However, Lloyds is in a stronger bargaining position. It is not majority owned by the state, for now, unlike RBS. And Blank and Daniels can claim Lloyds was having a good credit crunch until Darling's boss begged them to step in and buy HBOS. They were doing him a favour - Brown owes them. So Blank and Daniels' portraits should also sit alongside Goodwin's in the gallery of bankers who took fine historic businesses and destroyed them.
Reader views (3)
Brown is the guilty man, who relaxed banking rules and pushed Scottish conmen who had taken over RBS and HBOS to be global, and take unnecessary huge criminal risks. The result is they destroyed 30% of Scottish wealth.
Brown has no judgment and has destroyed 25%-30% of UK wealth, and made every government agency almost totally useless. As with Fred's pension, Labour are negligent, reckless, careless, spendaholics who like sopundbites but could not organise a tiny 'p*** up in a brewery'. They boast about being fair and how they care for 'the people', while in reality they are robbing 'the people' blind, stealing their pensions and putting them deep into debt. They have misdirected the country into dishonesty and crime, with no law and order and real criminals are let off while normal citizens are mistreated.
Labour are really a bunch of dishonest careless crooks, who use professional deception, so called spinning, like Lord Mandy of Lieandcrook. Brown will be seen in history as the worst PM in 80 years who drove the UK bankrupt financially, morally and socially.
- Jim Scot, Bremner uk, 28/02/2009 21:52
Report abuse
Chris. Let's also remember that the Lloyds shareholders approved the deal 94.5% KNOWING FULL WELL that just the most cursory due diligence had been undertaken. They overwhelmingly wanted to take the risk. They deserve the mess they have created.
- John, london, 27/02/2009 10:18
Report abuse
Lloyds should do a share split and hive off the rubbish inside HBOS to a separate listing or even an AIM Listing and sink it. Time to close down operations across Scotland and let Brown & Co. explain why the Second Darien Scheme failed
- Tomtom, Leeds England, 27/02/2009 10:14
Report abuse
