大象传媒

Still not too late for Lloyds to extract themselves from HBOS if the Government is prepared to do what they fluffed before - nationalise HBOS and merge with NR to produce a state supervised exemplar bank (with reasonable o/d charges!)Does anyone believe the heavily discounted rights issue is in the long term interest of shareholders and the credibility of the existing top management?

....It is very strange to be sitting in a news environment with finance journalists reporting on what secretly happened a year ago to the banks, while defence journalists are digging over what secretly happened in the run up to the Iraq war, and human rights reporters are telling the story of other secrets emerging from an Iraq torture inquiry....

maybe not so strange?

for some all three are related? and the banking one is the divine punishment for the other two?

Last night (24/11), on Newsnight we heard the view from The Top. All very chummy, but fairly tight-lipped. It would indeed be interesting to see a calculation of how the true nett wealth of U.K.plc has changed since the advent of Friedmanomics. Paying particular attention to those overtly secretive processes involving the Export Credit Guarantee Department involvement in the run-up to Black Wednesday and, last October's covert bail-outs. Especially in view of the growing momentum in the U.S, at a grass roots level, to abolish "The Fed." Which many ordinary U.S. citizens now see as a private firm which is leaching away the wealth created by previous generations of their citizenery.
Are we too, as a nation, being sold to the highest bidder? What should we, the ordinary folk of Britain do about it? Maybe the lady, featured in Panorama a few weeks ago, who created the "Destinations" board games ought to be asked by Mr. Paxman for her view on the secret loans to the very bank which then pulled the rug from under her business and life? After all, the clean, rarified air at The Top isn't the same as that which the rest of us have to breathe!

Paul, what I dont quite understand is this : if I recall correctly the Bank Recapitalisation Fund was a fund set up for banks eligible under the Credit Guarantee Scheme to raise their Tier One up to a level to qualify for the Credit Guarantee Scheme - the FSA had done some stress tests which werent published I think ; banks were free to subscribe or go to the markets as Barclays did, for example. What we are now being told is that, in fact, the BoE had provided Emergency Funding as a bridging loan to these two banks pending government recapitalisation - as if the government recapitalisation had been the predetermined course? The share subscriptions were then underwritten. Was the Credit Guarantee Scheme then used to raise debt on the markets to pay back the Emergency Loans?

' with so much still secret? '

Rather telling that

Paul - three blog entries in just a few days! Have you acciedentally taken some amphetamine? But seriously, it is good to see you blogging agiain with such frequency.

One of the things I take from the story is that it demonstrates what a mess RBS and HBoS were in and, as far as I can see remain in. All the talk of growth seems to ignore the reality that for most SMEs, debt finance remians incredibly hard to come by. I appreciate the QE has resulted in the big corporates being able to access funds through the bond and capital markets but this does not really help small and medium sized business. The problem is particularly acute in those geographic areas (like the one I live in) where RBS and HBoS where by far and away the largest commercial lenders. In spite of all the PR about the banks still being open for business, my experience is that in the vast majority of cases, all RBS and HBoS are willing or able to do is to renew existing working capital facilities.

Going back to the secret loans made by BoE last year, at about the same time as this, I heard rumours that many employees of HBoS were being ordered by head office to phone around their existing customers and networks to encourage them to deposit funds with Bank. Presumably, they were unsuccesful.

The truth is interesting, the amount is staggering but the secrecy isn鈥檛 surprising. The interesting point to come out of all this is who is calling the shots, the bankers or the elected government.

You describe Gordon shaking with anger, was that because he realised he also could not (or would not) do anything about it. The latest revelations are more evidence to back up the proposition that the system was in an awful mess last year and the government, or actually governments as ours is not alone, passed up the chance to regulate the system.

It is disgraceful that they are prepared to abide by agreements, regulations, legislation when it is in the interests of the banks and then break agreements, regulations, legislation also when it is in the interests of the banks.

I think you鈥檝e got it the wrong way around when you say
鈥淟loyds shareholders could be forgiven for asking whether the board at this point was working for them or working for the government鈥�
For a short period the board was probably working in secret with the government but to shore up the banking system. Once it is shored it is back to business as usual.

BtW, my brother in law has a loan to get his plumbing business started. The interest on his loan is over 20%. Is that what Gordon means when he talks about putting liquidity into the system.

