Lloyds and HBOS humbled
The profits warning just released by Lloyds is shocking.
The loss at HBOS - which is a fraction under £11bn - represents a new record loss for a British bank (if goodwill write-offs are excluded, to be boringly technical for a second).
Lloyds says that on a statutory basis HBOS - which it bought earlier this year - lost £10bn in 2008 plus a so-called policyholder charge of £0.9bn (so just under £11bn altogether).
And on a statutory basis, the profit for Lloyds was was just under £1bn last year.
So on a merged basis for the two banks together, the result for 2008 would have been around £10bn.
Which is enough to turn most bankers white, even those hardened by the battles of the past 18 months.
What generated the colossal loss at HBOS was, to a large extent, eye-watering charges of £7bn on corporate loans that have gone bad - in part reflecting the recession we're in.
But Lloyds says that the loss on loans to companies is also the result of Lloyds applying its more conservative accounting standards to HBOS's loan book - which is one serious kick in the tender parts for HBOS's previous executives.
HBOS also suffered the indignity of incurring further big losses on its holdings of assorted dodgy investments.
It is a terrible humiliation for HBOS's already bashed-up previous chief executives, Andy Hornby and Sir James Crosby.
And it's pretty embarrassing - to put it mildly - for Lloyds' chief executive, Eric Daniels.
Lloyds didn't have to buy enfeebled HBOS - even though the government encouraged it to do so.
And only this week, Daniels insisted that, in time, Lloyds would make good money from the takeover.
This afternoon's horrible fall in Lloyds' share price is investors having serious doubts about whether Lloyds was right to buy HBOS.
Daniels will hope that those investors don't start to have serious doubts about whether he is the right man to attempt to rebuild a bank that many would say has been seriously weakened by the acquisition of HBOS.
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I don't want to say 'I told you so..' but, er, 'I told you so...'
Absolutely tragic that they couldn't have the cojones to walk away from this liability...
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Bye bye HBOS, bye bye........
The Governments insistance on refusing to admit to full and total nationalisation is likely to bring Lloyds down too.
No bank can absorb that kind of merger - and it's not like the market was right for the takeover to begin with.
I give it 18 months and then Lloyds-BOS will be in Government hands.
then it will be bye, bye Daniels, bye,bye...
I wonder who will 'advise' the Government out of this mess? Milton Friedman I wonder??
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And the point surely was that even if HBoS had been 'given away' for a pound, it would still have looked very expensive given the 'black hole' in its balance sheet - and the fact that they were willing to give HBoS shareholders a swap of Lloyds shares for this worthless crock is nothing short of corporate malfeasance.
But when many many institutions owned shares in both companies, they were never going to act in Lloyds best interests, and the Top Management at Lloyds have failed in their fiduciary duty to the shareholders.
This is going to go the way of RBS if they are not very careful - but at least they managed to delay this news until AFTER the Treasury Select Committee, so that Daniels avoided getting the kicking that Hornby et al got...
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Is there no end to the stupidity of these bankers?
In what other industry/profession would the terminally clueless get such big bonuses?
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If I buy a race horse and bet on it and it wins, I win big time - Race Winnings and Bet Winnings
If it's a donkey I lose big time - Cost of feeding, shoeing, training and betting loses
Did HBOS not notice there was a double upside AND a double down side to Leading and Investing in the same companies?
Or did they seriously think they could indefinately inflate their own market?
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There must be a lot more of this bad news to come. Unless the world's leaders face up to the essential insolvency of most banks,this problem can only fester.
It is the absence of political leadership which is now the problem.
rob Killick
www.postrecession.wordpress.com
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i still do not understand why lloyds allowed themselves to be bounced into taking over HBOS....in no way is it in the shareholders interest, so is the board in dereliction of its fiduciary duty?
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HBOS is twice the size of Lloyds and is riddled with bad debts. That much was known before the merger went ahead. Lloyds, as a more conservative lender, should have stayed well clear of HBOS, rather than buying the thing.....
Lloyds was a respectable bank, and I feel sorry for its shareholders who have lost out in this merger.
The fact that many of the disgraced senior bankers have no banking qualifications is truly alarming. If they had any honour, they would fall upon their swords. There are too many players and not enough gentlemen left in the City.
A robust banking and insurance industry is vital for Britain's wealth and stability. To allow retail banks to borrow cheap money from abroad was a very bad decision, and needs to be reversed. In future, the bankers must be protected from themselves, by adequate legislation.
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this is relevant news mr peston and im glad to see the negativeness of your blogs is going to the right places.
lloyds i beleive made a massive error of judgement in buying hbos.
daniels probably wouldnt like to agree but its true.
although not quite as expensive as RBS buying abn amro(again how barclays were lucky on that one!!)
the purchase of hbos will prove just as damaging for lloyds.
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In light of what you've reported, nobody can tell me there isn't a prima facie case for someone having made misleading statements here - potentially a criminal offence.
Why can't we pursue this with the vigour they do in the USA ? (24 years in chokey !)
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(cosmic vibration or psychic reading)
Conceit and intellectual pride.
Being stuck in a problem which has no apparent solution.
Frustration and anxiety that are left unsettled.
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Indeed Mr Daniels needn't have bought HBoS.
But the real question to which the answer should be pusued now is whether Brown or the FSA (i.e. Crosby) not just persuaded Lloyds but put pressure on it to buy HBoS.
The fact that competition rules would not apply to the merged entity points towards pressure on Lloyds, or at least the maximum amount of facilitation.
It seems the Mr Moore got it very right, and not for the wrong reason as some seemed to imply yesterday. It wasn't the reliance on wholesale funding, it was dodgy underwriting that brought HBoS down, risk appetite was just too big.
The lender of last resort has imploded. A bad asset bank or larger asset protection scheme will now be needed to prevent privatisation.
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Humbled yes but I look forward to the first prosecutions related to all this.
It's time the people in charge of the banks suffered some serious consequences rather than ringing their hands in public then going back to their nice houses and comfortable lives.
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If it's a "terrible embarrassment" for Crosby, what is it for Gordon Brown? Not only did he put this guy on the Board of FSA, but Brown was also very explicit in the part he played in brokering the Lloyds/HBOS acquisition. If Crosby's judgement has been further shown to be flawed, it must surely say very much the same thing about Brown.
I've shied away from saying "Brown must go", as it's very easy to say but not easy to suggest who/what replaces him. We're not exactly awash with political talent. However, Brown now shows such a catalogue of personal failure that someone not assocaited with oversight of the financial services industry (part of Brown's remit as Chancellor) needs to be in No 10 now. Otherwise we end up with every decision/revelation being measured against "what Brown knew", instead of its wider economic implications.
Brown is now the story, and I hope his colleagues show a bit more spine than they did when Blair became a liability but they didn't have the nerve to push him out quickly.
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This comment was removed because the moderators found it broke the House Rules.
Let's face it Robert, they're all bankrupt or teetering.
Probably not one of them could survive without the taxpayer guarantees against their bad debts and dodgy dealings.
Even those unaffected so far may need help.
It's a major event.
Worse than 1930?
Well, very few people owned or mortgaged their homes in 1930, now we all do.
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"embarrassing" ?
Millions of people would just love o be embarrassed for a £1m salary and a similar amount of annual bonuses.
Stalin once said "A single death is a tragedy, a million is a statistics".
Steal from one person and you get to go to jail for a few years. Swindle from a few million people and ruin their lives get you retirement in luxury.
Examples, examples, examples ...
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Are they still planning on paying bonus? Sir James Crosby was involved with FSA so he will be one of those setting up regulation (or tearing it up).
As it said if he was the man advising Brown, its freighting to think were the country is in.
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SO can I as a LLoyds shareholder sue Daniels or as an HBOS shareholder sue Hornby, for latter extracted cash from me as they strove to raise £4 Billion last year claiming that that would solve their problems, and Daniels told me that Llloyds was a conservatively run bank, then against my wishes, bought HBOS a basket case, possibly because he owed Gordon Brown a favour, or worse, wanted one, and has lost me over 80% of my savings in the process!
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Brilliant. What a Tax Avoidance scam - declare a loss and no Corporation Tax to pay.
HBOS has done it again. What next?
So another incentive for HMG to scrutinise Banks more closely in future.
That's an idea - put HM Revenue Inspectors on the non-executive Boards of the Banks - that will raise their stress levels.
After all, that's only fair as small businesses always have the Revenue snooping on them.
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Why is everybody surprised, you know it was coming hence the takeover. Lloyds TSB's reputation is well known in the commercial market. There will be clawbacks in the years to come compensating for the over-provisions. As usual the stock amrket runs for cover. No surprise there!!
Go on Mr Peston keep talking everything down, when it hits the bottom will your salary be affected. Probably not!!
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The HBoS profit warning implies 5.5 billion pounds more losses than already anticipated in December, of which 3.7 bn extra on the loan protfolio. This also demonstrates that the dodgy assets are predominantly outside the US, so this one like many others can not be blamed on the land of Obama!
It does indicate that the auditing company that reviewed Mr Moore's dismissal from HBoS at the time, KPMG, might have been prejudiced, only ever so slightly, as it also was the HBoS auditor and was paid 11 miilion fees.
Not me guv indeed!
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I rather think you need to recall the circumstances of that Lloyds takeover - they'd just attempted to help Northern Rock out during the Virgin Oliphant war, and were obvious white knights, so they could hardly refuse when the Dahling came begging, even though it has no match to their policies of non-expansion overseas.
I was suggesting earlier that there are legal constraints on the government from the Fundamental Rights charter. Those may well come into play here.
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I note with interest (ahem) that the loss is roughly half the profits announced in 2007.
Has anyone seen any analysis of banks pretax profits for (say) the last three years against losses incurred in the banking crisis?
I suspect the profits announced over that time scale would far outweigh the losses incurred thus far. Given they do, what happened to those profits? Were they real?
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No surprise.
Yawn.
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What are the real bad debt losses as opposed to applying more conservative accounting standards.
Simple example: if HBOS lent £10million and loan is not recoverable because customer bust then that is a real loss of £10million. If customer is struggling and behind on payments but still paying and accountants write the loan down by 50% then that constitutes a £5m loss but it is not real - if the customer still exists and is trying pay the actual loss may be £10m or zero the bank will not known until months or years later.
What I would be worried about is the level of real losses first and then proper detail about the accounting treatment
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Lloyds was the best run most conservative bank in the UK with unparalled domestic support.
But there seems to be a case now of pressure to grab the big one at a discouint without necessarily doing a full due dilligence. What purpose Andy Hornby is still there for on £60 per month beggars belief.
This looks like a classic case of Victor Blank putting ego before common sense. He should resign asap.
It is absolute insanity that those who screwed up are still assumed to be the best people to sort out problems.
The reason President Obama is now president is that the USA realised Bush could not cut teh mustard and had to go.
So it is now fair to say that whilst Prime Minister Brown maintains total denial for any wrong doing even though every arrow points to him directly and Mr Blair. No progress will be made until he clears his desk and lets the new incumbent get on and sort out his mess.
Such action must take place at all the UK banks with no compensation or huge pensions offerd either.
You can't claim the party is over but still have the same people gulping down drinks and freebies.
Go now Prime Minister Brown and give us all some peace. So we can try to build a new basis.
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So Robert, if we have £7 billion of Corp lending losses and a big number on Dodgy investments how much of the £11bn do we have in actual man in the street loosing his house losses ?
It doesn't sound as if they have taken a bath on that number and as the BBC is more than happy to "shock and awe" with bad news I wonder if there is some "OK" news buried in there somewhere ?
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"It is a terrible humiliation for HBOS's already bashed-up previous chief executives, Andy Hornby and Sir James Crosby. "
Perhaps the reason a man who has done nothing wrong allegedly suddenly resigns.....
I wonder if the knighthood for services to banking should be returned too.
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This rolling collapse reminds me of Germinal, by Emile Zola. Every time the starving coal miners of Le Voreux thought that their brutal, harsh lives could not possibly get worse, things did spectacularly worse.
I am tired of the banks being forgiven by the Government - bailed out by us - and zillions of taxpayers' pounds disappearing. Time for a debt jubilee for the rest of us, too, please.
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Obviously bad news but the real question is to what extent Lloyds have followed the usual process of throwing the kitchen sink into the write downs. If they have I would make no criticism. If they have not - and further write downs emerge - then Daniels will have to go. If this is a true statement of the position then it will hit the shares short-medium term but will enable real value to be demonstrated longer term (2-3 years). I guess the perspective for shareholders depends on their time frame. What worries me most is the reaction to the announcement - it is only shocking (to quote la Peston) if this has not cleaned the stables. I know it is not a direct parallel but if you want an example of normal corporate practice on takeovers just look at the reserve strengthenings RBS put in at Churchill when they took it over. In relation to takeover value it was on a similar scale and done to protect future years.
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I think that the "owners" confidence in Lloyds group is finally showing. By the owners I refer to not only the goverment, but those of us who have banked with the group for years, helping to put them in the position they were before this fiasco started.
I have shifted the majority of my monies out, believe me it took nearly 3 months to do it, 3 months. Despite constant phone calls and internet contact it required a visit to the uk to do this personally, so much for telephone and internet banking. Lloyds Tsb as they were then could not even cope with a simple change of address for me.
I was lied to, given poor advice, ignored when asked for staff to contact me, and then they wanted to charge me for giving me my money.
After the fiasco of HBOS and the government "enquiry" i have no faith in them looking after my remaining money.
The rest of it is coming out and going into a bank where they talk face to face and tell you up front what the charges are.
Honesty and accessibility.
Remember we own our money, we are customers who can vote with their funds, and take our money where we want to.
Bring back the "good old days of banking" where there was continuity of staff, respect and courtesy. Not todays ways of new staff every couple of months, who don't care as long as they get inline for their bonuses.
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Note that Lloyds had already stated on 4th November 2008:
"In a technical accounting move, Lloyds TSB also said it planned to write down assets held by takeover target HBOS by up to £10bn as it takes a more stringent view of its target's asset portfolio. However, Lloyds said this would be largely offset by positive adjustments on debt carried."
http://news.scotsman.com/halifaxbankofscotland/Lloyds-TSB-profits-dip-as.4656212.jp
Do you or your contacts know whether there is a positive adjustment on debt?
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Yep - bad purchase - a bit like RBS buying ABN. I could never understand the logic of teh purchase when no-one really knew what was lurking in HBOS (or LLoyds) and it slapped the face of better competition for the consumer.
Daniels has to go as his judgement is questionable.
The 'Government' took a knee-jerk reaction to a situation and ,ay. in doing so, have made things worse.....as usual.
This will not be the last of the 'horrendous' results
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Your blog on Wednesday:
"So no-one in their right mind would argue that Moore got it wrong in respect of the big issue - though Moore's critique was not that funding would dry up, but that borrowers would have difficulty repaying"
and your blog today:
"eye-watering charges of £7bn on corporate loans that have gone bad"
Seems Mr Moore hit the bulls eye. And as anyone who has worked in a big corporate knows, coming up with a well argued report criticising the Boards strategy is the fastest guaranteed way to pick up a redundancy cheque.
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I was very surprised by how easily the merger went through at the Lloyds TSB shareholder vote. It seemed pretty obvious to me that the deal was being forced through by the Government because they knew that HBOS was in a terrible state. Remember that this was before the banking sector bail-out.
Ironically, was it not for the merger Lloyds TSB would be profitable and still be fully independent. One has to wonder what effect this will have on the obviously troubled relationship between the banks and Brown/Darling. Did the government know more about HBOS's terrible position than Lloyds TSB did? My suspicious side says 'yes', and that Brown and Darling let Lloyds TSB take the hit in an attempt to avoid another Northern Rock debacle.
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"Shares in Lloyds - 43% owned by the government - fell by as much as 40% on investor shock at the latest forecast. "
Does that mean that we as a tax payer lost 40% of our share price at that point ?
I still think banks have not fully disclosed the extent of their bad debts.
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I imagine that most small shareholders in Lloyds voted, like me, against the HBOS acquisition. With no-one able to fathom the depth and the detail of the mess HBOS was in the Lloyds proposal seemed mad. Much better to wait for it to fail. But presumably the institutional shareholders took a different view. What did those clever guys think they knew? They are employed by the institutions that "safeguard" the pensions and savings of we unsophisticated laymen and women. I don't expect miracles from them but it would be nice to feel that, because of how little was known of the detail, they could have stopped Lloyds doing something so foolish. Stupid bank management supported by stupid institutional shareholders - the rot is everywhere!
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Sadly I believe it is time for Mr Daniels and Sir Victor Blank to depart. They have either been sold a pup by HMG or their over-weaning appetite has seen them unable to recognise the frailities of what they were purchasing when it was before their eyes.
I voted in favour of the takeover - despite severe personal reservations - as a vote of confidence in Mr Daniels in particular. I now feel let very let down and have no confidence in him whatsoever.
As Sir Victor and his non-execs clearly failed to rein in the ambitions of Mr Daniels and provide the necessary challenges to the reported outcomes of the due diligence, his sword needs to bge fallen upon as well.
Only two days ago Mr Daniels said HBOS losses were within the margins they had anticipated. How come two days later they are significantly ahead of those discussed?
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Yet another revelation to hammer home the conviction that the general public have that the banking system has been in the hands of a number of unqualified, power and money greedy directors not fit for purpose. It's time to clear away all this deadwood appointed by the 'old boys' network and replace them with true professionals with 'Chartered' qualifications. How do we get rid of them? Start withdrawing our savings and investments until they resign or are sacked by the Government or shareholder?
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As a new contributer, does moderation always take this long? First post at 2:55 not viewable yet an hour later?
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Considering these massive losses, why is the prime architect of HBOS's destruction, Andy Hornby, still being paid £60,000 PER MONTH (or £720,000 per year), as a consultant by Lloyds?
It seems to me that this is outrageous and another example of the sickening old-boys culture of the City and financial institutions.
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HBOS may have been worthless, but Daniels only saw an increase in market share that would avoid the attentions of the MMC thanks to his chum, Gordon.
Maybe he is right and did not see the need for due diligence to back his gut instinct. The point is, this is another example of gambling by executives.
The gamble is for the shareholders and the country, but not for him. For Daniels, he is a hero if his gut instinct is right. If he fails there is no downside.
Perhaps we have to revise the terms of a Limited Company to make directors personally liable to the point where they can only retain £250k of personal wealth.
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It really does not matter how you present it this is smack in the mouth for Lloyds
a) HBOS was a dog of a buy (certainly as good as ABN AMRO )
b) the share price reflects the sensitivity of the markets (and they would have be harsh even in the best of times)
c) what happened to due diligence on the takeover - was this not clear, especially if more rigerous accounting standards were applied by Lloyds in comparison to HBOS
d) or were they pushed into this ?
The games afoot as they used to say ..
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As I've said before, Lloyds shareholders have paid a heavy price for the PM's Glenrothes by-election strategy.
However, the FSA played a big part in encouraging and approving this disastrous merger. It's also clear though that the integrity of the FSA was fatally compromised by the presence of Crosby. He presumably, through a pension fund at least, MAY have had a fiduciary interest in HBOS not going to the wall. This should be clarified.
I envisage lawsuits from disgruntled shareholders which will make the Equitable Life saga look trivial by comparison.
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Meanwhile,....
across the pond, similar rumblings....
Peace and Living within our means
ed
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PS None of this surprises me in the least!
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Someone wake the moderator up!!!
47 comments and 1 hour later!!
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PPS Can Lloyds at least sack Hornby from his "consultancy" now.
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If we were to leave aside, for the moment, the obvious adjectives such as "parasitic" or "greedy" , which are certainly in the top ten most used sentiments , it is apparent that we do not have ANY
competent management in our financial institutions --- and the present incumbents have no intention of getting their snouts out of the trough.
Why can't we let these 1st division---ha, ha, --players go play on their own with their own and their sycophant's money -- and see a new Banking Facility set up in every high street with services aimed specifically at the plebs and small private companies; OK so some may call this nationalisation-- what is so wrong with that when we have all seen the results of unchecked greed in the big international institutions -- a little genuine competition from a decently run high street operation with no axe to grind such as selling insurance or "special"services may be good for everyone except the current plonkers.
This would surely be no more costly to set up than the current tidal flow of our money going who knows where ?
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November 2007, Tried to transfer £10k from an Iteligent Finance account (a bank owned by Halifax). Kept trying but couldnt get it. The Phone call revealed that they would only allow £2k of my money to be released, after some argument they allowed me to make 2 withdrawls of £5K on 2 seperate days.
The cat was out the bag so over the next few weeks I withdrew £2k every day until there was only an small odd amount left in the account.
Clearly HBOS was an unstable bank at that time.
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There you go Eric that's what you get for helping Gordon Brown out.
Of course Eric you are on your own as Teflon Brown will make sure you take all of the blame.
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I believe Homer Simpson put it best.
Doh!!
Why oh why did Lloyds TSB buy HBOS? Surely it can only be because of that infamous meeting over drinks at Number 10 to their desire to keep their mate Gordon Brown out of the mire.
The HBOS loss this year alone is likely to wipe out at least five years profits for the combined bank going forward, even on a very generous Gordon Brown type scenario.
I can see lawyers salivating at this. I just hope that Lloyds has very very good D&O and PI cover.
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Recommended reading; http://news.bbc.co.uk/2/hi/business/7884365.stm
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And Eric Daniels thinks he is modestly paid and wants to pay a bonus to his bank staff! I don't think so.
What is sickening is the inactivity of the government which as a major share holder just needs to say - no bonuses period!
But I forgot it's all one cosy cartel of politicians and bankers lining their own pockets with tax payers money, whilst in the real world people are loosing their jobs, homes, livelihoods.
And when did we vote in Gordon? Roll on 2010
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Staggering! We pay over a £1bn to the Beeb in fees every year yet this post has been going for over 75 mins, there are 60 posts, and so far NONE of them have cleared the moderator.
Did they forget to hire a moderator today?
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The chap that runs Lloyds must have known this figure when he was in front of the Treasury Select Committee and had the gall to say that he had a normal salary like everyone else (of about a million) - what a cheek!
The Lloyds takeover of HBOS looks to have been a terrible deal for Lloyds' shreholders. This will not be the end of it I fear. How much more! Lloyds, a reasonably sound bank is being destroyed by the terrible HBOS. HBOS looks to have lost even more than RBS now. At least RBS had the AMRO deal as an excuse - HBOS has no such excuse.
This raises the whole question of regulation and supervision yet again - these appalling men MUST go - they are not competent. (That is the Governor of the Bank of England, the whole MPC, the whole of the FSA and the Permanent Secretary of the Treasury.)
Andy Hornby and Sir James Crosby deserve tarring and feathering and being paraded through the streets of the City of London displaying a notice saying "I broke HBOS, thank you taxpayers for bailing us out" It won't happen of course!
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What do we do with radioactive waste? We put it in a large concrete bunker underground - it's good for nothing.
What do we do with a cancer? We try and remove it or reduce it. What if it is malignant, and spreads to all parts of the body...?
Question - is all this toxic debt something we can bury / write off , or is it like a cancer that will overwhelm the whole financial system.
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Sometimes I wish that we could use 11 thousand million instead of 11 billion - just to reinforce the huge amounts that we are talking about.
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Daniels and Hornby must have know this and kept it under raps until after the meeting earlier this week.
Can anyone ever trust these bankers again?
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I was under the impression the govt had played a key role in matchmaking these two?
Are you now saying it didn't to protect Brown from the "share-wrecker" fallout of destroying an otherwise sound business by insisting it took on a basket case?
