Tories put shareholders interest before the public’s
Kenneth Clarke scored an own goal by criticising the government in allowing the Lloyds bank takeover of HBOS. What he is forgetting is that with Friday’s declared losses the takeover has saved the taxpayer almost £11 billion (at least in the short term) at the expense of Lloyds shareholders. So what the Tories seem to be doing again is putting shareholders interests ahead of those of general taxpayers.
What’s more he would have complained bitterly if the Government had blocked the deal on the principle of “too much state intervention” and also as it would have meant that HBOS would have been nationalised.
Lloyds shareholders jumped at the opportunity to takeover HBOS
Lloyds’s management went into this deal with there eyes wide open, with the goal of acquiring a large market share of British Banking with the focus mainly of what is a reasonable sound Halifax mortgage portfolio. They must take full responsibility for the lack of due diligence in failing to assess the amount of toxic debt in the corporate division, £7 billion of which was written off on Friday.
Lloyds TSB shareholders voted 95.98% in favour of the takeover. They paid £4.3 billion for the bank in November, having negotiated down for original agreed price of £12.2 billion in September so they thought they were getting a good deal. So did Sir Peter Burt and Sir George Mathewson – the former chief executives of Bank of Scotland and Royal Bank of Scotland respectively, who tried to scupper Lloyds’s takeover of HBOS takeover.
Fear of Lloyds becoming a superbank have retreated
The concern back in November was more about the government allowing a ‘superbank’ to be created that would be too strong for the competition. The government were complicit in the takeover because they did not want another Northern Rock, for financial, political and operational reasons. Bending the competition rules was a small price to pay.
Lloyds HBOS do have a commanding share market of the UK banking sector so the Competition Commission will have to take a look at the situation once the recession is over. No rush then.
