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Why we've interviewed RBS but not Lloyds

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Jeremy Hillman Jeremy Hillman | 08:35 UK time, Friday, 26 February 2010

Many of you followed yesterday's story about Royal Bank of Scotland posting losses of £3.6bn for 2009 whilst at the same time paying bonuses of £1.3bn to its staff.

It's a story which provoked high emotions. Not only do many of you bank with RBS as individuals and businesses but we all, as taxpayers, own a very large chunk of the bank - 84 % to be exact.

One of the ways we were able to cover both sides of the story was the willingness of the RBS boss Stephen Hester to be held accountable. Through interviews on the BBC he was able to speak to his customers and shareholders - you may not agree with what he had to say but he laid out a reasoned and coherent case for his actions. You can see one of his interviews here.

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There's another bank in which we all have a major stake (41% in this case) and which owes its existence to support from all of us. Lloyds has announced its results this morning. It too has made big losses and its share price sits well below what we taxpayers paid for our stake.

The BBC has been asking Lloyds bosses for interviews but so far they don't feel the need to answer our questions or explain their plans for taxpayers to get their money back.

Lloyds CEO Eric Daniels - the only boss of a rescued UK bank to keep his job throughout the crisis - and on a salary of more than £1m - doesn't seem to feel the same responsibility to be accountable as his opposite number at RBS. If you do have questions you'd like to put to Eric Daniels or the Lloyds Chairman Sir Win Bischoff, then please write them here and we'll keep asking and hope they change their minds.

PS. Robert Peston has written a post about Lloyds' latest figures.

Jeremy Hillman is editor of the BBC News business and economics unit.

Comments

  • Comment number 1.

    If we own 84% of RBS, the nation, couldn't we put a block on the payment of bonuses as shareholders? The same could apply to Lloyds and why are any bonuses paid at all. Surely if no one paid a bonus this excuse of 'keeping the best people' would not apply. As everyone pays these bonuses it doesn't work anyway, you'll simply move on to your next bonus.

  • Comment number 2.

    Get a life BBC!

    The results clearly show that LBG can and will make substantial profits after 2010 and the worst of the debt provisions have been made now.

    The government have nowhere near the exposure with LBG as they do with RBS and are a minorty (albeit a large one) shareholder.

    Let them get on with turning LBG round and sorting out their bad debts - that's what will provide the funds to repay the govenment.

    Perhaps people should be reminded that Lloyds were pressured into taking over HBOS - if they hadn't then HBOS would be 100% government owned and we would be stuck with the entire bad debt portfolio.

    Stop whinging BBC and write something more objective then this 'woe is me' rant.

  • Comment number 3.

    I think Ian ought to get out more?
    LLOYDS WOULD HAVE GONE "UNDER" if the taxpayer had not intervened.
    So short sighted view re profits they "will" make. The point surely is that they have made a huge loss this year and still paying whopping bonuses.

    Can you ask both Directors if they have refused their bonuses or deferred them? And ask them if they have any other employees agreeing to do the same? Also what are their long term plans re mortgage/housing markets.

  • Comment number 4.

    To Jeremy Hillman [Author] - Whilst I do agree with aspects of your column and in particular LBGs responsibility to the british tax payer for comment. I do, however, share Ian's [poster 2] reservations that your column does not distinguish between RBS and its self inflicted fool hardy purchase of ABM AMRO against LBG's "forced" purchase of BBoS.

  • Comment number 5.

    I agree with Ian on this. The circumstances re LLoyds is entirely different and in fact the Government were very much behind arranging for Lloyds to take over some very toxic assests. I think the BBC has become so negative over the last few years it has actually helped the situation get worse. For goodnesss sake seek out some successs in Britain and write about it. They do exist and I am sure many of us would like to read some good news.

  • Comment number 6.

    Oh come on BBC..... given that you're also supported by the taxpayer and refuse to disclose how much of our money you pay out in salaries (and lets face it... we'll get the money back from the bank eventually but Jonathan Ross is never going to repay me!) its rather a case of pot calling kettle black.

    Getting back to this story you're twisting facts. Lloyds is never going to 'give the taxpayers money back'. The govt owns 41% of Lloyds TSB shares. If the govt wishes to get its money back then it will sell the shares. It can do that tomorrow if it wishes to. However unless the govt is even more stupid than it seems it will wait until Lloyds are turning a decent profit again to get the best price for those shares. The same applies to RBS and all the other banks.