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It is very clear that however we come through this terrible financial crisis one thing is for sure. Those that run these companies actually have no idea whatsoever of what it really means to run a business in the real world. Statutory accounting and the FSA need to have a strategic review on how companies report their figures so that the reality is far clearer to see. Being a businessman myself the true reality of statutory accounts bear little or no resemblance to the coal face. However when one looks at the current issues it is clear that those "gurus" who are flying at the tops of the coporate world might do better looking a little deeper into the source of such accountig figures. A little less in the boardroom and a little more remembering that the consequences of their flawed descisions bear heavily on many many millions of lives.
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#2 "I wonder who will 'advise' the Government out of this mess? Milton Friedman I wonder??"
Not unless it's by Ouija board.
RIH Friedman
(H stands for Hades)
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Robert,
As a life long TSB customer, with all your contacts can you please find out who the idiot was who bounced TSB into buying HBOS.
When the TSB boss appeared before the committee the other day he obviously forgot to mention this little gem of bad news. Surely he must have known about it when he spoke to the MPs.
I think he may be hauled back to explain himself, don`t you?
Can it get any worse? Gordon Brown was spouting off today in Coventry about it being everybody else`s fault and nothing to do with him. Trouble is he now believes it! Only problem for him the rest of us are no longer so gulible to believe a word a banker or the Govt says.
No wonder the IMF and everyone else in the world who has a view on it says we are in more doo doo than any other country.
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Perhaps it might be seent hat the strategic efforts by the "government" to ease the financial crisis are nothing short of wet! An instant hit to the economy would be to remove stamp duty for one year in the housing market. There were many comments about how reliant this economy is on property - there were many doubters - perhaps the realisation that this economy is totally reliant on property might start to make sense. Our boom times were built on it and the economy cannot suddenly shift to a different focus overnight or indeed in a few years. Access to personal assetts such property, facilitated by a realistic lending policy, will provide a far greater stimulus than any other effort made. The government could easily become a national lender to the end user to facilitate this. Remove stap duty and turn the sconomy around. Its a natural tipping point for our economy out of the awful situation.!
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WHEN IS SOMEBODY GOING TO BE HELD RESPONSIBLE FOR THIS NONSENSE?
THE TIME HAS PASSED FOR BLOGS, THERE
IS NEED FOR PROSECUTION OF THE DIRECTORS OF ALL THE BANKS INVOLVED IN SUCH CRAZY BUSINESS PRACTICES. I AM SICK OF THE CIRCULAR DISCUSSIONS WHICH ACHIEVE NOTHING.
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Isn't this just Lloyds giving HBOS a big bath, which is
a) to be expected at a point where the previous management can be blamed for this years losses, and
b) setting HBOS up to be more profitable in future having got so much of the bad stuff out of the way now?
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Yet another big story about, er banks...
RP - If you have to craft these (always) well-written bank stories so that they are ready for you to read out on on the BBC 6 o'clock news when they hit the headlines (as they do on a daily basis) you could at least bother to write a different (business ?) story for this column.
I mean, cummon...
Unless you don't have time which means, I figure, you only do about 2 hrs work a day.
GC
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Sir Victor is a pal of Gordon- think of all those cosy lunches and dinners they had together when he was Chairman of Trinity Mirror/The Daily Mirror - is that the real reason why Lloyds took over HBOS?
Other Board members had their doubts.
How does it feel Sir Victor and Mr Daniels to destroy tens of billions of people's pension fund investments in a solid bank for the sake of your egos?
You will rival Sir Fred in the worst banker stakes.
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we continue to be suprised by banks losses, why ? international business paid more and more for raw materials, for new plant and for new transport mechanisims. the debt for new oil tankers and bulk carriers must be half a billion on its own and the bottom has fallen out of that market along with so many others. i think we're not even close to the end of nasty suprises yet and what will gordo do then poor lamb. no doubt a new commisioner of debt will be appointed and the pound revalued alongside the zloty.
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Here we go again!
First the ungodly loss of £10 or £11 billion. Next it will be time for the bonuses.
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copy of transcript of interview between jeff randall and Sir victor Blank (lloyds bank chairman)..........less than one month ago, 19th january 2009
JR:
Why don’t the banks come clean, why are they not telling us what’s really going on?
VB:
Well this bank has come clean. We showed twelve months ago exactly what we had got in terms of any kinds of toxic assets …
JR:
Including HBOS?
VB:
We didn’t own HBOS then.
JR:
But is everything out there now?
VB:
I believe that everything is out there as far as HBOS is concerned, they’ve made I think three or four statements over the course of the last year explaining exactly what their financial position is.
Did lloyds do "due diligence"? did they even have the faintest idea of what they bought?......... As a lloyds shareholder i want some answers....Lets hear the real story about what happened between government and lloyds...Someone should end up in court for this failing in fiduciary duty..
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My impression was that Flash and co. put a lot of pressure on Lloyds to go through with the takeover. At this point, Lloyds and their shareholders deserve some guarantees from the government.
Perhaps the government would like to buy HBOS from Lloyds? I understand a very experienced person called Crosby is avaliable to take charge.......
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At long last Mr Peston, a straightforward piece of journalism without the usual over theatrical new labour biased spin!
Mr Daniels should now have the decency to fall on his sword and resign, along with his chief supporters on the LBG board.
He has all but completely destroyed shareholder value for previous Lloyds TSB shareholders. I cannot imagine that target was in his contract.
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Robert
"Those investore" are we, the taxpayer, who underwrote I think the shares at 173.3p ( LTSB element) and 187.77p/113.6p maybe (HBOS element) ? Can anyone confirm this. Shares trading now at 64.8p ! We've just stood the losses -pure and simple.
Who is answering for this on our behalf - forget about Daniels, I've got doubts about those representing the taxpayers?
What about the 4 billion preference debt- is this going to be redeemed?
Does anyone care or is this just confetti in the wind.
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#4 nametheguilty
We can't just blame the bankers stupidity for the Lloyd`s HBOS merger.
Remember Crash Gordon and Ally Darling couldn't get that merger through quick enough at the time!
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but hang on two ticks
in 2005 HBOS made £4.81bn profit. In 2006 £5.7bn & in 2007 £5.7bn.
So i make that £16.21bn profit over the past 3 years, less the £11bn loss this year, which leaves them £5bn up for the past 4 years.
So, surely no panic? Surely they have some of the £16.21bn in a piggy bank somewhere just in case things went wrong?
O - that isn't how the banks works you say. Make that "don't work" and i will agree.
Is the time right to nationalise the whole lot? Many economists now agree it is and i can see why.
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I look forward to the 'whistleblown' truth emerging about the Brown governments role in the take over of Lloyds and HBOS.
It will happen, some very proud and successful men are 'eating the ass of the elephant' for Brown right now.
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Hi Robert
If the authorities can't sort out this mess, I suggest we all withdraw our funds from these toxic banks - the run on Nothern Rock will appear like a picnic.
We can then put the money with those few responsible intitutions left which will put them in a position to lend again.
Let's see if any of these bank executives will then still be in a job - nevermind receiving a bonus.
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Why on earth did Lloyds buy a bombed out ole bank not even worth a bawbee?
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#30 I'll think you'll find Bush had served 2 terms and was hence ineligible to stand in the last election.
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Can any one help me? perhaps PUZZELING has some ideas .
Many of the bloggers seem to be able to explain things in succinct terms unlike the bbc news prorammes.
I have 2 children both in primary school.
They asked me what have the banks got to do with the credit crunch.
My best explanation.............................
A family decide to trust one family member, say an Uncle, with all of the holiday money.
The family have saved for many months to build up the kitty. pocket money, overtime all spare cash is in there.
during the holiday Uncle decides he needs a bonus for the responsibility for holding the kitty...... he doesnt tell us how much he needs and we foolishly believe he will be taking out enough for a couple of extra 99s!
Time comes for a trip to the fair. We ask for some cash....... Turns out that the kitty has been put on the Great Yarmouth races! After we fume we ask him to replace the kitty with his own money....Sadly it turns out that his cash went on the bingo. .... Then borrow some we say.... Lots of other Uncles have got money to lend, Nope he says....They were with me at the races.
As we contemplate our lack of cash we decide that the only option is to ask the government to help us out. Not at all they say.... The kittty holders got here before you and they need everything going.
But say my childen.You must be wrong. No adult would be be so selfish, no family could be so foolish and surely our Government would put the evil Uncle in to prison.
As I said, some help please...... John Craven would find it hard to explain.
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Sell them a rope!
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I wonder if they haven't written off more than they can chew - taken the real write-offs added a generous lump of contingency for good measure, and now sit back to await the golden profits of the future, put in a thumb, pulled out a plum and say what good boys are we.
But I'm only a cynic. Pay no attention.
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One little thought crossed my mind on the takeover and I extracted these two quotes from the BBC site.
Scotland's First Minister Alex Salmond has urged HBOS to reconsider a proposal by two of Scotland's most prominent financial figures that the bank should take them onto its board; reject the takeover by Lloyds TSB and remain independent. He discusses the proposal.
Two of Scotland's most respected bankers have urged HBOS shareholders to reject the Lloyds TSB takeover of the company.
Sir Peter Burt, the former chief of the Bank of Scotland, and Sir George Matthewson, the former head of the Royal Bank of Scotland said they could help HBOS remain independent.
Given events of the last few months I do wonder what messrs Salmond,Burt and Matthewson think now. I smile gently - politicians !!
On to more up to date matters , I urged everyone to watch the full recording of the parliamentary committee on Wednesday - if you did ..you would not be surprised at today's announcement , it was all there for all to see, with the exception of the figures.
Eric Daniels admitted that HBOS was more problematical than originally envisaged, down to the deterioration in the world economy, but despite this was still working within the best/ worst range anticipated at the time of the takeover.
Yet despite this there was still a positive future to come out of the integration of both businesses and capital and funding was more than adequate.
If you want to watch and make an informed judgement it is here.
http://www.parliamentlive.tv/Main/VideoPlayer.aspx?meetingId=3422&rel=ok
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And some people still believe in the Barclays "profits" tosh of last week...
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How feeble is this government??
Not only do they let you and I the taxpayers rescue most of the banks from the abyss and put the country and the 'common' people in hock, they also convince the one and only well positioned bank, namely Lloyds, to take HBOS off their hands knowing what a hellish mess it was going to create in the near future for Lloyds.
It's absurd for G Brown to try and wriggle off the hook over the banking fiasco as it's on his watch that all this happened. What with a non-existent FSA, greedy bank bosses and greasy polititians all to ready to roll-over to help the economy supposedly boom, (and not bust, eh Gordon!), it's easy to see why it went so wrong.
By the way, don't bother to say sorry Gordon as it won't be sincere.
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Might not this be a case of Lloyds' CEO and Chairman getting as much bad news out all at once so that they look good this time next year. Even a low profit for 2009 will look fabulous.
As a Lloyds shareholder I sincerely hope that this short-term pain is worth the long term gain!
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Am I alone in thinking that we are getting into the endgame now?
A total meltdown of each and every bank?
Is it time yet to nationalise all British banks in the interests of national security?
Should each bank be closed down and put into run-off, with all new business being conducted through just the retail arms of say Lloyds and RBS...duly renamed as Bank of ANYTHINGBUT Scotland?
Any other corporation getting themselves into trouble with loan renewals must be left to go bust.
The meddlesome Brown has to be stopped from trying to save the British economy....the whole thing is now listing heavily to port and cannot be saved from sinking.
We need government to make sure there are enough lifeboats on hand to pick up the victims of this man made disaster and to ensure also that they are properly housed and fed....That in itself is going to be a big enough job.
Forget saving the economy. It has been destroyed beyond recognition by hubris and greed.
Let the greedy and the arrogant along with all their hapless victims go down.
Only in this savage way can the good half of the economy survive....
Brown is showing signs of delusion. He must be removed now at any cost.
AN EMERGENCY INTERIM GOVERNMENT NEEDS TO BE FORMED BY THE END OF THIS MONTH.
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The Labour governments primary objective throughout this crisis remains to maximise its chances of winning the next election.
This will be to the detriment of future growth as the consequences of printing money and the exploding debt burden risks a currency crash that at best means many years of stagflation and at worst hyperinflationary bankruptcy along the lines of the Weimar Republic and the most recent example of Iceland.
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Of all the banks I have ever used, HBOS was the one that obviously was most sales-focused. Ok, so the cashiers were obviously well versed in trying to make it appear that there was no hard sell going on, but when a simple trip to lodge a cheque turned into a covert hounding I realised I'd been there too long.
I realise all banks are sales focused but HBOS were a joke. How I longed for the cashiers to wake up to the fact that they'd been turned into automatons who couldn't converse with a customer without offering to "save" them money. This seemed to be the preferred tactic.
The collapse of the banking system is no surprise. It's not rocket science. It's an inevitable result of greed. And never was that more apparent that the grabbing tactics of the bank who marketed themselves as "always giving you extra". Bill Hicks had a point!
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#27
Now now ..your slip is showing. I'll wager that, at the time of the coming together of BOS and Halifax you trumpeted it as being a Halifax take over of BOS.... ...Halifax well run after demutulisation...get a grip man!!!
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Losses themselves are bad news for stake holders, but what about the Treasury?
RBS and now HBOS have announced massive losses, which (in basic terms) can presumably be relieved across the Group and also carried back. That results in, I presume, a large shortfall in Tax Revenues receivable by the Treasury and also a large tax refund departing said Treasury.
(The above is written in an assumption of basic simplicity to corporate tax affairs. As one national newspaper is currently campaigning about how FTSE companies avoid paying tax then I could be wrong).
But regardless, any shortfall and any refund adds to the Public debt.
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So now we know how much they really lost. Next week, I believe the public will finally find out who was really involved in losing the money, where a lot of it went and how hard HBOS have tried to cover up the truth.
If someone was to write a book, or a film script about what really went on at HBOS, every publisher in the UK would refuse to publish on the grounds it was totally unbelievable and farcical. But the next few weeks will produce a better story than James Bond + Get Carter - or will that be James Crosby + Get Brown?
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it seems no one wants to remember that Lloyds would have had to look for state funding had this merger not gone through reference the letter from Sir Victor Blank on the Lloyds website..!!..
stop looking for scapegoats..lets get the probelms fixed !!!
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Isn't it a good thing to write down this debt?
Lloyds may be 43% owned by the Government but they still have a great future, at least they are being transparent!
Was the share price fall down to short sellers again trying to make a quick buck at the expense of eveyone else - I think it was.
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are you really shocked Bert - to my mind only a numpty (your word not mine) would be shocked given what has been going on
think you are in the wrong game chief
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This comment was removed because the moderators found it broke the House Rules.
Can someone point me to an explanation from Daniels as to why Lloyds bought HBOS, Mind you, by the time this gets moderated I will have lost the will to live!
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The only surprise to me is why this is a surprise to anyone.
If you took over HBOS, and knew it was in trouble, you would make as many write downs and adopt accounting policies in the most conservative way possible. That way you can effectively blame everything on the previous management and the only way is up from there - hey presto you become the saviour in a few years.
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@ Jim Barron (38),
Well spotted!
Mr Moore was right about HBoS's risk appetite on the asset side of the balance sheet. And wholesale funding should not be problematic when assets are beyond doubt, while retail funding can be hard to come by if word about asset quality is on the street, e.g. Northern Rock.
I did not want to say very explicitly that I got the impression that Mr Peston was being spun, since many of my posts got banned yesterday.
Mr Peston now seems to immediately spin that Mr Daniels looks a fool. Well, maybe Mr Daniels does, but I give him the benefit of the doubt as long as my suspicion that he was railraoded into merging with HBoS is not proved wrong by an investigation where everyone including Brown is heared under oath.
Anyway, KPMG seems to have a bad day as well, and so does the FSA again who along with KPMG concluded that Mr Moore should talk no more.
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I hope Mr Daniels and his board are reading this blog! Do you have any influence RP?
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As far as i know nobody has suggested this but...
wouldn't Mr Moore be an excellent member of the FSA?
He seems to have the right pedigree.
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Banks' losses. Pah!
Reality check.
Asset values in all classes - overvalued by as much as 100% (for toxic bank debt) and 50% (property).
Prices must fall globally- the economies around the world readjust - then start all over again.
We had two world wars last century to mask over economic failure (at massive human loss of life - we don't want another thanks!). This failure happened because we just got greedy.
The world still turns, the sun and rain still come. We just have to get on and live as best we can and learn (if we can).
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But if they do read it water and ducks' backs come to mind
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Why all the shock?
It was quite obviouys that from previous statements that HBOS wa
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We only have a small amount of TSB shares but am nevertheless fed up that the merger went through. Commercial property has been something to avoid since June 2007, and has deteriorated hugely of late. The forward book is certainly not going to improve. If it is a surprise to the management then they should not be there. What was in the deal that made it worth considering?
My shares are worth very little, I get no dividend. What made the guys think this was a good deal? What did Gordon promise them if they did the deal?
The fact that the market is so shocked is even more worrying. If a large part of your book is in commercial property right now, your expectations for some years should not be great.
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This comment was removed because the moderators found it broke the House Rules.
Why all the shock? It was quite obvious that HBOS was going to declare huge losses for last year and this announcement should have been expected.
I'm sorry Robert but here is another example of you reporting an issue and creating panic.
I think it is about time that you stuck to reporting the news rather than trying to be the centre of it!! (or is this another apparent example of you getting information from an informed source which has ulterior motives? i e forcing down the share price so the Government can undertake further theft from share holders e g Northern Rock.)
I am confident that given time Lloyds will sort out the mess and the profits of doom and gloom will have to eat their words.
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The fat cats need to have their trousers taken down. Reckless endangerment of the country's finances is tantamount to treason.
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A few weeks ago LLoyds shareholders received a letter from its Chairman outlining plans to repay (in 2009!) the Government for all the Preference Shares, so that Lloyds can quickly get back to paying dividends. Can we believe any of this??
Those of us who are pensioners or deferred pensioners of Lloyds TSB also received a letter from The Chairman of Trustees (Mike Fairey, an Exec Board Member when the banking fiasco was taking place) reassuring us about our occupational pensions. Can these assurances also be believed?
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Once upon a time Lawyers had the reputation of being the scum of the earth, playing with words and defending the indefensible for a fat fee, sometimes paid by the State.
Then we had estate agenst who decided that a school leaver had the knowledge and wear with all to lead people ointo spending on the biggest outlay they would ever have with no qualifications of any credibility save maybe a few GCSE's.
Now we have once again bankers who bleed and screw companies and the public for any charges they can levy, gear their own speculative departments on a basis of 40-1 whilst you and I can only borrow on a basis of 1-1.
It is an outrage to all common sense that no one is blowing the whistle and sending the whole lot to jail for not telling the truth about the extent of their liabilities, fraudenlently taking money from the taxpayer only to splash out on big bonuses, and offer a token apology that has as much value as a chocolate teapot!
These crooks are only superceded by the stupidity of the FSA senior management who also decided upon themselves to award bonuses for failure irrespective of what they are seeing has been going on.
And finally on equal ranking is the gutless dithering Prime Minister who uses the principal of the best defence is attack by blaming everyone in the world from the USA to those who overborrowed, who lest we forget he now claims to have saved for thsi mess whillst he waddles about pleading absolute innoncense.
There is only one obvious solution that will work and that is tax cuts on personal income and National Insurance, nothing else will have a chance. Labours infrastructure investment is a white elephant of an Olymic village, and huge amounts of rhetoric and masses of civil servants who generate nothing but more tick boxes and cost to
Prime Minister Brown bled this country dry from taxing pension dividends, selling gold for no reason, and kowtowing to bankers who have been seen to be individual blood suckers with no brains.
If there are 3 areas of immediate necessity to clear up this mess it is the removal of the FSA senior managent, they can all be replaced with better candidates and no effort. Removal of the Prime Minmister and the immediate call of a general election, and tax cuts on personal income of between 10-20p in the £1 together with 5% off National Insurance.
The problem is that because it is so obvious and beneficial the Prime Minister can't take it in, and until he does we all need to make sure those who feel sorry for him remembe rwhat he inheirreted as Chancellor and what his legacy is as Prime Minister!!
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To Robert,
Not so long ago many of your posters were calling for open disclosure of the actual banks' debt situation that our World's Governments would ultimately have to consider bailing out.
Now we as a global economy are in recession and staring the big D eyeball to eyeball.
Lloyds have honestly disclosed their new liabilities; I hope that their disclosures are as true and conservative as the posters clamoured for.
An aside to Kiki_dread: The Sound of the Universe is truer than those whose words try to hijack it for their brief concerns.
Regards and Happy Valentines's Day to you all.
N.
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Do not the institutional investors research the fact that HBOS mortgages -The Mortgage Business, Birmingham Midshires, Bank of Scotland & Halifax are predominantly self certified/fast tracked? They where always going to end up with problems so why the surprise??
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Come on, we're not stupid.
What should the real figure be....£20bn.....£30bn?
Any rise on £30bn?
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What a mess - we were told by Mr Daniels that a considerable amount of time had been spent doing due diligence on HBOS so just how did these absolutely horrific bad debts not get picked up?
Sir Victor Blank has a lot to answer for and so do those persons undertaking the due diligence. They have brought LloydsTSB to it's knees and effectively wiped out it's shareholders - many of whom are staff earning an average of £17000 per year [as quoted by Mr Daniels].
Victor Blank must go and all those responsible for the due diligence exercise must also go.
Clearly there is no prospect of the bank repaying the preference shares in 2009 or of making a distribution to shareholders - stated intentions of both Victor Blank and Eric Daniels only a short while ago.
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I think Daniels is doing the sensible thing: clearing HBOS' decks asap, so it'll all look better (less bad?) in the future. The group is still a huge cash generator, to cover future potential losses.
In the long term, is £10 billion - which is only one good year's combined profit for the two companies - a high price to pay for a 30% share of the UK market?
I don't think so - this is Daniels' once-in-a-lifetime opportunity that he talked about.
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Alarmist and totally unnecessary scaremongering by Mr. Peston. Lloyds knew HBOS was a crock of you know what but viewed the purchase of HBOs as a once in a lifetime opportunity to become top dog in UK. Given time and by stripping out a lot of costs / synergies etc. Lloyds wil turn things around. Its called "kitchen sinking" - lets get all the possible bad news out in one hit. I find it outrageous that people take such a short term view in this country and have already written this deal off. HBOS has been owned by Lloyds for 24 days!!! Give them a chance Peston!
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On the other hand are they overstating the losses so that next time they can reverse the over-provision and report a huge profit, pat themselves on the back, and award themselves mega bonuses for turning the bank around?
I don't trust these guys an inch.
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Methinks there's been more than a little promising to make right behind the scenes by HMG.
Taxpayers take a deep breath now!
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How are bankers ever going to re-build our trust in them?
How are we to explain to our children that as a result of a small number of peoples decisions, that we, their parents supported, they will be paying for the whole of their lives the debts that we have created for them?
Surely we should be teaching our children now the habits of saving and only spending when you have saved; rather than the opportunity to obtain debt now, oh and don't worry about paying of the debt in the future.
Lets give our kids pocket money, and teach them how to use this wisely - the bankers have been given all of our money, and look where it has got us - in debt!
I wonder how many of the bankers who have lost their jobs are regretting the high living and spending, and debt acquisition?
Being honest with ourselves, and thereby our children; and speaking frankly about the situation the adults have created for themselves, but which the children will be paying for must surely be the firth point on any route out of this mess.
Creating a frank environment about the choices money brings and looking to the future , rather than navel gazing, must be the way to drag us out of this sorry mess.
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This is hideous. Less than six months ago Lloyds TSB was weathering the storm quite well -- with the share price holding up and dividends being paid. The HBOS deal has trashed the share price and dividends are suspended indefinitely.