Clearly the ATM network is a point of vulnerability that the Gummint needs to address - assuming that it hasn't already done so. But how credible was this 'threat'?

Have you followed this up with, say, Link Network to see whether two banks alone could 'switch off' their ATMs - short of pulling the fuses at the branches themselves? Agreed, all it would have taken at the time to cause chaos would have been the mere rumour of a hole-in-the-wall freeze-up...

MIGHT I ASK AGAIN

If paying of the extra loan SO QUICKLY meant there was no cash to lend the little guy losing his business?

I am concerned that we seem to be betting the farm on propping up a financial system that clearly failed us. How long until it happens again?

Are state bail outs like this comparable to government attempts to prop up nationalised industries (or nationalise failing industries) back in the 1970's? That can hardly be claimed to have been a major success, even by historians.

Just have a look at this RBS forum dedicated to taking UK IT jobs over to India.

So, let me get this right - British tax-payers paying taxes to save RBS who then get rid of as many high skilled high paying UK tech jobs to India.... meaning the high skilled high tax-paying UK workers no longer have jobs and hence no longer pay taxes... so RBS is bailed out by who?



Dsigraceful IMPO.

It's not just the ATM system that was at risk. I'm sure that HBoS and RBS would have provided lines of credit for many large corporates. They would have provided letters of credit for many customers to facilitate trading. These letters of credit would potentially have been worthless if the banks had collapsed. This would have caused havoc - for example, supermarkets and shops might have been unable to import food etc. If you know anything about the "just in time" supply systems operated by the supermarkets, you can understand how catostrophic it might have been.

Paul,

In the febrile atmosphere of October 2008, keeping this emergency funding secret was undoubtedly the right thing to do. Had BoE publicised it, the actual collapse of RBS in particular would have become a self-fulfilling prophecy. It would have resulted in even more banks cutting their credit lines with RBS, thus requiring even more emergency funding to keep the ATMs functioning.

Lloyds is different, given it was seeking to acquire HBOS. Had the emergency funding been known about, it would have impacted the share price of HBOS, and would have impacted that of Lloyds (negatively) if acquisition of HBOS had been seen as likely. Consequently, Lloyds shareholders would have been less likely to agree to the acquisition.

There is also the issue of who knew of the secret funding within Lloyds and HBOS. I find it inconceivable that the Directors of HBOS would not have known about it, and this is significant. They recommended acceptance of the Lloyds offer, and I assume took up the offerin resepct of their own shareholdings. In effect Lloyds overpaid for the HBOS shares as a result of material price sensitive information being withheld from the offer documentation. Put another way, HBOS shareholders received more Lloyds shares for their HBOS shares than they would if the information had been public. That is insider dealing and, unlike competition law, there are no circumstances in which the Secretary of State can override the provisions "in the national interest". I am sure the HBOS Board must have taken legal advice at the time, and I think the HoC Treasury Committee, and journos such as you etc, should be asking HBOS and individual Directors to put this advice into the public domain. HBOS' behaviour would also appear to constitute market abuse under FSA rules, and misrepresentation generally. I suspect we will hear a lot more about this, and not just from disgruntled Lloyds shareholders.

Incidentally, Lloyds could face the same issues as HBOS, but that depends if they knew of the secret funding of HBOS. There have been constant comments about Lloyds not having performed full due diligence before acquiring HBOS. Did this lack of due diligence extend to asking HBOS if they had drawn down funds under the BoE's emergency funding facilities? If they were aware of it, then they are also appear guilty of market abuse and misrepresentation, though probably not insider dealing (a profit has to result for it to be insider dealing and Lloyds shareholders clearly did not profit from this). If Lloyds did not seek (and test) such representations from HBOS, then the Loyds Directors were negligent. I suspect that would be the least of their worries given the possible alternatives.

A further point in respect of the emergency funding is that, had HBOS and/or RBS collapsed, it would not have stopped there. We would have seen contagion across all the banks, meaning the entire banking system would have closed down. I doubt anyone banking at, say, Barclays would have sat smugly at home thinking "this doesn't affect me". Everyone would have been out on the streets trying to get their cash.