  • Comment number 7.

    I would suggest that the situation at a base level is the same across both organisations - Govt (taxpayer) owns a large number of shares, and will need to support the change process in said banks to drive up the shareprice and recoup their investment, or perhaps even make some profit. If it wishes it could sell its shares now, recoup some of the investment and drive the share price down even further..........
    Where the organisations differ is that RBS is in effect state owned in all but name. A whopping 84% Government owned - As a result of one man and his meglomania Fred "so long and thanks for all the fish" Goodwin. As this is the case, I agree that Mr Hestor has to provide full and frank explanations of where RBS is headed, how it will get there and when the taxpayer can expect their money back. (Down the toilet, the fastest way possible and never may well be the answers!)
    Lloyds is not in the same boat, with only 41% of shares being government owned and therefore whilst some may believe that Mr Daniels perhaps SHOULD be answering questions like Mr Hestor, he does not have to - like it or not.
    As an aside, having worked for both of these organisations and having many good friends at various levels within them, I can assure you that Lloyds is very much an organisation on the up, whilst RBS is continuing on its downward spiral to oblivion.
    Within RBS bonuses for retention of top staff (outside the casino club)is a myth. They are losing skilled resource at a frightening rate and have no intention of stopping it - its a numbers game (cheaper to let staff leave than have to pay them off) which will have more dire consequences in years to come.

    No capability = No progress.

  • Comment number 8.

    Are the previous contributors members of the board at Llloyds Bank?

    It is without doubt a very significant PR mistake to refuse to field anybody to talk about the results, good, bad or indifferent though they might be. There is clearly a public interest to be served by so doing.

    The question that Robert Peston poses - how can the board feel that these results merit great bonuses? (not the puerile debate rehashed about the fact of paying such large bonuses if earned by good results: see below) - merits further questioning.

    I had certainly believed that the results would be better, given that Mr Daniels had been awarded such a full bonus by the board (albeit declined). For this reason the appropriate person to interview might be the new chairman of Llloyds.

    I have also been a very strong supporter of Mr Daniels in the past and am very disappointed with his no-show. Keep calling and ask that he or the chairman come and speak. They are not speaking to you, they are speaking through you to the public at large.

    The non-engagement is similar, of course, to our beloved government. If they have good news, out they trot. Bad news? Even the Today programme can forget it.

    One further comment about some of the BBC interviewing on the banks.

    There are excellent and serious journalists who engage on the issues with those they are talking to: Sean Lay (sorry about the spelling if I have got this wrong), John Humphries, Robert Peston - and then many others who simply want to ask the same old question about bonuses. This happened with Stephen Hester yesterday. It is boring: we know the arguments for and against bonuses; move on.

    The issues have to do with how well and how fast these two big banks are moving to get back into a position where they will be profitable. And on this point I am with the previous contributors: the banks seem to be on track, but many questions remain and ought to be put, by Robert Peston.

    Finally, I looked up how to spell the World At One Journalist's name above and came to the link below - it needs fixing as it still lists Nick Clarke as presenter: http://news.bbc.co.uk/aboutbbcnews/hi/profiles/default.stm

  • Comment number 9.

    #3 c u later

    Um ....... don't think so.

    Lloyds would have been fine on their own - not in great shape but certainly not bankrupt.

    The biggest difference with Lloyds is they are upfront with the problems - look at the contrast with RBS where they try to hide away the huge bad debts as 'Non-Core' losses in there results.

    HBOS is a complete basket-case - I think worse than RSB/ABN Amro and Lloyds were undoubtedly foolish to take them over (but pushed very hard to do so). Lloyds are and will be profitable in future.

    And when you say I have short-sighted views - they are quite the opposite. The only way the govevnment will get their money back is if the sahre price gets back over 74p. And the only way this will be achieved is by making .............. I'll leave you to fill in the blanks.

    And by the way the directors have refused the bonuses not deferred them and quite rightly so. How many other senior employees of Lloyds do this will be interesting to see.

    I'm not a rabid supporter of Lloyds just trying to put this in peerspective - would we have wanted another 12-15BN of bad debts heaped onto tax payers and god knows how much else if the government had stepped in to resuce them?