At the Lloyds EGM in November every single person who spoke was opposed to the acquisition of HBOS, not least, as was pointed out, because of the toxic nature of the Corporate Banking book and the difficulty of evaluating it.
Needless to say, the institutional shareholders (by proxy, they don't of course attend such mundane events) nodded the deal through because without it their HBOS shares would have been worthless.
The Chairman, Chief Exec and NED's in Lloyds should resign -- they have presided over an unneccessary destruction of Shareholder value of absolutely historical proportions based, by Eric Daniels' own admission, on inadequate due diligence.
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Does the fact that most of HBOS' losses were from bad debts to constuction companies illustrate that the government should where possible support such industries directly by providing them with work constucting stuff that would make the Uk fitter for the future so that they could service their loans so that the banks would need less money from the taxpayer?
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Just a thought. GBP 11 billion is GBP 183 for every man woman and child in the UK.
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"Lloyds says that on a statutory basis HBOS - which it bought earlier this year"
Earlier this year...
OR LAST MONTH as everyone else knows it.
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Why are comments to this blog subject to pre-posting moderation?
Post-posting moderation seems more than adequate for a blog of this type. Reading comments that are more than one hour old means that the whole sequence of contributions is disjointed.
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Whats your business built on?
Leverage and fractional reserve.
Can I do that too?
Yes, and you can insure me against my own stupidity in the process.
If you do that for me too.
OK. Wow look at our share prices go up!
Thus the city has run for many many years and Robert expects bankers to go white at the thought of a few billions in losses?
They probably havent stop laughing at how they managed to fleece customers and government for so long. Surely it was obvious to someone that this was going to end in tears and it looks like those in the know have made sure its tears for the little people and not themselves. The goverments on both sides of the atlantic seem to be under the illusion that pumping money into it will restore what was mere accounting fraud in the first place.
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"..to be boringly technical"
You're always boring.....Never very techncial.... Always an egoist.
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23 - I agree - where do you find "the kitchen sink" in the accounts.
As far as govenment involvment/pressure is concerned we'll never prove it.
Nudge Nudge wink wink know what I mean know what I mean
To continue the analogy this parrot (GB) is deceased, he ceases to live, he is (should be) no more.
Parrott = It's a global problem, It's a global problem,It's a global problem, Its a global problem,It's a global problem ,It's a global problem.
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It's gratifying to see so many of our banks competing with those of the US to achieve the lowest PE ratios. Yet we still lag behind. Can I suggest that we pay our CEOs and executives much bigger bonus'. Charles Prince did a stirling job at Citibank and his bonus was enormous.
I must admit a sneaking pride in the fact that Iceland, home of last years world championship winners, had so many of it's banks registered in the UK. If only our chief executives could display such ambition.
Any way back to the present. I note the undoubted talent displayed in eastern european financial circles. We've used imports from there for shock effect for a few years now. But surely it's time we let one have a crack at one of our lagging institutions. Perhaps Nationwide. It's been in a sorry state for years.
I'm not happy with the national team. Brown can't have the same impact in the more visible role he now has. And that Darling chap, not only does he look like a puppet, but he just seems happy to glory in the achievments of his predecessor. Surely Browns apprentices, Ed Balls and Ed Millhouse, could have done a better job. I know they are concentrating on youth development at the moment and I understand their own children are enrolled at one of our premier colleges of over achievment, but surely they are wasted talent. I heard the visionary speech they gave this week and I feel strongly that if any one could lead us to victory then it has to be one of them. Their strong commitment to targets, large bonus' and inequality in education demonstrate tactical thinking on a scale worthy of the the world's greatest.
Victory awaits.
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The cynic in me says the Prime Minister buttonholed Victor Bank at that cocktail party and promised him a peerage if Lloyds TSB plc (as it was then) took over HBOS.
It has always been wrong to underestimate Victor's colossal ambition.
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Robert:
This is just the start...
By my calculation there must be another £200Bn 'out there'...
RBS to add in £30Bn before the end of Feb...
There will be another 5 years of this type of announcement before we're through...
No more Boom & Bust...
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Well, now we know ! the real reason that Lloyds was frogmarched to this merger was this expat Scottish Government looking after its own.
Yet another shameful example of the English handing over their hard earned cash to satisfy the greedy in the North of Britain. Lloyds had a good name in being prudent and this deal would not have proceeded if they were aware of the true debt and had not been railroaded by this dodgy Government.
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Can somebody explain me please.
I understand that the bulk of these losses are connected with write downs of value of assets that are linked to falling property (residential and commercial) prices. So, these write downs would continue as long property prices continue ot fall. However, when the price stabilise and start to grow then the there will be appreciation of these assets on HBOS book that would be reflected in profit / loss account. Am I right or not?
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As many people have said on here before and many will say again, the once honourable City of London is dead.
Also pronounced DOA is the once great UK banking system.
Once one of the big bank fails all the rest will fail just like a house of cards.
We, the people of the UK, must stop the madness that has overcome our politicians and bankers (who seem to want to squander every bit of taxpayers money) and build this country up again from the roots.
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Directors responsibility
A Directors first responsibility is to safeguard
the shareholders interests and investments. When is someone going to take legal action against the Directors of these companies. I am sure they have sufficient assets to contribute to mitigate shareholders losses.
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#75
"Did lloyds do "due diligence"? "
In all of this fiasco there is only so much diligence to go around, "due" or otherwise.
It seems pretty clear that most of it has been expended on covering tracks, getting wedges into trousers and keeping them there.
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Given that they already estimated a write-off of GBP10billion, GBP11billion seems not so bad....
But there is more serious side to this. I will move all my cash out of HBOS as soon as the 12% regular saver I have with them matures in a couple of months. I can only imagine that most other folks won't want to keep their cash in a effectively-failed bank. So there will be and probably already is a massive leakage of deposits out of HBOS. So Lloyds bought a shell, with a deteriorating mortgage book. They'll get to close all the HBOS branches in the next couple of years, and hence will be able to pick up a lot of retail customers -- except if they chose to bank elsewhere. So the question is: will Lloyds, now part-owned by the government and surely no longer the most nimble of banks, really be able to translate this acquisition into a bigger market share?
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I've not been on for a couple of months but this whole week has compelled me to reinforce many of the messages.
I am enraged !!!!!
I work in a professional services firm in a big City and know of many hundreds of private sector employees being laid off in this city alone - non bankers.
These individuals work (ed) in the private sector, had defined contribution pension schemes, which have been shattered, received only the statutory minimum redundancy packages and have been largely blameless for their own downfall.
Arguably, there are 2 main contributors to this crisis - bankers and assorted politicians/regulatory bodies/cosy senior civil servants.
These groups (lower paid bank employees excepted) receive bonuses for failure or just doing their jobs, they are members by and large of incredibly generous and excessive pension schemes, when they do get made redundant (a rarity in the public sector), some of them receive bewilderingly generous redundancy packages.
Many are parasites and feckless.
No bank employee should receive any bonus whatsoever this year, contractual or not. FULL STOP. They have failed on a gargantuan scale, reaping havoc and misery on the proper private sector.
Many of the senior executives must have either been grossly negligent (and that is a generous take on this) or undoubtedly fraudulent or wilfully reckless, in breach of numerous Companies Act duties.
The various Rights Issues were undoubtedly fraudulently misleading. The directors and their advisers no doubt equally complicit.
The independence of the big 4 accountancy firms is non existent, they do whatever it takes to get the fee.
What about the next scandal ? The Insolvency partners in these big 4 firms charge £800-£900 an hour !!!!! But the government is weak and feckless and will not challenge this racket.
The institutional shareholders are a toothless useless bunch, asleep at the wheel, whilst they also rip their customers for everything they are worth.
Utter carnage has been unleashed on this country and a litany of prosecutions should be undertaken against the bankers and their advisers.
Some of the big advisers need to be held to account as well as prosecuting senior individuals. Get some teeth !!!!!
But who will fund this ?
One final thought - if you do nationalise the Banks, then stop the bonuses, stop the generous redundacy packages and stop the generous pension schemes.
These were never given to the many thousands now being made redundant.
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I am not surprised by the level of corp debt that has been written off. If no one has noticed how many companies have gone into liquidation?.
Retail staff- agree sales trained and time for the fsa to look seriouly at it's own regulation of the advisers???. They are taught how to sell within the frame work of the fsa guide lines. So if they are badly trained(which i would say they are) then i would look at the regulators who have given this frame work.
The llyods group will move forward i would expect to see a consistant profit being declared for many years to come. But a warning to shareholders. If you want huge gains and react to medicore profits, what do you think will happen, banks etc will push the boat out to deliver and we will again have this situation arise again....
Board was greedy, regulator asleep on the job, shareholders greed.
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jolo 75... want to know about due diligence watch the video of parliamentary select committee from Wednesday ....all the answers are there. As indeed are many other answers to questions posted here.
Seems I can keep going on about this but no -one cares to listen.
It's clears up many myths expounded by "political and business" commentators.
Watch it with today's knowledge in mind and you will find what came out today is not "news" at all - the reason the market reacted is that they hadn't bothered either and to them it was new news !
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so how is Eric now going to pay for this?
reduce costs i guess! so how many job losses Eric?
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Alex Salmond told me, a few weeks back, that the HBOS share price fall was all the work of "spivs and speculators".
Alex is a wise man. Why are the less-well informed in our midst attempting to suggest that HBOS had a real problem, and that the share price collapse reflected this?
Alex is still a very big shot in Scotland. He is, in fact, Number 1. The "First Minister". More people should listen to him.
Alex is a wise man. He used to work in finance at RBS. He knows things.
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I have always been mystified as to why the staid and conservative Lloyds were tempted by HBOS. I can only assume that, in a moment of madness, they saw the combined worth of the group catapulting them into the top flight. A cynic, on the other hand, may be tempted into thinking that they were cajoled into as part of Gordon's master plan to save the world. When is the next honours list? No, he wouldn't - would he?
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Well, missed the target again, didn't we? This is all so predictable, HBOS made a big loss, and that's only what they've discovered so far. This is going to be one of those Scottish castles with more skeletons in cupboards than there are cupboards, with secret corridors, sealed rooms, and the one window more on the outside than they've found on the inside. Quite apart from the phantom flan-flinger who only comes out at Candlemas. In other words, easily exorcised by a quick burst of Jimmy Shand.
What was missed was the High Court judgement against the shareholders of Northern Rock. If the shareholders of that body can be treated like that, then there's an entire extra class of risk known as Government Meddling everyone's exposed to, and so we can watch the Stock Exchange go exactly the same way the money markets have, straight down the pan as nobody can be sure about the downside risk.
I was going to welcome the new Chief Executive of the London Stock Exchange, Xavier Rolet, but I found a most curious little quotation on the website of [Unsuitable/Broken URL removed by Moderator] l'Express, quoting him directly about how Sarkosy managed to persuade him to return to France in the summer of 2007:
« Lors de l'élection présidentielle, un certain nombre de sujets, jusque-là tabous - la fiscalité, mais aussi la place du travail - ont pu être évoqués librement », "During the presidential election, a certain number of subjects, hitherto taboo - tax arrangements, but also the workplace - could be discussed overtly."
On the day that Glen Moreno, acting chairman of UKIP discovers that the job he had thought was his has been advertised, presumably because of his somewhat sullied past associated with Liechtenstein Global Trust, reputed for its activities in aiding and assisting illegal tax evasion, it now transpires that the new chief executive of the London Stock Exchange is a gun for hire, he can be bought, and cheaply with it: one wonders what arrangements were discussed subvertly to get him to change his mind - certainly, no sooner was he back than he was in the market for offers, that much l'Express makes clear. And why. What we do know is that the average "incitement" offered by Sarkosy to these émigrés was a million euros a year, and he would hardly have returned here for less, indeed I would presume that having let Nico down, he'll be looking for consideably more and security until the end of Sarkosy's reign.
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The recation to these results shows what is wrong with this countries bankers/investors/media, not the results themselves. All week we have been hearing about how banks should have been looking for long term not short term gain. Lloyds bought HBOS because they believed it was a sound Long term investment! Why else buy a failing bank? Yet investors and the media are still hung up on short term results! The hypocrasy of the media in particular is astonishing! Media reaction to profits drives investor reactions, as long as the media sensationalise losses, ore even drops in profits (ie microsoft ONLY making 4bn!) our financial system will never be fixed.
Shame on you Robert!
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I've been waiting for this bad news.
Great to see the price tumble!!!
I'm getting in on Monday ready for some quick profit.
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I'm tempted to say 'don't worry, Gordon will pay for it' in the current bail out spirit of things. I wonder if there's a bigger incentive in this somewhere for Lloyds-TSB? The government could see that HBOS left alone would not survive, so changed legislation to let Lloyds buy it.
I find it hard to beleive that the top managers in the latter did not seek guarantees of future support from the government if they took on what was in effect another big risk and liability. Based on this we might see another cash injectionfrom Mssrs Darling and Brown when Lloyds hint they might not be able to handle the debt.
As the recession begins to take hold (we are just at the beginning) I think many more bad news stories from banks will emerge, however they know that Gordon Brown is comitted to keeping them afloat no matter what the cost. Nationalisation therefore must be the next logical step!
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The Lloyds shareholders who almost unanimously voted yes to a takeover of HBOS only have themselves to blame
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I see Vince Fable is touting nationalisation again - he has clearly not got over the public acclaim over his calls for Northern Rock to be nationalised and what an astounding success that has been!
First the Government withdrew tens of billions of mortgage finance via NR, then realised it was having a seriously negative affect on confidence/house prices/asset values, and eventually decided to go into reverse and try to increase mortgage lending through Northern Rock.
Vince is clearly wishing to remind the gullible public what a genius economist he is-although these two words are mutually exclusive.
But where are his views/solutions on how a nationalised Lloyds would be run, and how the taxpayers, who are largely the shareholders in the banks via their pension funds, not to mention their 40% current holding, would avoid 100% of the losses of an even more badly run nationalised bank?
He also believes that the other UK banks should be fully nationalised, and where are his views/solutions on how the resulting mess would operate?
Non-existent as far as I can see, as were his solutions for how a nationalised NR should operate.
I hope the rather gullible British public will not fall for your sound-bites Mr Fable.
Listening to old Vince and although difficult to believe, I think the LibDems would do even more damage to the economy than Labour, although the Tories also appear frighteningly incompetent too, and perhaps corrupt given their wining and dining with/seeking contribution from hedge funds.
Vince when you spout nationalisation again please provide some detail on how you would run the nationalised banks.
Although I do fancy going to a state run bank, demanding loans of thousands of pounds at 0%, and then blaming the Government for not giving me one - or perhaps with an election looming, they would?
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I had to split a posting into three pieces (Paul Mason's) to get it even registered for moderation. It wouldn't load on yours at all Robbie.
Can you do a blog on how this blog software works sometime.
ARCANE isn't the word for it.......!
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Why did threnodio Number 147 post at 17.12 and appear at 17.14?
That poster has made more submissions in the last week than I have ever contributed.
An host or, perhaps, favoured in-house member of the steering committee?
N.
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#147
Lloyds have long had their eye on them, but Monopolies and Mergers would never have approved it. This was a once-in-a-lifetime chance and they didn't look carefully enough, unlike Barclays whose policy has been to position themselves to hoover up the bits when the target goes bust, possibly with a little helping hand - one deals with these people with great distrust. I know their style, having fought off a bid with them in the background in the past. Unfortunately for them, their straw man had feet of clay and ended up in gaol in our case.
They were then able to leverage their interest in Northern Rock - which was never exactly whole-hearted and smacks rather more of positioning themselves on the list of potential White Knights getting first pickings from the next wreck to wash up - into this bid. Of course, their inexperience in the areas of business which caused all the damage (necessary or they'd probably have preceded NR down the aisle of a these shotgun marriages) means they failed to pick up the symptoms of potential trouble, which has now come home to roost. One moot point in these respects is whether they've been quietly splitting up their hedges, sticking HMG with the losses and keeping the profits on ice - the technical term is prudent treatment of inchoate income - until things start looking up and they can catch up on their bonuses.
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Moderator
Please explain your favouritism for #147 - did you work for Gordon before?????
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This is all so depressing. As a shareholder and employee of 15 years at LTSB, I can't believe how this has happened. I would like to stress I work at the bottom end of the business and had nothing to do with the decisions that Eric Daniels and the like have made, and neither do I receive bonuses!
I work in a head office and we are presently all wrapped up with the merger. If the public at large knew what was going on I fear the shares would fall even further. The top layer of management went to mostly LTSB, probably to assure everyone who was interested that we were taking charge. But further down than that it is undoubtely the HBOS show. My manager lost out to an HBOS person, who has made it clear as soon as he got the role he can't be bothered with us in our office and looks after his side of the business in Halifax and Edinburgh. We even have to take on HBOS speak so as not to upset them. Everyone is now a "colleague". It makes me sick.
I know it's not the fault of the little people like me on both sides but why should my job and stability, and shares, all go down the pan for this company.
Who on earth voted in favour of this takeover? Cos I sure didn't.
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Off with their heads !
Off with their heads !
Come shouts from the public gallery
Demonstrators and MP’s
As former bank bosses are led
Into a ‘live’ Court of Evidence
Before the Treasury Select Committee
Billed to be grilled
Over their mistakes and banks’ losses
Recklessly risky deals - why oh why ?
Gambling stakes so high
Guilty for stealing bonus-filled tarts
Yet no jail terms
Instead they are set to earn
- in their bailed out terms -
Jam-filled pension pots
While the economy rots
Even the prime minister is summoned to testify
On what went wrong and why
But it’s all too late
To call the debate
The credit crunch won’t wait
Its bite is strong...( extract )
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As an employee of LloydsTSB (now Lloyds Banking Group), and a loyal shareholder i am astonished to hear this.
Surely LloydsTSB had the opportunity to fully investigate HBOS lending book and suppossed security held for these loans when they were undertaking "due diligence" prior to making a formal decision as to whether or not we should buy this business.
It's seems to me that LloydsTSB were too quick in deciding to take on this Bank's business.It has made a GOOD bank into a BAD bank.
The board have to take full responsibility in taking on this "bag of spanners" and apologise to the shareholders for depressing the share price even further for not doing their job properly.I would think The City are taking a very dim view of them and their judgement.I ,as an employee,am certainly now questioning their judgement and i won't be the only employee doing that.
Eric Daniels keeps harping on that this was too good an opportunity to miss out on and that the new banking group will be in a position of strength in 2 years time.Well i only hope that the Bank is still in business in 2 years time because if this was missed at the outset what else is due to come out of the woodwork!
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#115
For heaven's sake, don't stop at just the FSA. Don't you realise the entire regulatory system has become an expensive jobs-for-the-boys exercise after the Hampton Report removed all duty on regulators to regulate? Look at OTELO for a for-instance. Their chairman of their Member Board, Chris Holland, states openly on their website that he represents BT, and he is indeed the BT manager responsible for liaison with his own OTELO avatar. We had exactly the same with Sir Phillip Hamton himself in UKFI, and a significant number of UKFI and RBS staff are past colleagues in the upper levels of Citibank.
The Belgians had so much of this they voted what appears to me to be good common sense; with so many unemployed, why should one man have a dozen quango jobs, let him do just one well and find work at the bottom by moving people up to fill the other eleven vacancies - one job per man. It's time this happened in the UK.
The other thing that has me narked now is the way the BBC interviews bankers and nobody but bankers about who's fit to do the jobs. This is exactly why the banks are using Banking Qualifications as a way of corralling the wagons until the attack has passed - that way they keep it a closed shop. The real answer is to have complete laymen in post in the Regulatory authorities and to require the bankers to explain what they're doing comprehensibly. Any deviation from the explanation and any incomprehensibility should ensure the product is banned forever, no appeal.
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Wait for the shocking job losses and branch closures that will come in 09 and 10 as the merged bank has to cut costs to survive. What's left will do well but at what cost to the ordinary staff who did nothing wrong except pick the wrong banks to work for.
Somewhere between 25 to 30,000 will be up for the knife and they know it already. I guess moral at these banks must be shocking on the shop floor and how will translate into customer service?
I see the hand of wee Gordon in forcing Lloyds to take over HBOS? Perhaps the conversation went along the lines of "so you need a small amount of cash to get through do you Lloyds, well only on condition you take over HBOS". I expect HSBC and Barclays told him where to get off when he approached them.
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It is not too late to let Merger Action Group (MAG) take away HBOS and all its debts and losses.
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And Hornby is still on £60,000 a month! You couldn't make it up. The bankers are just laughing in everyone's faces, including the government's. Daniels, the head of Lloyds, had the gall to declare to his shareholders a month or so ago that "I can assure you that there are very few restrictions put upon us by the government". In a year's time there'll just be a few despised mutuals left standing alongside HSBC which, since it is Chinese, can't possibly go bust. Maybe we should swallow our pride and ask the Chinese to run our banking industry and what's left of our cash-strapped industry.
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Surely the perplexing issue is how Lloyds Bank can apply more conservative accounting treatment to provisions for bad debts to produce a significantly higher loss than anticipated.
What have HBOS' auditors been doing and how can shareholders or analysts fairly value a bank with this sort of book-keeping?
I have sympathy for Lloyds and I believe the pessimism is overdone. As Lloyds integrates HBOS with the usual synergies that come from these acquisitions I am sure that Lloyds will realise the embedded value in HBOS' customer base and assets.
Were I a Lloyds shareholder I would sit tight.
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"Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take more and more expensive credits, until debt becomes unbearable.
The unpaid debt will lead to the bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to Communism. "
Karl Marx, 1867.
This is a true quotation - look it up on the web!
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94: "Of all the banks I have ever used, HBOS was the one that obviously was most sales-focused. Ok, so the cashiers were obviously well versed in trying to make it appear that there was no hard sell going on, but when a simple trip to lodge a cheque turned into a covert hounding I realised I'd been there too long."
Did you also get their irritating weekend phone calls? Which is why today's news is no surprise to me. They're desperate.
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This comment was removed because the moderators found it broke the House Rules.
It just goes to show if you don't know what you are buying don't buy it !!. Even if you are under pressure from the UK government.
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Was I dreaming about 10-15 days ago or did I read that most people thought the loss at HBOS was going to be £10bn?? I am not surprised at all. What hurts is that Lloyd's made a £1bn profit and I cannot as a shareholder get any dividend on that now.
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I think the former Lloyds TSB board has to consider the wisdom of the takeover of HBoS plc in the light of these (not entirely unexpected) losses.
The board have succeeded only in dragging a bank that had been a model of prudence, probably only behind HSBC and Standard Chartered in this respect, that would have in all probability weathered the storm with little or no government investment. Instead shareholders now find themselves owning circa 37% of the new enlarged Lloyds Banking group (Treasury 43% and HBoS shareholders ~20%)
I find it hard to believe that alarm bells did not start ringing at Lloyds when HSBC made public that the government had approached them to assist in the bailout of HBoS and they were unable to arrive at a valuation of the HBoS business that placed any value on the share capital given its risk exposure, whereas Lloyds felt able to offer 0.605 Lloyds shares for each HBoS share.
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#92
If you look back towards the bottom two blogs back I said exactly what I have found to confirm that suspicion this is terminal, with knobs on.