Even if people were smug, they would soon have been jolted into action if RBS had collapsed, as RBS has a massive transaction processing business. Over one-third of all financial transactions in the UK passes across RBS's systems, so even something that appears to have no RBS involvement may actually require RBS for it to be completed. It would not just have been ATM networks that failed. It would have become impossible to pay for anything using debit or credit cards as well. Even if they were usable, a high proportion of everyones salaries would not have been paid at end-October, again because of the involvement of RBS in all aspects of money transmission. So everyone would have been short of cash. And remember the good old days when credit card companies just bumped up your credit limit for no reason? Well we would have had the opposite: immediate cancellation of credit, withdrawal of overdraft facilities etc. Financial life as we know it would have ceased. Cash would be king, but impossible to get hold of for how long? A day? A week? Experience elsewhere suggests a short period of no cash availability, followed by an extended period of "rationing", making routine cash management much more challenging than we are used to. In short, individuals would have experienced a very similar liquidity crunch to that of the banks.

Paul is not far wrong in saying the riot police would have been "part of the solution". I was in Argentina is 2002 when their currency crisis resulted in all the banks closing. I was there when they had reopened, but locals were still restricted as to how much money they could withdraw, and there were armed police outside every bank branch. It was clearly a very challenging environment even well after the original crisis time had passed. The kind of day-to-day cash management we take for granted totally breaks down in the absence of a functioning money transmission infrastructure.

It seems to me from your post that most Journalists are more like lawyers nowadays in the way they conduct their professional lives.


I make no wonder most of the populous has become so apathetic about politics, the ruling elite and their accountability. We may as well all just watch 'Peter Andre the next step' on ITV 4 for all the value we get from watching or reading the mainstream news.

The last bit of truely hard hitting, morally and nationally significant journalism I can recall was the exposing of the 45 minute claim and the following Dr David kelly affair'.

Remind me what happened to the journalist and the 大象传媒 radio prog who brought that story?

How many links to Al queda a were found and how many ''weapons of mass destruction were found in Iraq''

How many people have been murdered, blown up, tortured, bombed and / or traumatised for life because of the Iraq war?

Who was right and who was wrong, yet who had to apologise and who lost theor career over it???

My favourite bit of journalism in the recent past was watching you outside the RBS headquarters challenging the employeess walking out of the bank to comment on the morality of credit card interest rates as the RBS press office had not offered any comment to you...(I recall that was the case anyway).

Can we have more of that sort of thing please and spread the word to your colleagues also that this sort of thing makes both compelling viewing and seeks to expose the truth and is what liscense fee payers would expect to see from a public service broadcaster.

I bet the 大象传媒 got some official complaint from RBS about that article didn't they which makes you reluctant to do it again?

I am not having a go at you Paul, I think you are one of the good guys, there just are simply not enough journalists like you around and the work you and those like you do is incredibly important, more so now than ever, because it seems to be dying out.

NOLI ILLEGITIMI CARBORUNDUM !!

News breaks last night about a possible bond default in Dubai, global banks being up to their eyeballs in Dubai debt, the FTSE loses 2% today within an hour and the London stock market then stops trading for technical difficulties...

No mention of this on the 大象传媒 News of course... So much for rolling 24 hours news...

I think I will do as others have suggested and switch on ITV4 tonight to see if Peter Andre has any mention of the Dubai bond fears! :-)

It is also pretty scary that those who are making the decisions and keeping secret what they do are not those best qualified to react in such emergencies.

Already we are seeing a far too lax attitude to the wrong decisions that were made at the time although they will affect all of us far into the future.

After more than twelve months after taxpayers had to bale out banks because the whole fabric of our society would have collapsed from under us there has been no preparation as far as anyone can see for something similar happening again.

Mervyn King has stressed that we need separate retail banking which would protect us from the ravages we've already seen. Banks that can be guaranteed to protect our salaries direct debits pensions benefits and everthing else that we need to run ours and the country's needs on a day to day basis.

This should have been a priority and should be up and running at least as an emergency measure in the short term. Perhaps it is but it's another secret they're keeping from us.

solution to rbs bonuses.rbs returns 1.5 billion to goverment.government gives rbs employees shares in rbs with a 5 year ban on selling them. this way everybody wins.taxpayer gets some money back.rbs gets investment.rbs employees get a bonus ,maybe more care will be taken if its their own investment.