    #6 - Spot on - let's ask Jeremy to publish his salary package as we 100% own who he works for! No? - there's a surprise!

  • Comment number 10.

    The statement that we, as taxpayers, own 84% of the bank is completely inaccurate:-

    We, the people, do not OWN the government - we elect MPs who then form a government. If they decided to do something completely different to what they promised then we have NO POWER to change it - clearly we dont own them.

    Now the government owns the 84% in RBS but if you accept that we do not own the government then neither, logically, do we own RBS.

  • Comment number 11.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 12.

    As some one who is employed at branch level by one of the mentioned banks, can I please stress that we are not amoung those on the big bonuses that are mentioned here!!
    Customers very often forget that these big bonuses are for board members and investment bankers, NOT for the customer service staff that have to take the complaints about big bonuses every day!!

  • Comment number 13.

    As a salesman I find it amazing that banks insist that they have to pay bonuses to keep the best people. If I dion't meet my targets or the company does not make a profit, do I leave the company? No. Neither do most sensible people. We live in a real world where we know that to receive our bonus we have to earn it and make a profit. Why do banks feel they are different to all other industries?

  • Comment number 14.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 15.

    #13. The point you, the BBC, and most of the rest of the posted here miss is that the people at RBS who are getting bonuses HAVE made a profit and an enormous one at that. RBS's investment arm made over £8bn this year. The £3bn loss comes from having to write-off over £12Bn in bad debt run up several years ago by people like Fred Goodwin who have now gone. As a salesman you'd be pretty hacked off if you exceeded your sales targets this year but were paid nothing because another salesman 3 years ago messed up. If a rival company then offered you a payrise if you changed job you'd be pretty dumb not to move. I would.

    In any case this ongoing "bonus" issue on this thread demonstartes another problem. Most people don't understand the difference between retail and investment banking and can't apparently understand that not all banks are in the same situation. Barclays (which has a massive investment arm) didn't recieve a penny in govt money so is paying huge bonuses. Lloyds-TSB does very little investment banking and is paying very little in the way of bonuses because it never really did pay bonuses. Incidentally Lloyds-TSB did the taxpayer a big favour. If they hadn't bought HBOS and put HBOS's bad debts on their books HBOS would be 100% state owned and we'd be trying to get rid of two Northern Rocks not just one.

  • Comment number 16.

    Interesting. Robert Peston can say what he likes about banks but I can't directly quote one of his sentences without being defamatory.

    Please add a new house rule to avoid me wasting my fingertips typing: 'thou shalt not criticise the BBC's editorial policy in any way'

    In fact add two rules:
    'you can't say anything potentially libelous, defamatory, homophobic or racist.... unless its about bankers or Gordon Brown in which case anything goes'

  • Comment number 17.

    I think we are getting away from the fact that all of these banks have astonishingly bad results....no matter how you look at it.

    How our Government let us get into this position is unforgivable and as far as i can see still have not put into place rules that would prevent this happening again...

    It will be a generation before the recovery filters down to us the common man, in the mean time we can all delight in the smugness of these experts,that they know best....

  • Comment number 18.

    #17. How I look at it is that RBS made a very tidy profit this year and had to spend all of it (and then some) covering the bad debts made years back. If it continues to make £8.6bn a year for the foreseeable future it will very rapidly clear the bad debt, the (doubtless conservative) govt will sell the shares and use the cash injection to claim that they're financial geniuses even though they opposed the bail out in the first place.

    We in turn have had a good deal as rather than just use our money to write off the bad debt (which we really would never see again) we've bought the banks so that when they make a profit we (i.e the public purse) also make a profit.

  • Comment number 19.

    #9
    Sorry...been out

    No one forced Lloyds to do anything...ergo your argument falls.
    "And when you say I have short-sighted views - they are quite the opposite. The only way the govevnment will get their money back is if the sahre price gets back over 74p. And the only way this will be achieved is by making .............. I'll leave you to fill in the blanks"

    If they hadn't been so foolhardy the price would be so so much higher...are you in the real world...or just live in bankers heaven?

    have a nice weekend

  • Comment number 20.