I've deliberately not said exactly where, as I don't have a mandate to bring the thing on, but none the less Rahere is a consultant to the Vatican - his own CofE being total numpies, see the Church Mouse's blog - and has found out things which put Dan Brown into the corner with a dunce's cap on his head. Don't think for a moment I fell for any of it from either side - if you want a taster, Saunière was blackmailing the Pope over a couple of incidents in his past, including a mistress. An example of the blackmail is how he managed to get his own mistress, Emma Calvet, in to study voice under Domenico Mustafa, the Director of the Sistine Chapel and one of the few sweet-singing castrati of his generation. The result was a quasi-falsetto "fourth voice" which added an extra half octave to the top of her voice, making her performance of Carmen the one which moved Bizet's opera into one of the modern greats. Saunière simply fell lucky, taking documents which said something to his Bishop, Felix Billard, the right-hand man of Cardinal Henri de Bonnechose, chief theological adviser of the Pope, himself reckoned to be the foremost theologian of the last four hundred years. Once the Pope died, so did the blackmail, de Bonnechose was long since dead himself and Billard simply tried to get his cut.
The other aspect is that Michael Baigent is a senior freemason and editor of Freemasonry Today, which explains the peculiar mix of fact and folly in his studies. Their numerology's nonsense, the answers are much simpler than that.
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I am a member of staff at LLoyds and a shareholder.
However, I don't share the knee-jerk reaction of both the markets and so many of your contributors. Mr Daniels has done well enough in his time at Lloyds for me to back his judgement on his purchase of HBOS.
We all knew HBOS was in a bad state and thats why Lloyds acquired it relatively cheaply. Banking in the UK will be profitable again in the not too distant and I fully expect the new Lloyds Banking Group to be at the forefront.
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Can somebody explain this one to me.
Nick Leeson was trying to make money, he loses £200m in the process and is jailed for six years.
These clowns lose £10bn and walk away free.
Que?
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Why are we waiting Why are we waiting why are we waiting why O why O why.
Robert would you please focus your incisive investigating expertise into why the BBC have one of these great new blogy things, moderate it ,but do not staff it - so the 7 million customers per month (you said it on radio 2) can loose the thread of the discussion.
I can't believe it' not butter ops I meant moderated
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The really interesting part of this story is that these losses are home grown. They aren't caused by the American sub prime losses they are caused by the falls in the UK property market. I know Mr no more boom or bust likes to lay the blame for our economic woes on America, but this is a home grown disaster!
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Lloyds bought a dud.
The 'Yes Prime Minister' incompetents who run LLoyds, and for so long had kept the balance sheet strong have bitten off more than they can chew and I bet they will be back at No 10 with cap in hand in less than 3 months.
HBOS has a couple of real nasties on it's balance sheet and the CEO and board of Lloyds showed a huge lapse in judgement when he even considered buying HBOS. It should have been allowed to go bust.
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#75, jolo13:
"I believe that everything is out there as far as HBOS is concerned, they've made I think three or four statements over the course of the last year explaining exactly what their financial position is."
He just "thinks" it's 3 or 4? How come he doesn't KNOW exactly how many? 11 billion down the toilet and he doesn't even know how MANY statements they have made? Little chance then of understanding those statements - or being capable of looking into them. The man's a clown.
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Is all this discussion not a repeat of what happened to Midland Bank which was an enthusiastice lender to Latin America?
Does the new generation of unqualified bankers not look at history, or do they just see ££££ in front of them and forget one key banking evaluator - ability to repay.
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robert thanks for your blogs.Please keep them going.Don't be put off!We need you to continue your good work.
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An interesting post by Robert in November
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/11/hbos_recession_bites.html
Well worth a read as a before and after.
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When the credit crunch kicked in, Lloyds were felt to be one of backstops of the UK banking system.
No investment bank, never been into self-cert or sub-prime, not particularly well known as a commercial lender (certainly within the broker community).
So a bank, during a time of massive leverage, decided to 'keep their nose clean'. Not get involved in high risk business. A somewhat old fashioned view during that time.
Then, right in the middle of the biggest banking crisis in UK history, they decide to take over one of the most leveraged lenders on the high street. In fact, the biggest UK residential mortgage lender when house prices have fallen 15+%.
Can anyone out there please tell me why you would do this?
The whole takeover stinks.
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173. At 8:06pm on 13 Feb 2009, aaford wrote:
Dream on, aaford, dream on
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166
It's an ACCURATE quotation (from "Das Kapital"). That doesn't make it "true".
Delve a bit into Karl Popper. He's pretty good at explaining why the Marxist stuff was always of its time, and philosophically and rationally perishable thereafter.
Something else will come along, in time, but any credibility that communism might have had died the death ages ago.
Although I do hear that North Korea is still rocking...
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Andy Hornby retained by Lloyds on £60K a month.
Complete and utter madness !
He is a disgrace and should walk.
And how can Lloyds value the HBOS loans on a more conservative basis ?
There is only one basis on which they can be valued.
What have HBOS Finance director and HBOS auditors KPMG been up to ?
Time they were investigated.
Properly.
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I am pleased Sir J Crosby has been identified a s a major contributor to the problems at HBOS. He was identified as a problem back in 2004 when he failed my basic business test.
We in Scotland new he was an issue and my national complaints went unanswered by him or his team.
It is always sad when you see the FOX put in Charge of the Hen house. (FSA/BANKS).
The damage he has done to staff moral, customer service et al is a disgrace to this day.
HOW MANY OTHERS GOT AWAY WITH IT!!!
As a retired assessor of multi million pound companies, I believe he failed the growth curve and normal distribution curve.
Like other people he and others should be stripped of all wealth accumulated as a result of his HBOS takings.
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I watched the whole session on Tuesday. The aplogies given through gritted teeth. This veneer of apology barely concealing Stevenson and Hornby's arrogance. The collective disdain for any questioning of their
management or strategy scary.
Now, three days later, the consequence of their laughable conceit is laid bare in these appalling results.
Contrition, genuine apology and a long period of reflection are in order for all these failed executives and politicians.
The long tradition and solid reputation of two fine institutions ripped apart by the blinkered strategy and failed policies of a cadre of "so called" leaders.
I only hope the inevitible staff redundancies will be kept to a minimum, although one has the impression this generation of industrial captains are interested only in their own prosperity and reputation. How very sad!
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10 Billion loss.
No bonus.
Fire those responsible. Investigate all advisers involved in the process.
Slash your expensive middle and senior management cost base.
Save front line lower paid jobs.
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As a member of HBOS staff and a shareholder.....don't blame Mr Daniels...I'm sure Andy Hornby was as sparing with the truth with him as he has been with his colleagues over recent years.
However I would question the judgement to allow Hornby to stay as a consultant...he clearly could not consult his way out of a paper bag. Surely he is the most unemployable person in this country currently?
Get Hornby (and bring Crosby along) back in front of the Select Committtee and lets get some real answers as to what went off. Then let the police investigate and criminal proccedings start....Halifax and Bank of Scotland have long distingushed, noble histories that have been ruined by greed and ego's.
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I can only laugh at the players involved with
TOTAL CONTEMPT.
HBOS should have been placed into
ADMINISTRATION the directors investigated
and prosecuted as appropriate.
THIS IS ALL DOWN TO OVER INFLATED EGO
ON BEING BIGGEST AT ANY COST.
WHAT UTTER FOOLS THEY ALL ARE.
P.S. THE LOSS WILL BE NEARER 15Billion.
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Dear Mr Peston
While I appreciate you have have had a great recession in terms of news drama, and indeed survived being accused of bringing down on us the run on Northern Rock, I would like your views on the following suggestion.
Given that compared with past recessions, the fundamentals such as inflation, the cost of money and commodities such as oil are very cheap is the problem, aside from liquidity, surely is one of confidence?
If so, having been accused of talking things down, the media might have a role to play in all this on the positive side by talking things up? Why not become the hero of the media by being the first to locate the 'green shoots of recovery' by locating the positive aspects of the situation and highlighting them with a positive spin? It may simply be all that it needs. I suspect any resulting Knighthood would be better earned than those of our current banking 'lords'.
Best regards
Tim Leacock
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Yellowadmiral said:
Why can't we let these 1st division---ha, ha, --players go play on their own with their own and their sycophant's money -- and see a new Banking Facility set up in every high street with services aimed specifically at the plebs and small private companies; OK so some may call this nationalisation-- what is so wrong with that when we have all seen the results of unchecked greed in the big international institutions -- a little genuine competition from a decently run high street operation.
We already have decently run high street operations, they are called building societies.
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#99 I admire your confidence that Lloyds are being transparent and actually KNOW their liabilities. I think there may well be more doses of 'transparency' in due course at both Lloyds and the other banks.
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Well well well, how low can these banks now go? surely Lloyds has hit rock bottom as RBS did 3 weeks ago. We know who is to blame, they have had their days before the Court so to speak, the Banks have got to start lending again, copious amounts of dollar between themselves and the wider public. They have had this 6 month hubris, and remarkably they are still standing (albeit only just).
The free market works, this correction has readjusted the values of banks to their actual figures, people seem to forget the 2000 dot com crash, post 9/11 slump (between 2001-2003), the markets and these banks will not only recover but deliver a tidy bit of revenue to our government to pay off the debt I hope...
If you prophecise bad news you will truly receive it, so quit making comparisons with the great depression and wallowing about doom and gloom and do something about it.
I bet you all top dollar that the USA will be first ones out of this recession because their optimist and their "why not lets try it attitude" this Country ought to take leaf out of the USA and GET A GRIP.
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Nationalise - and then mutualise - any failed/failing bank. The building societies haven't bankrupted themselves, or the country. Let's expand that model.
Meanwhile, all eyes on Barclays - they're next.
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By the number of comments awaiting moderation it is obvious the response to the Lloyds/HBOS news has been overwhelming. Given that one of my comments was disallowed two days ago because of alleged defamatory content about these despicable miscreants, however, one wonders how on earth one can express a truly valid view which is a genuinely pertinent reflection of their behaviour pattern.
Suffice to say that the FSA and the government, not to mention those illustrious financial institutions chiefs themselves, have known for years about the teetering health of banking industry TRUE balance sheets. However, because they have all been driven by sleaze, avarice, greed, egotism and self-aggrandisement, in collusion with the various 'control' authorities, they chose to sweep the debris under the carpet to afford themselves sufficient time to stuff their own pockets with fat salaries, elaborate expense accounts and almost inconceivably large bonuses before it all went sour. They could not have cared less about whether or not those remuneration packages were justified, or affordable. Neither did they care less about whether the perpetuation of their myths would only lead to the virtual ruin of their investors, their staff who were still loyally investing in their businesses and, of course, the nation. All that mattered to them was to milk the system for all it was worth whilst the going was still good and before the bubble inevitably burst.
They are totally despicable, the entire bunch of them and irrespective of the legal situation, the are morally guilty of the that most heinous of crimes, breach of trust.
Since Thatcher's days, with almost sickening repetitivness, we have been cajoled into our accepting these morally inadequate individuals as 'pillars of society', 'people to look up to', 'people to admire', 'people we should aspire to emulate'. They have been féted, praised, elevated to peerages and awarded highly lucrative positions of prominence when, in truth, they have been greedy, dishonorable cheats. Even now, they have the temerity to preposterously excuses themselves for their misdemeanours.
As for foregoing bonuses, what a grand gesture that is from those who are already millionaires and should be capable of seeing out the rest of their days without another penny of remuneration. Compare that with those who have already lost their jobs and their homes, plus those countless hundreds of thousands who have still fall into the poverty traps created by these selfish people.
The reality is they have brought the fine, traditional, internationally admired British Banking System to a point of collapse.
They have ruined the economy.
They have destroyed businesses, jobs and families by the hundreds of thousands.
They have abused the trust of their customers.
They have abused the trust of their incredibly loyal and hard working staff.
They are cowardly, mean spirited, mendacious individuals who are completely without even a trace of moral fibre.
The sad thing for all of us is that they will survive to try to do it all again because nobody has the moral courage to challenge them, or change the insidious, almost incestuous, system.
They should thank their lucky stars they live in a liberally minded society and not somewhere similar to China where capital punishment is often meted out for much lesser offences.
At the very least, they should be dishonourably discharged, asset stripped, stripped of honours and titles and never be allowed to hold high office again.
They should be forced to pass the rest of their lives in that same financial wilderness to which so many of their hapless victims are now condemned.
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Mr Clarksons recent comments may after all
have some substance regarding "Gordon the Mesiah".
A better description would be " Bamstick". Someone, somewhat mixed up. A danger to the country and the tax paying public at large.
If Lloyds is to be saved, the night of the long knives is just around the corner for HBOS.
Eric Daniels and the Board has to act with speed to protect what they can of share holder value. Failure to do so and the tax payer will by default become the owner of more toxic waste.
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I wrote this 5 months ago. What's changed?
The government had the tools and knowledge to stave off depression in 1930 - but chose wrong. Humans always make the assumption that because it is "now" we are somehow more intelligent and better equipped to make rational decisions.
Having had The Great War we would never let another World War occur... Having had one Great Depression we would never let another World Depression occur...Humanity is as bright as it ever was.
The world authorities are taking a not dissimilar approach that japan took in the 1990s - underwrite the failing businesses and slash interest rates. If that applies to us it is hello to 2 decades of falling stocks and 0% interest rates.
We can either have a short sharp jolt or a long drawn out one. Who can honestly see the UK government u-turning on its banks rescue package? This is a depression and new deals and keynesianism will not pull us out of it -they didn't the last time.
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Thank you very much, Mr Moderator, for giving me such perfect ammunition.
Nick Robinson has been complaining about the hypocrisy of the Government in the way it manages the affairs of the nation. It's a subject close to many hearts here, too, but it's a subject which we often have interfered with on one of the three following counts:
1. Delay. Two to three hours in a first level moderation, a day to explain why, and an absolute failure to answer any protest is completely unacceptable.
2. Exceeding your mandate. You're paid to moderate, not censor posts which are well within legal limits.
3. Ignorance of your subject. Moderating an economics or political blog (and there's precious little difference at the moment) at this level when you're not an economist or politician is unreasonable to the economists and politicians posting here.
A large group of posters has gone elsewhere as a direct result of your behaviour, only paying an occasional visit back.
My first complaint in October had a temporary correction, my second of January has been ignored completely, and so I have now referred your suppression of my 220 or 229 on Nick's blog to the BBC Trust for their examination of what's been going on.
And as I'm posting this here so the other correspondants are aware that a formal complaint has been deposited, please do not edit, alter or interfere with this in any way, or that too will be added to the Trust complaint.
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Hi
What a joke that no one is responsible for all of this.
No one is really strong enough to make the guilty pay dearly for it.
We do not have a leader who can lead
without being influenced.
The worse is still to come.
Is about time the gov give the money to us
and we shall fix the banking problem
rgds
Tony
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When Victor Blank joined LTSB it was obvious that a deal would be on the cards at some stage given his CV. As an LTSB shareholder I had severe doubts about the prospect of the HBOS takeover as Eric Daniels had built up such a conservatively managed group. The news today is absolutely shocking but my major concern is the City reaction. LBG has clearly thrown everything into the debt mountain at HBOS ( well hopefully ) in order to clear the decks for the future. Remember that the takeover was worked on the basis of annual savings of £1.5/2 billion pa. So much has been said over recent times about Banks focussing on the long term rather than short term views. Today's City reaction goes to show that nothing has changed in view of the share fall. As it stands I keep the faith that given 5 years LBG and its shareholders will be the victors however much GB's intervention has been such a disaster .
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On 28th June 2008. HBOS chief executive Andy Hornby told shareholders
"We've taken decisive action on capital and will continue to take a predent and cautious approach to running our business."
"Capital, balance sheet strenght and margins are the core planks of our strategy for the future."
Before the merger, did HBOS's bankers, acountants and lawyers tell Lloyds everything on their balance sheets? Have they been "economical with the truth?".
Lloyds overpaid for HBOS by 100%. Worth less than £1.
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Whoops forgot to mention SHORTING!
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This is not bad luck or bad decisions made in good faith. This is not a result of the global credit crunch.
This is criminal activity.
These greedy people have made personal fortunes by lying, cheating, misinforming, ignoring professional advice, and by practicing and condoning corporate malfeasance.
If this does not result in criminal prosecution this means it will happen again.
Here is a revolutionary idea to protect all of us from this. You lend me some excess money you have, I give you a modest interest rate in return for you doing this. Then I lend this money to people and charge them slightly more than I am giving you to cover the cost of arranging this.
Set-up a not-for-profit nationalised mutual bank from the ashes of what is left of HBOS, RBS and Northern Rock.
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#188 "Save front line lower paid jobs."
........Like mortgage salesmen? What's the point? Close most of HBOS down and retrain the staff to do something useful.
#195 "Nationalise - and then mutualise - any failed/failing bank" Again - what's the point? Mutualising a failing and redundant business will not save it.
The financial services sector needs to SHRINK. From top to bottom, not all, but far too many are CLUELESS if not crooks. It's been like it for the last 25 years at least. Pensions misselling, endowment mortgages, etc etc etc. "Sales focussed" organisations robbing people by selling them what they don't need. Commissions/bonuses early on if not up front. Again and again and again.
Enough is enough!
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Just reinforces my long-held view that we've only seen about 5% - 10% of the unwinding of this over-leveraged, toxic-asset, politico-banking mafia led mess. If you thought 2008 was bad, just wait for 2009 to strut its stuff.
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When I was kid my brother and I had piggy banks in the shape of globes. One was from the Royal Bank of Scotland and the other from the Bank of Scotland (one being green and the other blue, although I can't mind which was which).
Anyway, if I still had either of them now, then on today's news they'd be worth more than both banks put together.
The moral of the story being that debt is not an asset, however fancy the financial terminology used to dress it up; 1 pence in the bank is worth more than 10billion in debt any day.
(Yes, I know this is childish and simplistic, but it does give me some feeling of superiority over the washed-up banking fraternity.)
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119 ZEN, mentions about the HBOS losses meaning that LBG will not be able to repay the preference shares this year. Isn't this the type of comment Robert should be making and the exact question he should be posing Eric Daniels. The answer will be illuminating as a positive response would vindicate ED ( assuming we do not get a blog on whether we believe him )
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So, Paul Moore expressed views that HBOS's aggressive sales culture needed to be addressed.
Has this happened? Have HBOS's corporate sales team changed for example? Have mass redundancies been announced in the area which caused HBOS their biggest failure? Or has Lloyds just absorbed all this rubbish and allowed the arrogance to continue?????????
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I dont understand how so many people can be so short sighted. Surely intelligent people understand that in the medium to long term, the shares of HBOS will again be worth alot more than they are today and Llodys will be in a fantastic position to expoit its position. Ironically we wouldnt have allowed a merger under normal competition law because of the potential advantage of such large player. Now we forget that and complain that Lloyds has been foolish. In three years time we'll look back and see that Lloyds has made a wise investment, as has the government.
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I correct my earlier postings on the likely next election, which presumed an election by May 2010 in accordance with the Law.
I observe that Statute requires the Northern Irish Local Elections to be held every four years, and the last ones were held in May 2005. That means that the next should be held in May 2009 at the latest, but they have already been deferred by a year to 2010. The BBC now reports that these elections have been deferred to 2011 by a request from the incumbent administration enacted in Privy Council.
Rahere finds it hard to accept that it should have already been deferred by a year, and totally ridiculous that any administration can keep coming back for further prolongations to its mandate simply because it's reorganising itself. That's the natural state of any organisation, responding to the changing environment it is in if it hopes to survive, so why the practice now? If it need to come back after reorganisation is complete, vote now and vote again then.
You hardly need me to show you how this could be a dangerous thin end to a very nasty wedge.
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Prior to the HBoS acquisition, Lloydds TSB held a AAA credit rating, both with Moodys and Standards & Poor, the only British Bank to be awarded this rating. Lloyds TSB was also ranked 6th in the World's safest Banks by Global Finance magazine in 2008, again, the only British Bank to feature in the top 10. If any Bank can rise from this like a phoenix from the ashes, then my money is on Lloyds to do it. As an added bonus, that idiot Mr Brown and the rest of the useless existing government will be kicked out of office just like the chairmen and CEOs of RBS and HBOS. Oh, and the former CEO of HBoS/deputy chairman of the FSA... What a tangled web these bankers spin...
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As a small shareholder in Lloyds I have lost 90% of my investment in the nine months or so.I bought the shares because the bank was a carefully and prudently managed one.
I wrote to the chairman and CE of the bank when the take over was announced and suggested that it was unwise, to say the least.
I got back a very dismissive letter basically telling me that the grown ups know best.
It is now clear that the board of LLoyds did not have any idea of the problems they were getting themselves into, or if they did they were gambling the shareholders money, (lots of pension funds in here) in order to get big quickly.
After all if they had done nothing they would have got the business in the end for free.
As I have lost 90% perhaps the board might like to take a similar bath on their pay until they get the business back on it's feet.
If the deal was done "in the national interest" and it might have been, given Gordon Bs involvement, then will HMG compensate me for wrecking my modest pot.
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#85 Aneworld.
You wanted a story to explain the credit crunch to your children. Here is my attempt.
Once upon a time there lived a family in the forest. One day little Jenny fell through the ice in the pond. They carried her body back to the house.
"She won't live without heat!" someone shouted.
Dad put logs on the fire and it flared up emanating its life giving warmth into the room. Its fingers must have caressed the heart of little Jenny for she sputtered into life. The family embraced. Everything was going to be alright now.
Mum was still worried about little Jen so she insisted that the heat was turned up. Besides all the other kids liked the extra heat. Dad thought this a little imprudent, but then he remembered the shed that contained all the logs cut by the previous owner of the house. A few more sticks on the fire wasn't going to do any harm.
Little Jenny was up now and romping around. Such a cheerful spirit! Mother realised that all the Children were happier with the heat turned up. No more creaking joints in the morning. No more chests condensing into hoar's breath.
"Can we keep the fire going for just a bit longer, Father?"
Dad had never known the family so happy to obey his rule. When the cold was in their souls they hardly tolerated him, but with the fire on full he became the cause of all their joys.
With all the joy and co-operative spirit riding high in the family, Dad thought they could go forth and cut down some trees to make new logs. But when he suggested it, help was strangely unforthcoming.
"Mmm, I'm so warm. Why don't you just pay someone to get the logs."
Dad looked into the bunker. One paltry log left. He put it on the fire and walked.
Mum was in charge now. But that was what she always wanted. Dad was just a source of hot air [sic]. Confident she went to the bunker to fetch more wood...
"How could you this to us!" said the Children. "The end of Winter is months away yet you have burnt all the wood. Are you completely crazy?"
Mum was agast. Dad had got out in time (apparently to a place in the Middle East) and Mum was left to pick up all the pieces.
Sound familiar?
Little Jenny and the Ice = 9/11
The Heat was Low Interest Rates introduced to save the Economy in the US and copied over here.
Daddy Blair saw everyone liked the heat on so much he asked Mama Brown to put logs on the fire.
The logs were the Tory legacy of '97.
Daddy Blair got out in time leaving the family UK to its fate.
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Extracts from LBG Trading Statements
"£7 billion of impairments in the HBOS corporate division."
"The impairments are, principally as a result of applying a more conservative provisioning..."
My understanding of these statements is that these 'losses' are yet to be realised. If they don't materialise then LBG will be announcing mega profits in the future. Short term pain but long term gain.
LBG have, rightly, chucked as much as possible into the bucket to get this figure as high as possible. It makes total sense to report this now so they can blame HBOS management. If they had not done so and reported similar losses once integrated the management of LBG would have been under severe pressure.
The Retail side of HBOS is a sound business. People seem to forget that HBOS enabled more people to own their own homes than anyone else ever and they didn't dabble much in sub-prime unlike some other lenders.
The Corporate business is the real culprit.
HBOS should have been broken up like Bradford & Bingley. Corporate should have been taken into public ownership - the rest sold on the open market.
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Every time you buy a business, one of the first things you do is to mark down the value of its assets. This is what LTSBG will have done. No surprise there - not unless you have next to no business experience, ie work for the media or for government. If you need to ask the question why, then you really should revise your MBA notes or look for a less demanding job.
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It amazes me to find so many of you ordinary and general populance with no business skill to your name making such brave and bold comments.
It's slightly hyppocritical that those of you claiming to be so business wise that you know more about running a bank than Mr Hornby are the same individuals that are complaing and pleading ignorance to the over stretched credit comitments that you so eagerly signed up to. ( now want bailing out for )
I am proud of Mr Hornby's bonus schemes and those in turn paid to staff- HBOS are the elite when it comes to shaking up business and nobody can take that away.
I would encourage any company seeking speedy acquisition to appoint this man and reward him well.
Give Mr Hornby a break you simpletons - he is Harvards finest!.
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On the previous RP blog
46. At 3:57pm on 13 Feb 2009, gruad999 wrote:
'Perhaps we have to revise the terms of a Limited Company to make directors personally liable to the point where they can only retain ?250k of personal wealth.'
No, the point of limited liability is that shareholders are limited to losing the cash they put into a company, why would you buy a single share in any company if that meant you personally were liable for all the companies' debts. (about 10bn and counting for hbos, and that is probably for each share)
Better would be to change personal bankruptcy laws to bring them into line with company laws.
How can it be right that a person but not a company be hounded by creditors for years after all the disposable assets have been taken.(you've had the shirt off his/her back, now you want the pound of flesh as well)
A company owing money can be dissolved(killed).
In a civilised country we can't just go around killing(dissolving) people just because they owe a few quid.
Secured Loans - should be nullified after the assets against the loans have been reclaimed.
Unsecured loans - you knew the risks before you lent the money.
Due diligence on the part of the lender
1. make sure that the loanee has title to assets of secured loans and take into account depreciation of said assets before lending the money.
2. Make sure that he/she is not lying on the form for unsecured loans, has ability to repay
(lying on the form is covered by existing law, it's called fraud and gets you 7 years (unless you're a banker), hiding assets after bankruptcy is also fraud, if you have help hiding them than conspiracy comes into play (again, unless you're a banker))
As secured loans are against an asset that has been established that no other claims are against it before the loan was granted then default on the loan is a simple matter of court adjudication as to the liquidation of that asset.
Unsecured loans, if you did your due diligence and priced your product accordingly (and there was no fraud) then thats business, you take it in your stride as one of the costs of doing business and price future products accordingly.
Either way the loaner takes the hit on that one.
An individual (company/person) is dissuaded from defaulting on loans simply because future loans depend on successful servicing of current ones.
Changes to company law that should be made are:-
Treat a company as a person
tax allowance as a single person and tax as normal rate along with the progressive taxation as per higher earnings.
Taxes to be paid on this years profits (no spreading them across 6 years)
If a low earner (minimum wage) gets JSA for 10 months in one tax year and then gets a job in the next year, tax is collected in the current year, not the average of the 2 years, why should companies be any different ?
Current year company expenditure to be allocated against current year profit (no depreciation over a number of years)
It would be much easier and cheaper (for those at the bottom) to have a vastly simpler and more efficient taxation system
If it is income from any source in the current year then it is taxed at your personal rate whether you are a company or a person (how hard was that)
The reason why the corporate and personal tax structure in this country is complicated is to obscure the fact that large corporates (and rich employees) do not pay the same relative amount of tax as the employee at the bottom.
At the bottom, you pay a disproportionate amount of the tax take of the country compared to your income.
(that would be because those that have most to gain from an unfair taxation system are those who are making the taxation rules)
At the bottom you pay for the courts system to chase your neighbours at the bottom who owe money to those at the top.
It really is the pits being at the bottom.
No million pound salary, no bonus, no hope.
In the boom times we get minimum wage, in the bust times we get JSA
So when any of you are having a little difficulty with your bank only allowing you to withdraw 2grand per day, just reflect on the fact that after 7 days you will have withdrawn more than a large proportion of the population have to live on (and be taxed on) in a year.
(average wage means that when top bankers (a euphanism) are on several million, several million have to be on considerably less)
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214. gruad999
One has to at least be suspicious that 911 was the trigger. The UK bill for the war in Iraqistan is now standing at 14billion. In the US some commentators has suggested that the real bill is the military one plus 50 to 100 percent for other side issues, not least injured personnel in civvy street. 911 appears to have been the point at which the management of the domestic economy in the US and the UK took a back seat. When there was also the advantage of extra tax revenues from a booming economy without having to raise taxes to pay for a war, or to raise public debt to pay for a war. This goes back to egos seeking an international stage to pose on. And politicans thinking they can talk to god.
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It makes me chuckle!
I work in the financial services industry and before this crisis started the now disgraced FSA's most recent 'ethical' policy was entitled 'treating customers fairly'.
I think any new policy implemented by this now thoroughly discredited organisation should start with 'treating tax payers fairly'.
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I can not seem to get my head around the reason why Lloyds thought this was a good buy, If Lloyds made a profit of 1 bn in a year, but then buy HBOS with debts of
10 Bn unless they have some cunning plan then 10 years of no profit?. I undestand that the losses were a lot greater than thought, but still does not make any business sense. At the time of the purchase we all knew without Lloyds takeover HBOS was finished. What were they thinking ?, not sure they were thinking.
Suicide perhaps.
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So the black horse has become a bedraggled donkey, all over a crustacean and champagne.
It all seems to be another fig leaf for Crosby & Hornby. Clearly Crosby had the mathematical brain, whereas Hornby was an expert at pile high sell cheap. Between them they engineered what amounted to the largest ever Ponzi scheme in the UK's banking history.
More than anyone in the sector, Crosby understood the complex financial products HBOS relied on for its wholesale funding. You only have to skim through his report on mortgage funding for Gordon Brown to see that. This gave him huge credibilty in the banking sector and regulator.
Anyone taking a cursory look at the peaks and troughs of the house price graphs over the last few decades, though, would see that the business model Crosby and Hornby had devised - and which Moore rightly warned against - would unravel sooner or later. But the rewards in the short -term were too great to back track. Crosby, having realised it would all end in tears, and after blinded everyone with science with his clever formulae, bailed out just in time, leaving the supermarket whizkid (who didn't really understand the maths) to pick up the pieces.
The FSA's new buzzword is 'outcomes' rather than 'principles'. If the outcome of Crosby/Hornby's business model is the same as Enron, Barings and BCCI, then why are they not now facing criminal charges?
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To be honest for Lloyds was a bargain to merge with HBOS. If they manage to come out on the other side, they will make big profits, the Treasury will get the money back (with profit) and everything will move on.
My main concern is the Halifax Pensions/Insurance.
Lloyds do not want to take any responsibility to cover up the huge deficit.
Which means that the tax payers, will have to pay , (after the court cases) without the posibility to get any returns from future "profits".
It happened before........
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It's quite simple really, LLoyds TSB was heading for the pan and about to ask for bailout, HMG said buy HBOS and we will, they did and HMG did.
As Wellcaught wrote at #213. At 11:09pm on 13 Feb 2009,
'I wrote to the chairman and CE of the bank when the take over was announced and suggested that it was unwise, to say the least.
I got back a very dismissive letter basically telling me that the grown ups know best.'
At that point I would have sold my shares and moved on, in fact I would have bailed at the point of thinking of writing.
It was pretty obvious by that letter that the people at the top had no interest in the small shareholder.
When they behave like that you have no alternative but to cut your losses and run, it is only a matter of time before they start to do the same to the big shareholders(pension funds)
And people are surprised that they want to hang on to their bonuses, they didn't care about you at the start and they don't care about you now.(they only wanted your money)
They are only in it for themselves, they are rich, they want to be richer.
That you think that they would in any way shape or form be philanthropic towards you defies belief.
Hopefully it hasn't cost you too much money to learn how the real world works.
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Post 174. Nick Leeson got six years because he did his deeds in Singapore not in Britain. The Singaporean's did the same over the Slater Walker collapse in the 1970's with the Chief Exec spending some time in Changi Prison.
Lee Kwan Yoo and his son have considerably tougher views on those that transgress financially than Gordon the Gollum and his Zanulabour mates.
If Gordon's actions and trust in bankers is anthing to go by if Nick Leeson had done his gambling in London he would no doubt be Lord Leeson by now.
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Following some anti-Scottish comments I would like to point out a few facts.
1. The Bank of Scotland plc is the oldest surviving bank in the United Kingdom founded in 1695.
2. It was also the first bank in Europe to print its own banknotes.
3. In 1959 Bank of Scotland became the first bank in the UK to install a computer to process accounts centrally. A world innovator!
4. The Bank of Scotland was one of the most respected banking institutions in the world until it took over the English 'Halifax' brand and had an Englishman running the show who's previous experience in running ASDA-Walmart clearly caused the HBOS downfall by the 'stack em high sell em cheap' mentality.
5. The ownership by LLoyds will ensure the Bank of Scotland brand returns to its Scottish roots with outstanding customer service and will once again become a world leader in the banking world
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Copyright/Patents
another way for the moneyed classes to stay rich and get richer.
They say (the holders that is) that IP is necessary to protect investment in R&D, fair enough, then patents should last 5 years, enough time to commercialise and gain market share.
Patents are protectionist and anti-competitive and serve only to enrich a limited few (microsoft recently celebrated their 10,000th successfull patent app.(a company that has been around only 15 years))
Boots still make a killing on Nurofen(tm) at 2.12 pounds per packet when you find on the same shelf generic Ibuprofen at 35pence per packet.
The pharmaco industry claimed the sky would fall in when the market for generics was opened up. It didn't therefore exposing the lies that they had been telling before.
That industry is only one of many.
The banks do not have a monopoly on taking you for a ride.
Big business and vested interests do not have your best interests at heart
They do have the ear of your government.
Now you have lost a bit of cash to one sector, open up your eyes and see how the rest of the industry works.
It's not pretty.
Your interests come well down the pecking order.
(and only if you have some cash to spare)
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#9 (and many other comments over the past weeks and months).
There is a vast difference between Barclays offer for ABN and RBS'. Whilst RBS' offer was in cash, Barclays was in shares - should Barclays have done the deal they would not be in the position that RBS is in.
For the sake of clarity Robert, maybe a blog to describe the difference in acquisitions tactics would be useful. I am not sure if many at the moment understand why some banks have managed to show a profit this year, i.e. Barclays @ £6.1bn (although I appreciate that £2.4bn of this is a paper profit due to Lehman's) as opposed to other banks which are showing ridiculous losses.
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226. At 00:53am on 14 Feb 2009, scootywootywoo wrote:
'Following some anti-Scottish comments I would like to point out a few facts.'
Anti-Scottish comments are well out of order.
Can I interject in your points.
somewhere between points 3 and 4, a change came about in the business, a cultural change.
The new philosophy said, lets take all these nice stour depositors money and put it to work, we can make a mint. Don't worry they said 'this is the BOS' your money is safe here, and you believed them.
Internally they said 'don't worry about the depositors leaving, they get divorced more often than they change bank accounts, we'll give them preferential shares and better interest, that'll keep 'em quiet'.
And it did.
'We need to be bigger' the board said, 'it's in your interests' they said.
And you believed them.
And so the Halifax was aquired, profits were up but so were salaries and bonuses.
There was grumbling, 'We need to pay high to get the best' they said.
You believed them.
They took their pay and bonuses and your money and then it crashed.
'We didn't see it coming' they said
Do you still believe them ?
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Questions:
1. Does the CEO of Lloyds expect a salary increase now he is running a much bigger organisation. If not in 2009, then maybe in 2010 when things have calmed down and the compensation committee look at 'similar sized companies' to benchmark against.
2. The senior bankers are supposed to be taking stock instead of cash bonuses. Do they stand to benefit from a stock price fall just before they get bonuses in stock? The stock has plenty of time to recover before they sell out. They could make out like bandits from taking stock bonuses now and waiting for the taxpayer cash to solve all the banks problems and the stock price to recover.
In this country you can go to jail if your kid dodges school. You can get a criminal record for overfilling your wheelie bin. And you can cost the taxpayer £10Bn while earning millions yourself and walk away with a knighthood.
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Light(?) relief
Classic!
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sounding more and more like the death rattle for capitalism!!.
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226. At 00:53am on 14 Feb 2009, scootywootywoo wrote:
Following some anti-Scottish comments I would like to point out a few facts.
1. The Bank of Scotland plc is the oldest surviving bank in the United Kingdom founded in 1695.
So what.... it no longer is surviving, it's hanging on by its finger nails and our, taxpayers, monies.
2. It was also the first bank in Europe to print its own banknotes.
And our government is now making noises about printing more money to get us out of this particular situation... digger a bigger hole comes to mind.
3. In 1959 Bank of Scotland became the first bank in the UK to install a computer to process accounts centrally. A world innovator!
..and a fat lot of good their innovation was, they'd have seen this lot coming a mile off if they'd computed all the facts correctly?
4. The Bank of Scotland was one of the most respected banking institutions in the world until it took over the English 'Halifax' brand and had an Englishman running the show who's previous experience in running ASDA-Walmart clearly caused the HBOS downfall by the 'stack em high sell em cheap' mentality.
Ye gods... you're complaining of an Englishman making a mess of your bank... look at our country for goodness sakes and the mess your fellow country men have made of our government, economically bad down turn, unemployment rising and poor souls dying in a war built on lies.
5. The ownership by LLoyds will ensure the Bank of Scotland brand returns to its Scottish roots with outstanding customer service and will once again become a world leader in the banking world
I wish you all luck on that .... meanwhile how many poor souls lose jobs and businesses whilst that comes around?
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Ok we know HBOS/LLoyds is a disaster and that dear Gordon is deperately trying to stop Bankers taking bonuses but I just read in The Scotsman that FSA officials are to receive £33m in bonuses. What an appauling thought!
Do we need another select committee meeting to investigate that posssibility?
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Embarrassing for Daniels? More so for Brown. I qoute you, on Sept 17th. Particularly Para 2. So why is Brown denying anything to do with this? (Apart from the fact that nothing is ever his fault)
"Our business editor said there was a real concern that any run on HBOS shares would create enough fear among the bank's financiers - providers of wholesale credit who give the bank its money - for there to be a withdrawal of credit for HBOS. "Clearly the watchdog and Treasury will welcome a deal as it will put the bank on a sounder footing," he said. "The last thing they want is a fully fledged crisis."
He added that the deal was negotiated at a very high level, with Prime Minister Gordon Brown telling Lloyds TSB chairman Sir Victor Blank that it would helpful if Lloyds could end the uncertainty surrounding HBOS by buying it."
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#88
Thank you for the link to the Treasury Select Committee's grillings of the bank chiefs. Interesting in terms of what went wrong last time round.
But none of this really addresses the urgent question of what we need to change going forward, to make sure it never happens again.
John McFall did make one interesting comment. He noted that the people he'd been interviewing were all clearly smart, thoughtful and reasonable. So the fact that so much had gone wrong had to be systemic and not to do with individuals.
So the SYSTEM needs to be changed. And I don't think from those sessions that anyone in banking is prepared to acknowledge that yet.
Personally I believe, the banking mix has gone wrong. It's fine to have some banks in private shareholder ownership. I'm not advocating wholesale nationalisation. But I do think we need a better balance as between plcs, mutuals and national savings.
As I've written before on this blog, I believe the key is to restore the strength of the mutuals in retail banking at a level closer to what it was before the privatisations of the 80s and 90s.
The reason I say so is this:
- the key issue is trust. We savers and borrowers MUST be able to trust that our bank is taking care of our money and putting our interests first.
- but if a bank is owned by shareholders, its primary duty will always be to those shareholders. In that scenario, savers and borrowers inevitably end up being used, to satisfy shareholder hunger for growth of profits.
- the bonus culture is all about this. Quite apart from the crazy actions of the investment arms of these high street banks, staff at every level - even counter staff - had profit targets, products they had to flog to us, products that may not actually have been in our best interest as savers or borrowers.
As long as this shareholder model remains the dominant one in retail banking, it's inevitable that we, the customers will be prey to exploitation.
The mutual societies didn't have this problem because we, the customers, owned the banks.
But the mutual model is now confined to the margins of banking. Apart from the Nationwide, most remaining mutuals are too small to provide the options we need.
So my solution would be to return the banks that are currently either wholly or partly in public ownership to mutual status, rather than selling them back to shareholders. Give us back the Halifax and Northern Rock as they once were.
I guess some element of compensation would be needed, particularly for Lloyds. Also I guess we as taxpayers will lose out if these banks are never sold back to the market. But the gains in terms of trust and security - without which banking cannot work - would far outweigh these losses imho.
Of course things can still go wrong. Mutuals can still fail. But that then will be down to individual bad management and bad regulation, not to the system itself being biassed against its customers.
I would appreciate knowing if you think I've got this wrong and what other models one might try. Cos shouting about bonuses and playing the blame game are a distraction from the real agenda. And they're wearing awfully thin.
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AUSTRALIAN FORMER PM CHIFLEY STILL RIGHT
As Gore Vidal once said about the worlds monetary system, it's “free enterprise for the poor and socialism for the rich.” Never was a truer word spoken.
No chance of getting the huge salaries and bonuses back from the banksters? The real question that should be pursued by our economic journalists’ is? Who really owns the credit system of this country? It would appear the banks and their owners believe that if the banks are making money the credit system belongs to the banks (private). On the other hand, when the banks are failing, the credit system belongs to everybody (socialised).
I and millions of other mainstream Australian sovereignists, still believe and contend, that the credit system of a country, and its public utilities infrastructure: i.e. public transport, communications, water, gas and electricity, must always belong to the sovereign country and its citizens, and should never become the plaything of external private corporations or rich individuals.
There's no better example than the fragmentation of communications, where few individual providers alone, is prepared to expend the vast capital to upgrade and rebuild our broadband Internet network. After the Government had privatised the main player, the Government (taxpayers) must now pay a further A$5-6 billion to have a modernised system installed.
Australian taxpayers already owned and paid for the infrastructure network?
The same applies to the Nations failing and antiquated rail and power grid systems etc.
Ben Chifley (Australia's PM - 1945-1949) was always spot on in these issues!
Corrupt economic theorists drive today’s privatisation, via unproven theory's and myths “that private is always superior than public”?
Hogwash, just look at todays inefficient corrupted and greed driven banking system. The Commonwealth Bank when public, was always more efficient than todays banksters.
— Lew Louthean, Australia
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Andy Hornby should have the dignity to work for free as a 'consultant' to help Lloyds try and rectify this huge disaster that is hitting the UK taxpayer hard. Never mind £60k per month - more than most people earn in 1-2 years. So should James Crosby - he must have more time on his hands after resigning.
Not that Hornby is likely to be working 40 hr weeks on this, lets be realistic. Euphemism for gardening leave. I guess they couldn't use that term as there's not much work to be done in the garden in Feb.
However, the people who really know how to solve it are probably the lower level managers at Lloyds and Halifax - those with proper banking qualifications. Let's hope Daniels has cleared out all the issues in one - it would have been far better to do it in Nov to keep Lloyd's reputation more intact.
When will consistency of accounting policies - FRS's for banking, and the auditors come under the spotlight? Let's face it £5bn must be on their radar for materiality! Or they are equally negligent. Surely this should have been a standard consistency check for FSA folk. Perhaps a select committee interview with the FSA bosses is the next requirement. Then the senior partners of the auditors. It's the only way to learn from this, and bring a bit of humility back into Executive ego's.
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This comment was removed because the moderators found it broke the House Rules.
#236
That's an interesting idea - remove the shareholders, and therefore they won't be able to say the shareholders made them do it!
This is all about a enormous amount of debt by too many people (I know, not everyone lives on debt, it is the multimaxed out credit card folk and companies I'm refering to).
Debt is the never-never. 'Cos if you live on debt, you'll never pay it back.
The markets don't trust the debtors to pay it back. Now so many people and companies will go burst. The gravy train has reached the end of the line.
I'm still wondering what would have happened, exactly, if the banks had been left to deal with the mess. What would the problems have been and for how long?
Would letting them fall be the real fix we need?
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Another thing that often crops up here in these posts is regarding the come clean argument. Sir victor Blank previously claimed that the bank had already come clean on its write downs however, as I said previously these write downs are a function of time. The length of time that the recession lasts, this because the longer the recession lasts you can get the log paper out and properly evaluate what your losses are eventually going to look like in reality.
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The mind boggles at what sort of inducements were offered by Mr Brown to Lloyds TSB for them to embark of such a lunatic scheme of buying HBOS.
As a a humble Lloyds customer such inducements seem to have passed me by along with my shrinking overdraft facility and my ability as a small business to raise short term loans. Although I do seem to 'enjoy' increased charges and reduced service increasingly supplied by computerised tick box jockys from obscure parts of the Globe.
Its alright for the chosen few: Senior Bankers and politicians despite everything they are still swimming in the cream but the poor customer knows where the 'buck stops'.
Dream on Mr Brown your electoral doom approaches.
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This comment was removed because the moderators found it broke the House Rules.
I have had a post moderated which should not have been, can anyone tell me where I send my complaint?
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Robery
The HBOS loss, is a trading loss on PAPER and prepared by prudent Accountants.
Not necessarily as bad as it may seem on further investigation.
Under accountancy rules, I was led to understand that, Companies that made a loss in one year,
could RECLAIM Corporation Tax paid in the previous year.
If this is the case and the fact that HBOS reported huge profits last year,
will HBOS be seeking A refund from HM Revenue and Customs?
Salt on the old wound, perhaps, if they did.
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#244 re: moderated posts. I noticed something odd yesterday, posts #22,23and 24 were all awaiting moderation, yet there were many dozens of later posts allowed.
These were not released for several hours, yet when one reads them, there is nothing amiss.
What is amiss is the reason and the fact that post #21 had words that could have been deemed by some to be offensive
Any thoughts on this by the moderator?
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Bankers are not stupid, they are just greedy. They do not see themselves as bad people, but the rest of the population does. All bankers should have to pay their bonuses back on the basis that they were a conflict of interests.
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Bobrocket 224
I think your initial premise that Lloyds TSB was in trouble when it agreed to buy HBOS is probably wrong.
Maybe a couple of peerages were offered up. Mind you they are not worth a row of beans now.
Of course I don't believe that the board or anyone else will take a pay cut. I was just musing.
My real purpose was to promote the Gordon factor and open up the question of government pressure being used to attain a commercial outcome,in this case a really bad one for Lloyds, for surely that is what happened.
Gordon cannot punish these guys because if he does they will spill the beans.
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Robert,
I appreciate your posts for getting to the point before other media commentators do.
Isn't it interesting that Halifax say house prices went up by 1.9% in January - "The average price of UK homes rose by 1.9% in January from December's figure, according to the Halifax, which bases its data on mortgage approvals." are they trying to deceive people?
Or isn't the point that they know that the continued fall in house prices combined with mortgage defaults and the further decline in the UK economy will result in personal and business bankrupcies resulting in defaults on their loan book which will tip them over the edge.
This story still has a longway to run.
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# 153
Re your comment
"I see Vince Fable is touting nationalisation again - he has clearly not got over the public acclaim over his calls for Northern Rock to be and what an astounding success that has been!"
Vince Cable and other bloggers here are 100% correct in their assessment that nationalisation of the banks is the best way forward.
Nationalisation is the least worst option when faced only two choices... nationalisation or allow a bank to go bankrupt which would result in total panic.
As an older person, I resent your Old Vince comment too, with maturity comes experience and sense... something clearly lacking in the banks boardrooms and handling of the British economy by crash and co.