    Hardly surprising unfortunately; I have the misfortune to work for this poor, feeble excuse for a “bank” (actually a pretend company propped up by pretend capital from a pretend government) and the CEO’s behaviour is typical. Existing in a bubble surrounded by flunkies, he adds new meaning to the definition of aloofness. Victoria Beckham arriving from LA flouncing down the road peevishly giving the paparazzi the brush off is excusable, more-or-less. For the person in charge of a company sucking up vast amounts of public cash in both direct support and indirect soft loans to do the same to your business reporter is inexcusable.

  • Comment number 21.

    In deference to the poster at #2 wasn't our contribution to this miscreant bank a rather large sum of money? If they don't appreciate it can we have it all back please, with interest?

    That is what a gentleman would offer, after all.

  • Comment number 22.

    # 47

    "We, the people, do not OWN the government" - no, of course not: slavery is illegal. We do however EMPLOY and PAY them and so have a reasonable expectation that they will act in our best interests, and the right to demand that they do.

  • Comment number 23.

    #22

    I didn't realise people had to be psychic to post on these blogs.

    What a prediction Megan! How do you do that?

  • Comment number 24.

    Actually Jeremy Hillman it makes no difference what percentage of each bank is owned by the public.

    The entire banking mechanism was effectively bailed out by the state regardless of what proportion of public money was allocated to individual banks.

    You (BBC) should line all these top executives up and interview them all together!

  • Comment number 25.

    I don't work for a bank and I think some of the bonuses are ridiculous but I have sympathy with Lloyds. Freedom of speech means that can say no to an interview as well as yes. It is arrogant to assume that just because the BBC has asked for an interview, a company must say yes.

  • Comment number 26.

    People seem to forget that a lot of Lloyds problems were down to the government pushing them to buy Halifax Bank of Scotland. Lloyds mistake was to do what the government wanted, if they had investigated the books of HBOS fully they would not have brought the business, and then need the investment from the Government. However if they hadn't the fionancial crisis would have been a lot worse and more Government money would have needed to keep HBOS afloat.

  • Comment number 27.

    There is a way to reign in the bonus system although I would prefer it govern the entire UK rather than just the financial industry.

    Take for example Lloyds - and include within that all of the bit's and pieces its a Parent company of. Introduce new company law that is not ambiguous and make it simple. This new law would be something along the lines of - lets for arguments sake say the top bonus percentage paid by the company is 50% - then what should follow is that the lowest paid bonus percentage cannot be less than 25 points below the top rated mark.

    So in banking - if man at the top gets a whopping 50% bonus added onto their not inconsiderable salaries, then the person at the bottom will get at least 25% - and 25% of a cashier earling 20k a year will equate to a 5k bonus (which in real life to that person is a hell of a lot of money)

    You watch the big bonuses disappear when normal folk start getting a share as well.

  • Comment number 28.

    This bonus culture goes right down to the shop front and has created more problems than we can see, since Mortgages became regulated in Oct 2004, unknown to many people they have become victims, having been sold the wrong mortgage product, due to the commission earned rather than what was the right product for them and they are now paying the price

  • Comment number 29.

    The point, surely, is that once again we're compensating "risk taking" bankers with bonuses on short term profits. The thing that got the banks into trouble was short term profit. We had to bail them out. And they're straight back to issuing huge bonuses for short term profits.

    I still think the entire basis for these bonuses is suspect, too. The bankers say that they get a bonus for taking a risk. Sorry, who's risk? When they fail, everyone else suffers and bails them out. When they succeed... they get the reward. If they were facing real risk, like being executed by the state when they destroy the economy, I'd feel more comfortable about rewarding their "risk"... bet there'd be a lot less risky behaviour and a safer economy, though.

  • Comment number 30.

    here is some truth for your closet.

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    2. www.nogw.com

    3. www.zzzoney.blogspot.com

    Truth about whom the real criminals and terrorists are! Are you one too?

    Zzzoney

  • Comment number 31.

    I don't think any bonuses should have been paid to this talentless lot. As for paying them to keep them, do you really think they would leave? They're lucky to have a job and I can't see the banking industry advertising for brokers. Get a grip bankers you blew your money. Which was our money and now your whining. Your all pathetic and should be up in front of high court judges. What you've done is criminal.

  • Comment number 32.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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