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I have just read Darlings justification for rescuing HBOS.
The tone and content make it obvious that LLoyds were seriously pressured into this deal. (I realise that the more perceptive of you knew this all along)
I think this is going to come out any moment and given the damage that it has done, in sinking two banks instead of one, it will bring the government down
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It very easy to assume that the board of Lloyds were naive to acquire HBOS. It is easy to say that due diligence was clearly not done. But the board are not stupid and the due diligence was not done for a reason.
This deal was rushed through under enormous pressure from Downing street. Pressure on both the Lloyds board and the major institutional shareholders to allow it.
The other shareholders should now press to discover what really happened behind the scenes that has cost them so dearly.
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Thing before Monday the bank will be nationalize. Otherwise we will be able to buy shares for pence.
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I rather unusually take some solace from the Lloyds results.
During the run up to the crisis Lloyds were criticised for being too conservative, for not indulging in the Debt fest that others were gorging themselves on.
We are in a recession and its going to be a bad one but although I hate to use the green shoots term, for the first time I think I detected the green shoots of not recovery but honesty.
These results were terrible, but hopefully Lloyds have bought a bit of honesty to the process, Lloyds describe these results as having writdowns attributed to there more reigerous accounting standards... What on Earth does that say about both the regulators and the previous accountants!
I sincerely hope Lloyds survives, both as a shareholder (who had lost a bundle already) but perhaps more importantly as a symbol that those that did the right thing should be the ones that eventually prosper.
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For NotoBene (#249)
I too smelt a rat when I heard that house prices had, allegedly, risen 1.9%.
It is, however, more likely to be a statistical glitch, a freak event, than a conspiracy.
We have only to look at the High Street and read the newspapers to see that this slump has a long, long, long way to run yet.
There will be no light at the end of the tunnel until 2010 at the earliest.
House prices will continue to plummet - they have to, the vertical rise was crazy.
The stock market will continue to head south for a long while yet.
Dow will approach 7000 and the Footise 3000 before this is all over.
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For 10 years or so everyone in the Corporate Finance World knew that HBOS would do the deals that no other Bank would. Nobody in the Corporate Finance World will be surprised at the news of massive losses just announced, we have been wondering for years why we have not being seeing greater losses.
Yes HBOS have been over aggressive but there were other parties also to blame.
Do not forget the Boards of the Companies who decided to take on the excessive debt and expose their shareholders and employees to enormous risk as a result.
Do not forget the advisors who worked on the deals with HBOS and their clients. The Accountants and Lawyers let their clients take on what many of us thought were excessive levels of risk. Just how much advice was given? It was get the deal away and get the fee.
Lloyds TSB have walked into this one and the sad thing is that the Corporate Bankers in Lloyds would have been able to warn their Board – were they asked or listened to?
I feel sorry for the Lloyds TSB shareholders and staff, they have been stitched up. The HBOS acquisition has been their ABN Amro
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Personally I think we might have missed the whole point of Mr Preston's article here chaps.
The devil is in the detail or rather "the SSAP's" (or they were), accounting practices to you and me. These determine everything by way of how much profit or loss, how much things are valued at or not....
I think that Boards of Directors vote for these.......
Interesting to note that 2 banks in the UK have such a different practices that HBOS figures went from a few billion pound loss to 10 billion in the space of a few months by virtue of the strike of a pen !!!!!
I really wonder what sort of practices RBS, Barclays and HSBC are adopting are they any safer ??????
Or may be we should all ask when companies make "profits" if they are just fantasy profits.......
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Re the losses:
Hopefully Lloyds have had a real conservative valuation of assets and this lots of results is it.
Before judging the Lloyds board folk should give it another 12 months for the next set of results.
Corporate takeovers and mergers are difficult things for all even in the good times.
Re Media/parliament: we are suffering the British disease - looking backwards - we need to say yes we are in a mess and ask where we are going and how we get there. Endless inquiries that don't add much are a problem in the UK. (Just look at the London area Airports - 30 years of jaw jaw and do nothing - result shambles)
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I find it unbelievable that the PM and the Treasury did not have prior knowledge of the HBOS debacle.
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#255
Obviously I'm not the only one thinking that all accountants might be questionable
The conversation might go
what sort of profit would you like this year.....or I'm sure we could fix that by bumping up some goodwill, buying something.......
Ho hummmmm
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This is a total scandal! How on earth can a financial institution "lose" so much money? On the basis of "losing" 11 billion surely this points to total and utter incompetence in all areas of the financial institutions.
I would hope that this is thoroughly investigated and the "guilty" persons brought to task.
The financial institutions have created this problem, you cannot blame the public for borrowing more than they can pay back.
That is where the banks should keep a lid on it and deny loans to people who cannot repay them.
If you can't pay it back don't borrow it!!! Quite simple really. It's not rocket science.
It's down to greed, the financial institutions have made a system so complicated and devious, creating vast sums of money out of nothing, that I doubt anyone can understand it or sort it out.
Pouring tax-payers money into this corrupt system is throwing good money after bad, how long will our inept goverment keep propping up a failed, corrupt, devious system?
I doubt anyone will ever fully explain how this has come about, certainly not in terms the the tax payer can understand.
It is a scandal the likes we have never seen before and no-one will be held to account over this!
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I am shocked at this. I put all my savings into the Halifax Building Society because the money was "as safe as houses". HBOS took the money and effectively gambled it away at the casino. At my age getting work is nearly impossible and I rely on my savings, but of course now get virtually no income from them, like all savers. We as the taxpayers have had to bail them out and will suffer from increased taxes for years, if not decades.
The HBOS management have ruined lives and yet walked away as millionaires. Is a "shattered reputation" adequate punishment? Surely there must be legal measures which can be taken?
The humble Joe in the street gets hammered these days for minor infringements against the law, and the rich and powerful are somehow always above the law. There has to be a profound change in the system.
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On the day after the HBOS takeover was announced, Victoria Derbyshire had a dial in 5 Live in which various so called experts expounded the virtue and value of this deal. As a Lloyds shareholder I rang in to express my anger at the stupidity of the deal. I was ridiculed not just by Derbyshire, but also by the so called city expert from, I think, Hargeaves Lansdown. What worries me most about this is that Eric Daniels was also Chairman of Trinity Mirror Group, that stalwart publication of the Labour Party. And who runs Trinity Mirror now? None other than Ian Gibson, former non-exec director at Northern Rock, ably assisted by Gary Hoffman, now CEO at Northern Rock, and former Chairman of Barclays UK. Don't you just get the feeling that this whole charade was cooked up after a bridge drive and over cosy fireside chats with our Gordon at No 10, Chequers and in Chiantishire? Rats and sewers spring to mind.
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Given Mr Daniels well known history of carefull management of Lloyds; the pressure on him to take on HBOS must have been huge and must have come from HMG.
If one accepts that that was the case, how can we get GB to take responsibility for it, pay back the shareholders and then fall on his sword
You understand I am just dreaming
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Shouldn't the people who are responsible for these losses be mopping out Public Conveniences now.
They are as worthless as the Banks that they were managing...
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Ah yet more hysteria from the doom mongers' leading cheerleader. "Humiliating losses" , "LLoyds humbled" he cries. Are the outside broadcast units on their way to a High street near you to give you breakfast coverage of a few extras lining up outside the bank?
Lets face it we all knew this was coming and we might as well accept that LLoyds had little alternative but to kitchen sink HBOS' assets. Its funny, but the ones screeming the loudest for nationalisation are probably the same misserable individuals who are hoping to make a few miserable quid from shorting the stock - as pathetic as the media coverage that goes with it. Daniels stepped into the breech when the boys from HSBC and Standard Chartered were hiding behind the sofa. Give the guy a break.
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Regarding For NotoBene (#249)
Nothing proceeds down in a completely orderly fashion. There were at least 6 major bear market rallies between 29-33, ditto house prices today.
Also it has been pretty clear since Northern rocks demise that the banks are finished - this crisis has only just begun and asset prices have probably got another 50-70% of current value to lose (i.e. get back to where they historically reside (2.5-3.5 times average income). Equity prices could end up anywhere up to 90% down from peak - that would put the FTSE at under the 1000 points level.
If you are ultra Bear-ish you will be expecting the above to occur so it would be reasonable to get money earning nothing out of a bank or falling in value in equity markets and into a falling property market because:
(a) there is still a danger that deposits will be lost - the gov. could baulk at shouldering the losses at (say) Lloyds and just refuse to meet all its obligations
(b) it has less to drop in property than the markets and
(c) your house cannot be declared bankrupt (of course, you can - and lose it but that's another development)
I would also expect the good old tradition of gazumping to have played a little bit of a role in the house price rise.
Finally people don't tend to move in December - Xmas, hols and all that and the gov. and press were doing a lot of talking up the market in January - Obama bounce; new year, new start, stimuli packages etc, etc.
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With those sort of losses still in the Banking system, surely there can be no argument now that the Banks are right to be very cautious about lending at the moment.
Reflating the old failed system is completely the wrong policy. We need a more intelligent solution than that and more intelligent politicans (and Bankers/Regulators), to take us there...
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on 17th September last year.
Our business editor said there was a real concern that any run on HBOS shares would create enough fear among the bank's financiers - providers of wholesale credit who give the bank its money - for there to be a withdrawal of credit for HBOS. "Clearly the watchdog and Treasury will welcome a deal as it will put the bank on a sounder footing," he said. "The last thing they want is a fully fledged crisis." He added that the deal was negotiated at a very high level, with Prime Minister Gordon Brown telling Lloyds TSB chairman Sir Victor Blank that it would helpful if Lloyds could end the uncertainty surrounding HBOS by buying it.
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#15 21 27 51 59 101 105 111 157 168 239 243 246 253
14 out of 270 posts blocked, 1 in 20.
Please write to the BBC Trust if you have had no reply and you feel you haven't posted outside the Rules, bbctrust@bbc.co.uk. The Management isn't responding.
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As a small ordinary shareholder in LloydsTSB and a preference shareholder in HBOS, I find it obscene that Mr Hornby, of all HBOS's staff, is apparently being paid £60,000/month as a consultant to the group. His services should be dispensed with immediately.
The admission to the Commons Select Committee by four top bankers that none of them had a banking qualification beggars belief. This admission recalls Richard Rowland's reaction to the formation by Chaplin and others of United Artists in 1919: "the lunatics have taken over the asylum".
In the light of the banking crisis, I believe that performance-based compensation of bank employees should be ruled out once and for all. It constitutes an irresistible temptation to senior employees to dereliction of duty, and it places junior employees in fear of unjust penalties for whistle-blowing.
Performance-based pay causes far more problems than it ever resolves. The claim that the banks couldn't hire competent staff without performance-based pay policies is nonsense. If anything, it apparently causes them to hire incompetent staff.
The fact that the banks seem to have had no idea of the quality of their loan books, let alone of their extent, is simply fantastic.
Where were the banks' auditors let alone the FSA in all this mayhem? Their silence in this catastrophe, responsibility for which they share, is deafening!
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230 Wrote
"In this country you can go to jail if your kid dodges school. You can get a criminal record for overfilling your wheelie bin. And you can cost the taxpayer ?10Bn while earning millions yourself and walk away with a knighthood."
Never has a truer word been spoken.
Politicians are failing this country. We need a system of referendum where everyone votes via the internet on every issue.
They trust us to vote them into power, but they don't trust our judgement to make sensible decisions for the greater good of our country.
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Extraordinary.
I am a shareholder in Lloyds TSB.
My insistance that Eric Daniels, the man who led the company into the diastrous merger with HBOs, should fall on his sword, has been referred to the Moderator.
What on earth is going on on this blog?
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#262954blade wrote:
The financial institutions have created this problem, you cannot blame the public for borrowing more than they can pay back.
I expect quite a few older people would disagree with the second part of this. Obviously some borrowers will get into financial difficulties because of changes in circumstances, and one can have sympathy. Taking society as a whole though, millions of people have borrowed too much without asking themselves what would happen if they were unable to repay. We used to have a culture in which people would have saved up for something they wanted.
This is the age of irresponsibility that is thankfully drawing to a close. Bankers, regulators, over-extended borrowers, and especially the Government have caused this state of affairs. The situation for borrowers will deteriorate in, say, two years time as inflation rises as a result of the Government printing money and wage rises fail to catch up. Of course savers will also suffer as their assets are devalued in real terms.
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The Subprime Crisis and the Terrorist Attacks on September 11, 2001
http://www.plectic.com/nineoneone/collateral2.htm
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#264
Keep looking, I'm building a database of these links, so we can see who's out to destroy the country. You know I've found a lot of Citibank connections.
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some more plectic analysis
http://www.plectic.com/nineoneone/collateral.htm
http://www.plectic.com/nineoneone/commission.htm
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As an employee of Lloyds I am at lost to understand how Eric Daniels failed to fully check the HBOS books.
I would be very surprised if monday brings better news.
The Lloyds TSB part of the group is expecting to post a profit. So it begs the question why take on the massive white elephant that was HBOS.
Eric Daniels clearly went for headlines and the idea of creating the largest banking group in the UK. He has failed to look after the interests of Lloyds TSB employees, shareholders and customers.
As for Brown? In trying to avoid the nationalisation of one bank, he pushed for a move that could require the nationalisation of two. congrats on that Brown
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What is extraordinary is that in front of the MPs the Lloyds fellow said that they really hadnt looked at the HBoS books. ie they hadnt assessed the risk. Or have I got that wrong. If that is right then the whole sector is riddled with gamblers and the word risk is not in their dictionary. The best bit is there is a bloke called Blank in the play, presumably recruited so he can write Blank cheques.
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# 234. ObserverinMonmouth wrote:
"FSA officials are to receive ?33m in bonuses."
FSA and Treasury are examining the bonus system.
But. I am starting to get the picture ...
Sir David Walker (Treasury) has been a senior executive at the investment bank Morgan Stanley.
FSA chairman Lord Turner is a vice chairman of Merrill Lynch.
FSA chief executive Hector Sants is a former high flying investment banker.
Also don't forget sir James Crossby (HBOS) and Glen Moreno who is trustee of Liechtenstein Global Trust (LGT), a
private bank accused of aiding tax evasion.
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JJB has just placed two of its failing divisions into administration.
If HBOS is indeed in such a mess then surely the newly formed LLoyds banking Group has the option of placing its HBOS division into administration.
Amputation is better than death.
Hopefully Eric Daniels is familiar with the saying, Pride comes before a Fall.
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Alistair Darling on Newsnight
"If we had not intervened... the banking system would have gone down, taking millions of families, millions of businesses with it. No responsible government could have done that," he said.
Interesting change from Gordon Brown's " problem started in the USA"
No responsible government would allow banks to operate the way they did, the Treasury and the FSA were asleep on the job.
This ZaNuLabour government should be a proscribed organisation, they have done far more damage to the United Kingdom than Al Qaeda ever managed to do.
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If this debacle has shown us one thing it's that letting the Governemnt have too much of our money is very bad practice indeed.
The Great Leader has been profligate with tax payers' hard earned cash - he's wasted 100's billions on useless projects and public sector staff (their wages have risen dramatically with little increase, if any, in productivity i.e. tax payers have received very poor value for their 'investment' (the word that Gordon likes to use to makes taking our more credible).
I think we need a root and branch reform of Government and the Civil Service and the crazy costs now associated with running them; the City has been found out - it's just a Casino by any other name. The US, Europe Japan and China need to re-write the rules of capitalism
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Robert - In their trading statement Lloyds say that their tier one ratio is above regulatory levels in the region of 6 to 6.5% which would suggest that they are still in strong position (although not as strong as before the takeover of HBOS when they were the sixth safest bank in the world and the only UK bank in the world top ten safest banks)
So how come Vince Cable is saying nationalisation is inevitable and how does this compare to the likes of Barclays, HSBC, Santander who have not yet (not yet) took government funds.
If it is the same or better then why all this negative reporting by the BBC that will lead to shorting on individual Banks and another potential run.
If the whole country is stuffed then just say it and the hard working tax payers can move to New Zealand, Australia, Canada and elsewhere in the world. And everyone else can continue to borrow more than they can afford and claim off the government.
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i bet brown and his three chins are wobbling out of control as he chuckles brilliantly at the dramatic drop in lloyds shares. Why? Because he's happy to see capitalism fail with the purcahase of HBOS. To me it seems instantly obvious that this man has to go. Him and his labour chums were riding off the back of the economic foundations built by tory's yet they screwed the system over to the point of the devastating recession we are now in. What is a shame is that the ordinary family that I live in were aware of the downfalls some years ago, yet people were blinded by possesions and greed. Now people have seen the results of such actions we need a decision maker, somebody that has the ability to make britain great again and not the small pathetic laughing stock of the world we have become! Where is our Barack Obama??
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could I ask Mr Peston a question? Is it possible to de-merge HBOS from Lloyds? You said they didn,t have to take them over, but when the prime minister asks you to it,s difficult to refuse. Couldn,t they hand back HBOS to the government and let the HBOS bit be nationalised?
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thinkb4 wrote:
Yes, but so did everyone else.
The entire system works only so long as new borrowers can be found to keep the monetary cycle going.
In terms of the housing market, this would work so long as new first time buyers could be found, which of course would eventually peter out as fewer and fewer first time buyers could afford ever increasing multipliers of their income before defaulting.
We basically reached that tipping point a few years after the US subprime crisis came to full effect, and we now see repossessions galore, never mind the avalanche yet to come as unemployment soars.
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suggesting eric daniels should be ousted is like crying fire in a crowded theatre in times like these. a well-led bank like lloydstsb is a far better steward of the troubled hbos than the treasury. you are betraying the trust of millions in the bbc and, for the time being, you, by thrusting your ill-considered personal views on listeners and viewers
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Robert perhaps you can turn your focus on the legal aspect of the credit crunch ie why are we not seeing any bankers, advisors etc being taken to court or whether we will see them ever brought to justice despite the USA putting some 150 odd agents on investigating the possibility of legal actions against those who caused the credit crunch.
Even some of the other parties such as david cameron have questioned whether we need to bring people to justice for these crimes against humanity.
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#264
The whole system is now a web of cronyism bordering on corruption protected by spin and deliberate creeping over-complication of the legal and justice system to cover their tracks.
We need a decision, we get an 'independant' review. We need an open trial by jury we get a judicial review run by Lord 'somebody or other'.
We need the people to care enough to do something. But the people have been placated by generous benefits and distracted by the creeping acceptance and allowance of distracting but disruptive practises ( casinos, shopping channels, soft porn on terrestrial TV at 9:01pm etc etc etc etc etc.
It is a truely hideous situation.
I feel so very tired and powerless by all of this.
jericoa
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"And it's pretty embarrassing - to put it mildly - for Lloyds' chief executive, Eric Daniels.
Lloyds didn't have to buy enfeebled HBOS - even though the government encouraged it to do so. "
My memory must be misleading me but I am sure a certain Business Correspondent was a cheerleader for his merger and its inevitability.
It was alwys obvious to anyone who had Lloyds narrow interests (as opposed to government, wider stability of the system etc) at heart that Lloyds would have been better off scavenging for HBOS asets after liquidation / nationalisation.
Now. how far can his state of affairs go on?
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Dear Robert,
It seems the BBC reporting of this matter isn't mentioning what seems to me to be the crucial point.
Did the HBOS board declare these losses, (or their valuation of them), to LLoyds, to Lloyds shareholders and the government last autumn, or even a few weeks ago before the takeover was concluded? If they didn't, isn't that fraud? Even if not fraud, isn't that something which should bar them from holding directorial office?
If they did declare it, then it would be publicly held information, and if the conservatives wanted to say something about it, that was their chance. If they declared these losses to Lloyds, etc, isn't it Lloyd's directors at fault, and if so, why should anyone feel sorry for them? If the government knew, then presumably they took what they thought was the best course of action, and of course they must defend their actions.
The point is that HBOS must have known. Every business must produce management accounts and I'm guessing the Bank's accountants were doing that daily. So, I think the BBC should home in on getting answers to what I've raised.
Further, where there is liability, let's expose it and punish it. That is what the banks would do to me.
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Hi
Can someone explain
With gov. giving money to banks for BAD LENDING DEBTS
doest it mean our LOANS AND MORTGAGES?
if so
Does it mean me loan/ mortgage is paid for?
or
banks get PAID TWICE ?
tony
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For this observer, the saddest thing of all is the seeming belief that all of the necessary provisions have now been identified and made. In truth, the likelihood is that bad loans and investments amounting to untold billions remain in the banks; all of the banks, not just those that have taken the Queen's shilling.
Daniels has just proved himself a nitwit amongst the host of nitwits that have been permitted to head our banks. Our institutional investors, in voting for the HBOS takeover, have proved themselves either as belonging in the general class of nitwits, or being unable to take an honest decision when faced with their own conflicting interests: vote against and write off their shares in HBOS, or vote for and write off their shares in HBOS and Lloyds.
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apropos of nothing,
wouldn't it be terrible if PAYE was scrapped, and every working person got their full salary as take-home pay.
... then could choose when and if to pay their tax to HMG.
that would be a mighty weapon.
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Why does Peston have to trash Lloyds? The bank already knew about the £10 billion stating "Based on a review of the non-public information provided by HBOS, Lloyds TSB has made a preliminary assessment that net negative capital adjustments of no more than £10 billion after tax would need to me made to HBOS's financial position for Core Tier 1 capital purposes as a result of the Acquisition. It's in the takeover document. Lloyds has a strong capital position and will come through this provided the government doesn't panic. But don't hold your breath on that. They have a habit of pandering to their voters.
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The Government are running around like headless chickens-leave Mr Daniels and Lloyds alone. Lloyds (a so called "boring" bank) were well capitalised before this debacle which was mainly caused by the piratical attitude of other so called "dynamic" banks.
"Don`t panic Mr Mainwaring" seems a good maxim to follow
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Let us just see whether Daniels suddenly finds himself in the House of Lords. What a surprise that would be!
Not of course 'cash for honours',just a 'bank for honours'.
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294. Danricv
....With gov. giving money to banks for BAD LENDING DEBTS
doest it mean our LOANS AND MORTGAGES....
I have repeated asked bank industry staff to clarify where the debts are because it is by no means clear that UK mortgages are the problem. UK mortgage losses in the case of repo are insured against that default by the insurance policy insisted on being in place as part of the mortgage. Therefore until I hear otherwise I assume the debts, at least in substantial part, are shipped in. Does that make you feel better. To allow people to think the UK mortgage holder is the problem is ingenious, the figures do not add up. Unless the bank staff want to clarify, which they have not wanted to so far.
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The chief executive and board of Lloyds are supposed to manage their business on behalf of the shareholder (i.e. the real owners of the bank). It is obvious that the interests of these shareholders were not looked after as no due diligence was performed prior to the deal.
When will these people be brought to task and face charges etc? The man in the street has been robbed blind by this Stalinist government! I say that because El Gordo and comical Ali were complicit in the deal going through over a few wines and dinner.
A disgrace if you ask me!!!
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If, as seems increasingly likely, LloydsTSB-HBOS is nationalised will the employees become Civil Servants and hence members of the CS Pension Scheme?
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As a businessman, I can not understand how Lloyds used "Consevative Accounting"
Surely it is a fundamental rule to check audited accounts fully, before this type of transaction takes place. It's like buying a used car and not checking the tyres, then noticing they are bald after you slide of the road at the first bend!
How are these people in charge of finance?
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Robert,
Would anyone credit it but Crosby (ex-hbos ex-fsa) has become chairman of a quango, Northern Way (reported in the times friday)!
We the UK taxpayers are paying this man for his 'judgement' it is shameful.
I have already stated' but will repeat that both GB and AD, oct 2008, when outlining the £37 billion recapitalisation and supposedly credit easing of the banks said that 'bank directors would not receive bonuses in 2009'full stop.
Meaning they both knew and must have supported bonuses for other bank employees.
Someone should bring them to book especially as GB is grandstanding that bonuses should not be paid ofr failure etc now.
Next,Angela Knight (ceo BBA and non-exec director of LLOYDS for many years) is bleating that 'Banker Bashing' is hurtful and unproductive and should quiesce.
Nowhere in the FT sat. report do I read that the bankers (qualified or apparently more often if not always unqualified) have shown themselves totally self interested and most importantly lazy and grossly negligent and incompetent and it is their shortcomings and lack of duty of care that is the prime cause of the banking crisis.
Apparently highly paid Angela Knight believes it is solely the publics fault that noone wants to lend money to banks.
Presumably her subtext is that if we , the public, back off and leave the bankers alone and change nothing in the banking system (what system is an obvious question to ask her) everything will be alright as nothing really is wrong!
A very informative anf fact filled statement from, A. Haldane the BOE's director of financial stability, sat FT, gives a clear steer that the banks have to-date not valued their 'risk' in any acceptable way.
The models, to paraphrase the article were likely to provide the answers required by the traders/directors to carry on their crazy strategy.
It is like hawking a problem around the legal market until you get the answer you want and then claiming as it was independent therefore 'the banks/gov. can not be held responsible'.
What the article clearly shows is that the UK Taxpayer must ensure we are not landed with the 'INSURANCE' of the 'TOXIC DEBT' that is unquantified and probably will be much more costly than the taxpayer can afford or more aptly needs to get involved in.
It is just too risky for the Taxpayer to be picking up what is basically unquantified risk of upwards of hundreds of billions of pounds especially as the markets are disintergrating.
Nationalisation through cherry picking 'assets (liabilities)' from a pre-arranged administration is probably the only way forward.
Finally have you noticed AD putting out the begging bowl by pleading that foreign banks should not practice protectionism?
The UK has been brought to it's knees by these'every so smooth team players' who believed knowledge of what the were being paid kings ransoms to do was an inconvenient option that they, being 'masters of the universe' was way below their pay grade and they therefore could dispense with the chore of actually working professionally.
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has something sinister been going on since 1997 ?
has every boadroom decision by the banks been personally sanctioned by GB ?
no it has not !
but if you believe the critics, he alone is responsible for the mess they have created.
he certainly hasn't been paid a bonus of the kind the greedy bankers got, yet their private sector behaviour is his fault !
if there had been Civil Servants involved, their natural caution would have shied away from these get rick quick schemes !
is this the result of the Thatcher economic experiment ?
chaos in our economy caused by unfetterred greed ?
and it is the fault of the current PM because in a free country he let it happen !
Thatcherism rip ? I hope so !
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Shouldn't we require all Bank directors to be properly qualified i.e with Banking Qualifications and evidence they are up to date?
After all we require doctors to be qualified, and who would go to a doctor who wasn't?
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If Gordon hadn't got his pal Sir Victor to acquire HBOS, it would have been nationalised and the taxpayer would have borne all the losses.
Lloyds would have remained a highly regarded safe profitable bank.
Instead the shareholders of Lloyds have subsidised the taxpayer to the tune of tens of billions, and seen their once valuable shares collapse in value.
But as the shareholders are in reality mainly pension savers who are also taxpayers, I guess it's non public sector pension savers subsidising non pension savers and public sector pension savers (such as Gordon, Mervyn etc), as well as subsidising overpaid directors, fund managers, advisers, other City parasites etc.
It may by now be dawning on many pension savers how much they are losing by the inept handling of the credit crunch by the Government, FSA, BoE, bank directors, auditors and advisers.
Even those in non public sector final salary schemes will suffer due to the closing of schemes to existing members, and renegotiation of terms for exisitng active members as the value of the scheme assets plummet.
Several hundred billion just in relation to the banks have been wiped off pension fund values in the course of bank nationalisations/recapitalisations.
If banks are further nationalised there would be no hope of recovery of these values to pension funds, and the impact on investor confidence would be immense.
A run on a bank? - peanuts - watch the run on the UK by domestic and foreign investors.
Who would want to invest in UK plc?
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#264, #277 etc.
Italy has the Mafia - we just have a highly incestuous, mutually protective ruling class. "Businessmen", regulators, senior civil servants: they're all in it. The politicians may just be patsies.
It might not have mattered - if they were remotely competent. I would like to do something about it, but like #291 Jericoa, I just feel "tired and powerless", as the revealed magnitude of the problem seems to get greater by the day.
My view now that the whole top of the pyramid needs to be decapitated - probably literally. But the ensuing chaos would be terrible.
Is there an alternative?
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"But Lloyds says that the loss on loans to companies is also the result of Lloyds applying its more conservative accounting standards to HBOS's loan book - which is one serious kick in the tender parts for HBOS's previous executives.
HBOS also suffered the indignity of incurring further big losses on its holdings of assorted dodgy investments.
It is a terrible humiliation for HBOS's already bashed-up previous chief executives, Andy Hornby and Sir James Crosby. "
Why are you beating about the bush ?? Say it as it is !! Gordon Brown, aka Flash Gordon, appointed Crosby to be Deputy Chief Risk Regulator when his own bank was running risks that would turn a hardened gambler pale with fright !!
Therefore, this is also a kick in the sensitive bits of a certain PM, ex-Chancellor, who keeps telling the world to follow his example of fighting off recession when he demonstrates that he truly hasn't a clue what he is on about !!
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Presumably Nos 10 and 11 were exerting maximum pressure on Lloyds to 'do the deal' so must carry a heavy responsibility here. Gordon Brown can't keep evading responsibility surely.
That Lloyds diligence was less than diligent provides another cast of 'the guilty' Wheel them out and let's get to the bottom of this.
And finally - what about the HBOS people who knew what was 'hidden under the carpet'? Surely they are guilty of making this dire time worse for us all - for their own gains - monetary or otherwise?
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Been away from here for a few days and come back to loads of fire and brimstone!
A profit of 1bn lost in a net joint loss of 10bn and the captains of these ships believe they are worth their salaries and bonuses-and yet, make a 'magnanimous' decision to forego them?
They announce their bonus decision, do their bit in the 'let's have a select committee inquiry to pacify the country' bit, then, when it's all over they announce the loss?!
I have no comment to make that has not alreadybeen made!
Weren't there suspicions abounding of coercion re the HBOS takeover, bailout funds and ignoring of monopoly regulation?
Must have been a dream!
Interesting how all bank shares plunged at the time of the announcement, albeit not as violently as Lloyds.
I would venture to suggest that the markets do not trust any of the banks. If accounting practices are so disparate amongst them, how can anyone trust anything that they say.
If they all had to use the same methods, then a more realistic comparison would emerge. Perhaps Lloyds are more conservative (realistc?) in theirs and the same should be used by all the others? Now THAT would be interesting!
Too much confusion abounds in this respect.
FSA bonuses of 33m? Ludicrous! Precisely what actions have earned these bonuses? Money for failure must be stopped, across the board.
AIG are being investigated by the SFO, why not the banks?
What a shame Alex C didn't pursue his winding up petition on HBOS....
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Ah, The Future
Enjoy the rugby this weekend...All morning, I've been hearing folk on the radio saying things like, "The problem is global..." I, on the other hand, am of the opinion that global is the problem...
ed
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to paraphrase oscar wilde, to loose £1bn may be unfortunate, to loose £11bn seems like carelessness.
If HBOS can loose £7b on corporate loans when they charge exorbedent rates, demand security cover, personal guarantees, shares in companies etc then there seems some very creative accounting going on or there is no hope for them
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#297 thank you for your post.
I recall the large document sent before the vote listing the risks in very non specific terms. How could any shareholder large or small assess the risk/benefit without a detailed understanding of the business - we had to trust the board.
However, having listened to the select committee questioning the chairmen of RBS and HBOS I now have my doubts about 'boards' - I got the impression, in spite of Lord Stevenson's claim that the members were highly qualified, that these were cosy clubs where anyone rocking the boat was swiftly pushed overboard (nobody asked them on what grounds Mr. Moore was dismissed!). These boards need a few stroppy postmenopausal women who cannot be silenced with money, to ask the awkward questions - the late Gwenneth Dunwoody or Baroness Sears would have sorted them out!
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Talking about being humbled, what are you doing for Comic Relief, Robert?
I think a song and dance, please.
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"Lloyds said the deal was still on track for completion by the end of 2008.
“This is a fantastic opportunity to create one of the UK’s leading financial services groups,” a spokesman said. Lloyd’s shares closed 4.3% up on Tuesday."
http://www.agentcities.net/?s=roth
I wonder what the spokesman thinks now?
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For many years I was a local agent for the Halifax Building Society, at that time the largest and strongest and a bye word for prudent orthodoxy.
Later, with the big bang, the rules changed and it was sell, sell sell. Well I didn't and I received a visit from a whizz kid from Head Office, who informed me that the Halifax "didn't need agencies or savers, as funds could be obtained cheaper on the wholesale market".
I wonder where he is now?
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#305 "has something sinister been going on since 1997 ?"
YES !! The UK foreign debt went from near 0 (zero) to near 600 billion quid !!
And it was the incompetence of the Civil Servants at, firstly, the Treasury and, then, the FSA that allowed all this greed to run unfettered !! All that was overseen by a certain Chancellor who even appointed his mate, Crosby, to be the Deputy Risk Regulator. Quite a bit like appointing a fox to guard a hen house !!
Furthermore, from what you've just said, I'm sure that Gordon Brown would love being labeled a card-carrying Thatcherite since he, it was, who sold our gold cheaply, blew our foreign reserves on ineffective politically correct schemes and banged on about "No more boom or bust" !!
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Have a good weekend Robert.
222. At 00:26am on 14 Feb 2009, whistleblower1970 wrote, "...bedraggled donkey..".
The Black Horse is now looking like a gelding; it should have been seen at the time!
Maybe it will win some more races in its lifetime; maybe the the losses can be stitched back on unless it was a stitch-up in the first place.
Easily said with hindsight.
BH. Raise your tail and let us see the reality?
N.
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HBOS corporate loans were eye watering - never seen such blatant overlending with such high fees attached (aimed at getting bonuses of course). I also think Lloyds will have wanted HBOS to clear the cupboard of any skeletons- even so it will have caught them out- they took a risk under pressure from HMG and boy have they been caught. But if HBOS is now pretty clean, this group has real potential providing its balance sheet is not terminally damaged as Lloyds were always known in the Corporate Sector for being careful and very supportive of their customers.
Ken Clarke was a bit too political this morning- it will take time for the Loan Guarantee system to be put in place and even then the lending capacity withdrawn from the UK market by the likes of GE Capital will mean that it will help a bit but will not make a big difference but it is probably about as much as HMG could do at this time. I also believe we need HMG to direct the support at businesses that are our future and that has to be in green technologies, engineering, science and good old fashioned manufacturing not to forget food production and construction.
Retailers going bust is not good but they do tend to import lots of goods and employ low wage people- much better to support high value adding businesses that earn us currency and businesses that build up our infrastructure and secure food and energy supplies.
Each week brings more stark news and the bad weather I think means that many of us have holed up a bit. Spring will come soon and I think we might be surprised in a pleasant way with some of the news that comes out then. At the moment I am surprised that the trains to London are still packed and the roads are still jammed- in the early 90s it was very noticeable what the fall of in traffic and usage of public transport was.
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#172 Rahere...Fascinating.....but sketchy.
Just as Hiroshima brought an all-time end to human wave warfare, so will this depression bring an all time end to mega-capitalism.
Within fifteen years there will be barely one tenth of the present number of companies around the world employing over 100,000 employees.....Chinese included.....NHS included
GOVERNMENT MUST NOW PUT A RING FENCE AROUND ALL BAD ENTERPRISE INCLUDING 50% OF STATE ENTERPRISE ......AND LET IT COLLAPSE IN A WAY THAT CAUSES MINIMAL KNOCK-ONS.....only a government acting under emergency powers can do this.
I agree with AC's number on the unemployment front...true figure of 8-ish million. This could feasibly reach double figure millions.
Hope for the best (or least bad) by all means.....but plan for the worst.
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Re comment number 299. Mr Daniels is an American Dumbo!
Can't go to the house of Lords.
Just as well Brown doesn't come to you for advice!!.
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250
Just read your comment - I'm retired myself so no need to get upset about the "old".
There are alternatives to nationalisation and I would not suggest NR was allowed to go bust.
If the BoE had quietly done its job as LOLR to NR, rather than naming and shaming it, or subsequent to the run, the governemnt had acted quickly to restore confidence e.g. by using some the measures it has subsequently put in place, we would be in a much better position now.
There are alternatives to full nationalisation e.g. guarantees, and my main criticism of Mr Fable is that he touts nationalisation, on the back of his past acclaim (unjustified in my view) and for political advantage, but does not explain in any detail (because he hasn't got a clue):
how the nationalised banks would be run;
how the problems nationalised banks would cause would be addressed (e.g. international investor confidence, would he make hundreds of thousands redundant in bank branches all owned by the government - why should I as a taxpayer support 3 bank branches in a high street where there could be one, how would nationalised banks avoid political influence in deciding on loans and interest rates, what would happen to their international businesses, etc); or
how it would help the situation - e.g. how would it reduce any losses to come.
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#92 I agree with
"Brown is showing signs of delusion. He must be removed now at any cost.
AN EMERGENCY INTERIM GOVERNMENT NEEDS TO BE FORMED BY THE END OF THIS MONTH"
But as for the British economy being beyond help I don't agree.
I think there is no limit to what a nation can achieve if they know what their part is. Problem is the whole bank thing has so taken hold that the Guvt - such as it is, has forgotten to tell anyone...
GC
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There seems to be some serious lack of understanding of accounting policies that has resulted in the castigation of the wrong people !!
Example: If a Mr. Smith( or Patel, if you insist) owes you 10 quid and you know that he is an honest and honourable man who will repay his debt to you as soon as possible, you would mark he owes you as a normal debt and wait for him to repay it !!
If you do not know him at all or know that he is a habitual gambler and binge drinker, then you would not expect that debt to be repaid and write that off as a bad debt with provisions made against it !! However, if this was the case and you still hope against hope that he will repay his debt, then you may be very likely to mark that debt as a normal debt.
What HBOS did was to lend a lot of money out to "unreliable" customers that they "thought" was reliable and recognised it as so in their books. What Lloyds Banking Group did was to "unrecognise" such debts and re-recognise them as bad or doubtful debts and take a hefty whack out of their P&L to make provisions against the fact that these debts may never be repaid !!
Lloyds may have already done their due diligence and had made provisions against these debts in their offer price !! Of course there were legions of HBOS shareholders who insisted that the offer price was a swindle.
I wonder if these same shareholders would like to come forward now and offer to repay these bad or doubtful debts that were in the books of HBOS at the time of the offer now that these debts have come to light !!
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Most people feel that Lloyds/TSB were pushed into the deal. It is all a terrible mess and it seems to have no end. I do find it incomprehensible that the book value has come as such a shock.... you just have to look at what they had their money loaned out on. I am fed up of the ponderous stance of RPs when reporting. just give us the details, it's the news we are interested in, not you.
Why were the renumeration issues not sorted out when the deals were being done? It is not as if the government are unaware of the bonus culture, this week we have news of the FSA and Home Office, to name but 2, news on the bonus front.
Why is anyone at the FSA getting a bonus? Weren't they on watch when all this was happening?
What has happened at the Home Office that warrants bonuses?
I am not sure I can stomach much more of this governments hypocracy and talk of morality. They nedd some lessons in those areas.
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Banking qualifications as a pre-requisite of being a bank director?
Interesting idea, however...
Rocket scientists, mathematicians and economists created and applied the very instruments of our destruction. Would banking exams do anything more productive?
I believe qualifications for a position of any kind are important, but not, necessarily those of a paper kind.
In the banks' case I believe the following are essential among a bank board:
Women-to break the male-orientated, 'old boy' network that is inherent in all this mess
Real-life experience-successful and meaningful contribution at director level to at least one non-finance business.
Honesty and integrity- across the entire board
Conscience-across the entire board
Commitment-across the entire board -easily determined by offering the position for a modest annual salary with no bonus (how about what Andy Hornby earns in a month, but for a year?)
Banking experience-retail sector especially so the understanding of true banking is quite clear. If someone didn't have this experience, make it a condition of their appointment that they do 2 days a week for 6 months on a branch counter as part of their induction process.
Banking exams could be a requirement -if the candidate doesn't have them, then they could, again have these insisted upon to be be taken as a condition of appointment.
A requirement to declare a conflict of interest at application-eg political affiliations, on the board of the FSA, auditors etc. These applicants should be prepared to step down from these interests before their appointment or not be appointed at all.
My personal opinion only. However, I wasn't considered suitable for the recent treasury post-maybe because I didn't go to Eton, Harvard etc. Be interesting to know the background of the successful candidate!
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#321 "Just as Hiroshima brought an all-time end to human wave warfare, "
Err, Hiroshima happened in 1946. Human wave attacks happened in Korea in 1950/1. Just how did "Hiroshima brought an all-time end to human wave warfare" ?? Was there a time-machine involved ??
/end pedant
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#319 Oi !! What's this ?? Are we into animal porn now ?? :-)
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In a previous comment, I wrote about a hidden agenda and I stick by that as the signs are so obvious now and I am certain there will be MORE exposed as time goes on despite the "more conservative" accounting policy adopted by Lloyds Banking Group. The WHOLE of the Board of Directors should be fired by their shareholders (including me) although we know how the City "protects" their own and THAT will not happen. We also know the "special" relationship between Eric Daniel and Gordon Brown which started this whole debacle those months ago.
There are major inherent problems within Lloyds and, as a previous consultant to the Group, it is obvious where these problems are and should be erased or, at least, resolved. For instance, whatever happened to the "Due Diligence" that one would "normally" do when acquiring or merging with another Company ??? We were informed (from an internal view) that there would be 3 months of Due Diligence then a statement would be made regarding whether to recommend to shareholders that the merger should take place. WHO undertook that Due Diligence ??? Whoever did should be shot or were they "pressurised" into making things look rosey ??? I wonder !!!!
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Guycroft (234),
This is the sort of thinking which got us into the mess in the first place. The first sign of maturity is the recognition of limits, whether in a child, a tribe, or a species...Peace and Commons Senseed
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What is "shocking" is the quality of this article written by Mr. Peston.
The HBOS results are not especially surprising. Lloyds warned of a negative impact on their equity of GBP 10 bn resulting from this deal a while ago in public filings available on the website. The excess over this older estimate, is without doubt "substantive" and "worrying"; but it is not at all shocking in the context of many other banks overshooting initial estimates of writedowns recently.
I fully admit to not being familiar with the LLoyds / HBOS deal. It is completely impossible for me to have any sense of the implications of these losses on the company from reading Mr. Peston's article. I'm not suggesting that we include detailed financial analytics, but at least a few words that lets the lay reader understand what the implications could be on the co's capitalization.
Readers deserve better quality journalism than a blog that was probably rattled off in 20 minutes.
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#318
"And it was the incompetence of the Civil Servants at, firstly, the Treasury and, then, the FSA that allowed all this greed to run unfettered !! All that was overseen by a certain Chancellor who even appointed his mate, Crosby, to be the Deputy Risk Regulator. Quite a bit like appointing a fox to guard a hen house !!"
It can only be considered incompetent and foolhardy if it brings about other than the required results.
What many people don't seem to understand is that the actions that lead to this situation and the current "remedies" exist to perpetuate the predation on society by the wealthy and powerful, not to prevent it.
That is why financiers are walking away from the collapse, with fortunes intact, later to regroup and resume their feeding on the masses.
Meanwhile weak and powerless members of society such as the mothers of truanting children are being thrown into prison with hardly the batting of a judicial eyelid.
The whole point of the current exercise is to keep the wealthy rich, the politicians powerful and the general populace in a state of contollable anxiety.
Seen in that light it all seems to be working pretty much to plan.
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I am appalled at the way this item has been covered by Robert Peston and the BBC in general.
1)Lloyds Bank is a sound bank and managed to make a profit in 2008 which is more than most other banks did.
2) When Lloyds agreed to take over Hbos they knew there was a problem with an 8 billion loss - this new figure is over the previous figure due to using their own more rigorous accounting procedures - I expect that they thought that that might be the case - don't you? It is not hugely over the expected figure.
3) Eric Daniels has not asked for more money from the government.
4)Given that Lloyds did actually make a profit in a terrible trading year, who would you rather ran HBOS and tried to make it profitable again - Lloyds or the government, with it's dodgy appointments to boards?
The whole tenor of your reporting on this matter is to sensationalise the news. You are incendiary. All of the media are now reporting this as the worst thing ever to happen to Lloyds because their shares slid a few pence on Friday - they have slipped a long way from their high! The most recent slip is very small in overall terms. What about a sense of proportion in your reporting?
We as tax payers have far too much of a commitment to bailing out the banks and other parts of the economy. Let Lloyds 'Captain Mannering' style of banking be allowed to prevail and turn HBOS around by trading their way out of the situation.
And for heaven's sake don't make such ridiculous headlines that the blasted chancellor/Prime Minister feels compelled to intervene and make the situation infinitely worse.
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This comment was removed because the moderators found it broke the House Rules.
The sickening thing about all this is that all the apologies and wringing of hands won't prevent any of these people receiving their 'bonuses'. In view of the unprecedented mistakes these people have made surely they should have their cushions taken away. I am retired but to help in retirment I saved £250 every month in my employers sharesave scheme. I may as well have thrown all my money away because now I am left with nothing. Eric Daniels and his ilk should be left in the same position.
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As a small private shareholder in Lloyds I would like to know whether Nationalisation would mean I will be forced to sell my shares or will they be suspended on a temporary basis?
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It will be very interesting to see the cash flow statement in due course. The position will be much less bleak and cash is the issue right now.
John
NW Londin
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290
AIG is starting to be investigate including in the UK. Surely it is about time a team of troubleshooters, Customs & Excise type be sent everywhere and take the whole stuff apart.
We also now need to stop dithering. Nationalise the lot, swallow the bitter pill now and start from scratch, the energy is better spent somewhere else, like trying to rebuild
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#328 ishkandar.....you get poor marks out of ten for your pedantry. Hiroshima was in 1945 not 46 as you say.
Point taken nonetheless
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This just goes to show that the whole of the financial sector is both corrupt AND incompetent. Shouldn't some of those knighthoods get taken back at the very least?
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# 85. anewworld wrote:
"I have 2 children both in primary school.
They asked me what have the banks got to do with the credit crunch."
The rich kid, who has many marbles, borrowed our marbles then claims he has lost OUR marbles through no fault of his own but he cannot afford to pay us back.
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Whilst the profits warning from HBOS/Lloyds is shocking - it should not be unexpected.
From December 2007
http://business.scotsman.com/halifaxbankofscotland/Bank-of-Scotland-to-declare.3588454.jp
One Edinburgh based analyst said: "Hornby will probably surprise a few people on Thursday with a low number regarding sub-prime debt. But sub-prime is not the whole picture, there are plenty of worrying signs in the European property market that could cause problems. Exposure to property funds in Iceland, Eastern Europe and Spain are looking precarious."
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332. I am not sure those blog are journalism. There seem to be just a way of spinning items out of control.
For some reason RP seems to know everything before everyone else, if information leaked to him for a specific purpose?
They are however rather addictive in the same way we get addicted to watching bad news. Hence my earlier post on spending the energy somewhere else but then again I am posting again,
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#331 - semantics, no more no less. You know perfectly well what I mean.
No limits is what got us into this mess? Spend less time reading poetry and a bit more on comtemporary history. What got 'us' into 'this' mess was three decades of absolutely ruthless, useless and toothless government.
With a 'no limits' philosophy the Paras won at Goose Green eg.
GC
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Robert,
What alerted me in Lloyds statement is that they said to have used more conservative (stringent) estimate for HBOS's losses. Can you please explain to your loyal readers the following:
1. Are there different ways of counting the same things in banking or not?
2. How come Barclays manage to make very sizeable profit while vast majority of banks plunge into deep red territory?! Are they using less stringent accounting rules? Or are they extremely clever and managed to invest in good assets while everybody else was investing in bad ones?
3. What do all these losses actually mean? Are they real losses or just paper losses in recession and falling asset prices? In other words are these money gone forever or will they reappear in couple of years as profits?
I would like to think I am not exception in wanting to understand the above questions
Please explain your readers
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In response to the following, again. My post, 335, seems to have broken House Rules.
329. At 1:20pm on 14 Feb 2009, ishkandar...
My new reply:
My post was made from a veterinarian analogy of the topic.
I should be grateful if I and other contributors would not be associated with the "we" of post 329 nor its implication.
Io,
N.
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This is highly irresponsible and low quality journalism from Robert Peston.
To follow up on MarjorieBaylis (no. 334), coincidentally sent at the same time as mine (no. 332).
There are probably many retail investors who are very worried about their shares in Lloyds and consider the BBC to be a reliable and objective source. This may only be Mr. Peston's "blog" or "take" on the issue, but it will be viewed as authoritative by many people.
It is therefore worth emphasizing that the article sheds no light on the issues being reported.
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A Business Banking Manager, working for LTSB, lending a fraction of these funds, and that lending going wrong, 'because we didn't do due diligence' would be subject to severe disciplinary procedures. So Eric, sauce for the goose........................
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Guycroft (345),
Can't disagree with the latter half of that, aside from the obvious oxymoronic implications of ruthless and toothless... a bit of contemporary "history"Not too sure about the boundaries between "poetry" and "history", contemporary or otherwise... Talk about ruthless...Salaam/Shalom/Shanthi/Peace
ed
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Just slow down everybody, nationisation this, and bankruptcy that, cool your jets people, lets get some facts:
HBOS crippled by a pair of greedy idiots that's true, but it ends there.
Now lets get down to business.
LLoyds is probably the best managed bank in the world. sits on over £220 billion in cash deposits, will post a profit over £1 billion for 2008( the worst year in finance in recent history).
HBOS £11 billion writedowns one time event. finished with period.
The board of LLoyds will take HBOS by the B***S and it will be painful, but they will succeed they have already proved how good they are by not getting thier fingers burned like the rest.
The real villains seem to have immunity from blame for their culpability in this mess, these are the brokers deliberately shorting bank stocks crashing the share prices and making furtunes eg: Poulson the billionaire shorted RBS and pocketed over £260 million and he did it again this week to LLoyds over £60 million this time. If the taxpayers investment is to be protected the practice should immediately be made illegal.
As for the glut of MP's and so called experts sticking their noses in the trough and calling for nationalisation, get with it, look deeper and burn the fingers of the real villains this will help to stabilise all banks and bring calm across markets
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Bobrocket #218
Thanks for your response. As you correctly pointed out, it's the shareholders liable under Limited company law not directors.
I don't agree with lenient treatment of debtors, since the thrust of my post was that management lack a downside when they take risks.
Glenafon #219
The root of this does come back to 911 and I think OBL has been far more successful than even he would have dared in destroying Western Society.
The fact that we have had two of God's best friends in charge, Bush and Blair instead of men of RealPolitik has compounded the issue no end.
I share your suspicion that the low interest rates may have been kept low to pay for the
"War on Terror".
Ironically although Bush and Blair are supposedly at opposite ends of the political spectrum their actions are very similar.
1. Both have been chosen to do God's will.
2. Both have engaged in an unnecessary war on moral grounds.
3. Both have eroded individual freedoms stretching back centuries in the name of the War on Terror.
4. Both have run up a budget deficit by lavishing monies on a client state.
5. Both allowed the economy to be destroyed by allowing interest rates lower than inflation.
6. Both had economic right hand men (Brown, Greenspan) who were hailed as geniuses at the time, but who now are seen to have failed the most simple economic test.
The actions of the Banks are only a symptom since they only took advantage of the situation created by Bush and Blair.
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"If I had my life to live over"?Just think,I worked for Lloyds as man and boy for over 40 years-in1944 my duties included sleeping on the premises as a firewatcher during bombing raids.Now, I look back and reflect upon former colleagues and feel sure,like me, they wonder at the apparent lack of duty,honest endeavour and service,to the good name of the Bank,its customers and shareholders.Still,perhaps predictable,a few years ago in an act of extreme meanness the Bank stopped circulation of a quarterly paper to it pensioners ,which gave names and dates of retirements ,deaths etc.on the grounds of EXPENSE and ADMIN.DIFFICULTY!!!
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Vince Cable said -
It looks increasingly as if Lloyds HBOS will now go into majority public ownership - followed inevitably by nationalisation.
Wouldn't he just love that to happen!
He doesn’t care about business, the competitiveness of UK PLC or shareholders that have lost money, he also doesn’t care about the lack of competition that would be created if Lloyds became nationalised and that’s exactly why the Government will not allow it to happen.
What’s a matter with these doom and gloom Muppets? All they ever do is talk the situation into a worse state.
These banks have made Billions of pounds in the past and yet they have a bad period and everyone including the short sellers in the City talks them into extinction. The BBC are just as bad, constantly whining on about the economy.
I run a small business and lending is not a problem for me. The rates being offered at the moment will allow my business to expand and that's great news. The banks are lending but only to strong companies that have a good credit record, which is the way forward.
The HBOS and Lloyds merger is going to take quite a while to settle down but I believe it will. At least Lloyds won't have any corporation tax to pay in the next couple of years. Also there must be billions of pounds in savings to come from the synergies that will be created from this deal.
Finally Ford Motor Company seem to lose billions every year and o-one says anything – why because there are no political points to score!
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One of the side-effects of the emergency measures is that the all-items RPI has been distorted by the dramatic falls in interest rates over the last few months. It is currently 0.9%, quite different to the other measures of inflation. RPIX is 2.8% for example. CPI is 3.1%.
At 0.9%, the RPI is also very different to what I see when I buy groceries or when my energy bill arrives...
Anybody with Index-linked savings certificates from National Savings is being clobbered by all the panic measures that have seen the base rates tumble for political reasons. They're hardly worth having actually...
So there's a double-whammy for savers. If the low-interest rates don't get you, the distorted RPI will...
It's a triple-whammy actually, as I don't suppose the interest rates will go-up anything like as quickly as they've come down. So holders of indexed-linked certs lose out today but are unlikely to see the situation reverse in a year or so's time...
There's more on this in the Daily Politics Blog, if anybody is affected by this and wants to chat about it some more...
About time you raised the profile of this sort of side-effect, please, Robert. Anybody, PLEASE ..... !!!!!
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The big banks have a monopoly, not only do we not have a choice but they have become so big they have brought the UK to the brink of collapse. New banks should be encouraged they should be given access to the clearing system. New banks could offer their savers 5% and with their savers money they could offer loans to business at 10%. Back to basics.
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Simple question; How is it that Sir James Crosby could simultaneously hold the post of Board Member of the Financial Services Authority (FSA) and also that of Chief Executive of HBOS Plc - one of the Companies that the FSA was set up to Police?
Am I missing something?
H
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Does no one realise that the Governments and the Bankers are complicit in this. Banks became companies that needed to grow their business and Governments tumbled to the fact that profits could feed their needs particularly as we were fighting a war in two countries.
This became a perpetual motion machine until the sub prime cog fell out of the bottom, everything depended on that cog. Governments never warned people about loans all they wanted was increased turn over of all the comestibles that we use. The amount of advertising on the media has reached a crescendo to squeeze every penny from the public.
Then we learn that the one economic adviser who pressed the warning buzzer has been dispensed with because he was right. It seems that the price of rectitude is failure and this means that we have nothing but a group of charlatans running this country, each in other's pockets with a Prime Minister who was the minister responsible for the changes of 1997- which leads on to the to a very old addage. "He who supps with the devil had better have a very long spoon"
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An alternate view is that they have thrown the kitchen sink into 2008 figures, used it as an excuse not to pay dividends, blame it all on the old guard at HBOS and then look brilliant in 2009 as provisions are quietly written back and voila didn't we do well - bonus please.
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No 355 RPI is a crock of .... It's part of the reason why we're in such a mess. Using the RPI meant inflation was never properly analysed by the BoE. Had the BoE used a proper measure of inflation interest rates would've been much higher in 2005-2006. But that was when the Golem was hailing his low inflation (RPI), low interest rate economy.
Higher interest rates would've put a brake on the insane borrowing.
All this blame the bankers in nonsense. It's the economy and the government and BoE that are to blame.
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This comment was removed because the moderators found it broke the House Rules.
My last blog was referred to the moderators. In any event, the simple point I would like to make is that from reading the various blogs my guess is that a number of retail investors probably look to Mr. Peston's articles as a source of authoritative information, so I had wanted to add some degree of additional colour.
One would need to look at the following areas to make a more informed determination as to whether or not the HBOS deal made sense and the potential impact of the recent losses:
* Losses v.s. initial estimates.
* The impact of the loss of the capital ratios of the combined company.
* The run rate core net income generation capacity of the combined business.
* Overlaying on top of this the potential for synergy realization.
* Amount and form of payment for HBOS.
I have no idea without spending some time doing this analysis what the implications are of the recently announced loss. And even then it is far from straightforward.
There is nothing intrinsically wrong with acquiring a loss making target. The amount of loss the acquiror needs to absorb should be considered part of the consideration for the deal and then analyzed to see if it still makes sense. What is critical is that the post transaction capital structure can also tolerate such losses.
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352. gruad999
I can think of better uses for the 14 billion to date. Let alone the wasted lives. If that sort of money had been used constructively in those countries everybody would be better off. The irony is the Garden of Eden is supposed to be located in Iraq.
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Good that Vince Cable can only talk. He is irresponsible hot head.
I listened to several his speeches in Parliment and what he says is not thought trhough. It is more populistic talk than a responsible one. Dangerous.
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354 readingwatcher
The media constantly talk to the big businesses who are apparently mainly in debt with a fall in demand. They want a handout so are hardly going to say they can sort it out themselves. If you say 6 percent unemployed leaves 94 percent in work then it does not look too bad. If it doubles to 12 percent that still leaves 88 percent working. It is a tragedy for those hit, not belittling it, been there got the teeshirt, but life goes on. Somebody has to pay taxes for this lot. It never seems to cross anybodys mind that the politicans are only too keen to say problem out there not here, problem global, not our fault. Well they are at fault. Failed to regulate.
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We are right up the creek and paddles seem scarce but does that worry the bankers. For them there seems to be no down side to their follies. Lose a billion or so and the worst that can happen is a golden goodbye plus a gigantic pension pot.
Out in the real world anyone making mistakes on this scale would be out the door with a court case pending but for bankers and their pet politicians the gravy train continues to roll on...
Is there no way to stop this? After all we are paying for it and will be for years and years to come!
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345. guycroft
But Guy you need to remember the big story today is that the woman with the worlds longest fingernails broke them in a car accident.
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One would think that GoonDon Brown knew some/knows all of this and hence his refusal to answer any questions (properly) in the last several weeks.
Goondon – Will you now resign and stop preaching about avoiding ‘protectionism’ as you have failed miserably with all of those big dangerous industrial ‘levers’ that you’re loathe to get your hands dirty with?
Also, just as concerning is the prospect of a further massive Lloyds /HBOS write down for year end 2010 i.e. the bankster, fat cat bribing bungsters are hiding the bad news in a dual financial year overlap with tripartite goon show connivance.
The worrying thing about the Treasury Select Committee farce this week is that the bankers have been asked to apologise before there has been any formal investigation - how can anyone be asked to apologise when the full facts and extent of their involvement has not been established or established beyond reasonable doubt.
We need full criminals trials immediately for criminal negligence/fraud/false accounting/high treason etc including banksters, political fat cats including Global GoonDon Brown, Alas!Goon Darling and all of the ‘goon- show’ regulators. Get them all charged for trial.
There needs to be consolidation of banks into a smaller number that are a minimum of 75%? UK owned and controlled. It is time to smash the banks and let's see some banksters doing porridge!
Further bad news to come – Lloyds will soon become a true penny share (if it is not already)- a good buy for overseas vultures being as they are with-holding their wholesale reserves of capital withdrawn from the UK - now to loan to desperate governments like the UK at an inflated profit.
The message for GoonDon Brown must be - Please stop selling out Brittannia to overseas interests in such a manner that its corresponding full political metaphorical description is unlikely to be approved by BBC moderation.
Global GoonDon Clown – For goodness sake - Will you now resign? No better time than right now - You do not have a mandate - You're wrecking the country with your gross tax/debt mismanagement fetish!
GoonDon - You've made us the laughing stock of the world! Please do something useful for the country.... like resigning!
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337. Jay235
.....As a small private shareholder in Lloyds I would like to know whether Nationalisation would mean I will be forced to sell my shares or will they be suspended on a temporary basis?...
What happened with NR was the shares where suspended and a value was given broadly related to the suspended value and that was that. The value was determined by an independent body. Unhappy NR shareholders have just lost a High Court action to challenge that evaluation. All governments appear to be fighting nationalisation of both banks and nationalisation of toxic assets. However last summer a major hedge fund in the US said that the size of the debt in the system was such that the likely outcome was nationalisation of banks in Europe and the US as only governments had the wallet to cope. The issue is not just debt there is also the issue of pensions. I have no idea where things are now other than I (blindly) do not think the debt issue has worked through the system yet. A bank sector guy may post more for you.
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366 greyhawk2
Paddles scare, somebodies stolen the canoe.
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364. At 4:35pm on 14 Feb 2009, VitaliG wrote:
'Good that Vince Cable can only talk. He is irresponsible hot head.'
Vince for PM - he's a real english knight of the round table variety. He's also going after those non. dom tax cheats and bent politicians who encourage them as parasites - and his cause is very much over due.
I would like to see him be PM or be Chancellor in a hung parliament. We need more like him and more ladies to come forward of the same ilk and speak out for Brittannia!
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!!BBC BREAKING NEWS!!
Your questions on the recession answered by our experts!!
Q - Is it possible I could go bankrupt?
A - Oh yes!!!
Q - Should I be scared?
A - Oh Yes!
Q - Who can help me?
A - No-one will help you!
Q - what will I do now?
A - No-one cares, we don't need your sort!
GC
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From the i dont believe it department.........!
The Northern Way today announced that Sir James Crosby has been appointed to chair its new commission to support greater private sector investment in the North of England......
......John Hutton MP, Secretary of State for Business, Enterprise and Regulatory Reform.....Commenting on Sir James' role, he said....... "Sir James Crosby brings unique experience and expertise to this Commission. This appointment is a positive step forward and a real opportunity to show that the North is open for business. I will be interested to hear about the Commissions progress."
http://www.thenorthernway.co.uk/news.asp?id=497
From the jobs for the boys department...!
......Yorkshireman Sir James is not so much a rolled-up sleeves entrepreneur, but an experienced financial operator with good contacts and a reputation that opens doors.
He is deputy chairman of the Financial Services Authority and a non-executive director of ITV and Compass Group....
http://www.thebusinessdesk.com/yorkshire/lighting-up-the-northern-way.html?news_section=26
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This comment was removed because the moderators found it broke the House Rules.
What a mess. This really puts the Barclays results into perspective. They may have had a lot of luck in missing out on ABN but surely they are due a re-rating?
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Of cause the Government put pressure on Lloyds to take HBOS on. Lloyds was a very conservative sound bank, why on earth would they take on this toxic bank. I have been saying for ages that this merger should never have happened, all it has done is weaken Lloyds, cut competition in the market and cost the tax payer a lot of money.
HBOS should have been allowed to fall, the reason it was not is probably more to do with politics than anything else.
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Ok, so let's make my comment 374 more restrained.
The government certainly encouraged Lloyds to do the poisoned deal with HBOS. And Mr Peston, to be fair, you did too. Some of us here on this blog encouraged them to walk away.
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nautonier 371
Vince Cable quite frankly does not have a clue, he is all over the place with his policies. He just says what he thinks the public want to hear.
Cable was advocating this merger, the only ones who opposed it were G. Osborne and Ken Clarke, what does that say about his knowledge of banking.
The Lib/Dems never think through a policy, much like Labour never do, we need sound policies now not this populace stuff.
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337: As a small private shareholder in Lloyds I would like to know whether Nationalisation would mean I will be forced to sell my shares or will they be suspended on a temporary basis?
Nationalisation is engineered State theft. Don't expect anything if that's where it ends up.
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As a Lloyds shareholder, I think the HBOS deal is going to have the same effect as ABN Amro had on RBS.
After many years of sensible management eric daniles decided he wanted to enter this game of trying to achieve a larger organisation to meet the usual bankers ego.
I fear the share price will head south and as usual small investors will suffer from the banks ov er exuberance.
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You couldn't make this one up - today's the final day for submissions to the FSA on how to regulate banks...Thank you, Radio 4's Bottom Line.
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364 Here Here
371
Why don't you call yourself Mrs Cable?
The Libdems and in particular Vince Cable are unelectable. Their mood changes with the tide. Vince Cable has come up with many assumptions over the years and no one apart from the Libdems has taken any notice because they were ridiculous. I appreciate that he is right in this case but it doesn't take a genius to figure it out. The credit crunch has been caused by several factors but the main one is the massive fraud that happened in America. No-one in the UK could have stopped this from happening.
The City should be regulated more strictly but if Vince Cable had his way the investment that comes into UK PLC would completely disappear.
The only thing Vince Cable does well is play the trumpet – his own trumpet.
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BROWN OUT!
Coalition now!!
GC
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#321
Do you think I'd give all that away? It's worth hard cash. Your problem's to find the lady...
However, there is an extension which speaks a lot about what's been going on.
Emma Calvet was also the girlfriend of half of the Paris demi-monde of the Naughty Nineties, including the scultor Auguste Rodin. Rodin was a close associate of the English satanist Aleister Crowley, and one of Crowley's better-known foundations still exists today. Now, one of our other posters didn't realise it, but they identified a link between a number of these players and that foundation,so I'm wondering whether it's possible that the Great and the Good are the inverse.
Certainly, the activities of this organisation have recently been investigated by the police, who ran into a stone wall with another European police force, because it was about to expose some highly-placed players on the continent.
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I work for Lloyds TSB and as yet the only truly positive slant i have seen on the HBOS takeover has been in the form of internal communications or press from the company and government. Personally I have always held the few that lloyds 'rescuing' HBOS is similar to grabbing hold of a huge lump of concrete and trying to stop it dropping to the bottom of the sea.
I also hear that lloyds has done the government a favour by taking on HBOS. This would be great if this favour did not carry the potential consquence of thousands of job losses from a previously prudent and steady institution.
As for Andy Hornby being kept on to the tune of 60k per mth, i find this surreal in it's logic. If you didn't laugh you would be physically sick......
As for the general argument that you need to pay ridculous salaries to attract the 'best' people I would contend that these salaries are needed to attract the GREEDIEST people if greedy= best then fine. However I choose to believe that truly great individuals are motivated by something other than money. how about......
Doing a great job?
Helping peole?
Achieving great results?
People are willing to accept that the model of a bank is to make use person X's money and in return pay person X a given amount. They then lend the money to person Y charging person Y more than they give back to person X. The difference being a profit. The simplicity of this model combined with a willingness to accept it makes the recent losses seem all the more mind boggling.
Guess if I want to really succeed i need to lose all sense of logic and become really really greedy!!
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#328
The last known instances were tactics used by both Iran and Iraq in the 1990s, having seen similar activities in Vietnam and Mongolia in the interim. It is arguable that civilians have been used for such purposes in Africa since.
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367. At 4:41pm on 14 Feb 2009, glanafon wrote:
345. guycroft
But Guy you need to remember the big story today is that the woman with the worlds longest fingernails broke them in a car accident.
Are they still the longest?
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#385 good luck at lloyds...
banking used to be simple... people lend money, bank gives interest ...lends the money to third party at interest+..... the + is for overheads and what is left is profit!
However the banks "best" brains decided this was too easy so devised ever more complicated systems...so complicated that in the end even the "best" brains had no idea what they were doing! The fact that they were allowed to do this lies at the feet of the FSA, however their "best" brains couldnt understand it either so ignored it and had long lunches.......! The government also did not understand, "the end of boom and bust" meant they thought the good times would carry on for ever.........In the end "banking" became "gambling".......and they were playing with our money...i now want mine back!
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Surely it is time now to unbundle this woeful "acquisition" - the Govt should then pick up accountability for HBoS as per Northern Rock, RBS, et al which is what should have happened in the first place.
Lloyds TSB - sixth safest bank in the world pre this transaction & then the UK's only Aaa rated bank - should not be allowed to be brought down by this ill-fated acquisition.
Daniels and Sir Victor should stand down - the huge gamble (made at a time when the world's bank's were facing unprecedented market conditions) has failed miserably and new appointments are needed to re-establish the Lloyds brand as one of integrity, stability and trust.
It is unthinkable that the Gov't, so soon after rushing through this deal with such indecent haste (and wholly insufficient due diligence), should now stand-by and watch as Lloyds TSB gets pulled under by the HBoS debacle.
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To all small shreholders in LLoyds.
I'm afraid, if, and I can't believe it could ever happen, the bank was nationalised, you are scuppered, you lose big time, and it's worse in the long term if banks go into national ownership they will at some point be re-privatised then you will benefit the same as we all did when the Thatcher government sold all of the UK's assets to their mates, they will be owned eventually by investors who can shell out billions in a breath.
WE had oil, WE had gas, WE had a car industry, we had everything, Where are we now? WE have nothing it's all gone to foreign owners thats where our jobs are going too.
WE are now out of options at the ballot box
The lib dumbs are a joke.
The Tories are pompous Hooray-Henry's
And Labour are the biggest bunch of self interest liars in the history of parliament.
BRING BACK KING RICHARD
Let's all be Lionhearts once again.
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Since the disastrous results for HBOS only became apparent to Lloyds TSB after the merger, surely it would be appropriate to demerger and make a present of HBOS to the government? Darling is going to have to pick up the tab for it anyway, so if HBOS is going to perform this way in the future, he can either nationalise it or let it go under.
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I started singing,
Bye bye to my slice of the pie
Now I'm getting calls for margin
Cause my cash account's dry
We bought so much cr*p and stacked it up high
And now our banks will all die
And now our banks will all die
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Vince Cable predicted a housing crash and recession 4-5 years ago - and for the right reasons. He is a knowledgeable and experienced economist.
I wish some of the hard-line politicos who are starting to trash him here would go back to Nick Robinson's blog and have pointless arguments with the other closed minds and fantasists who hang out there (along with a few reasonable people 0:-) )
If you criticize someone's views try saying WHY they're wrong. It's called thinking!
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Sir James Crosby and the other leading Knights of the Banking world may be unwilling to hand back the bonuses obtained under false pretences over the last few years. They may however want to consider renouncing their knighthoods, particularly where these were awarded for 'Services to the Financial Industry'!
If not, they shopuld be stripped of them. This would appear to be an easier process. from a legal standpoint, than to get money out of them.
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#327
On the matter of qualifications. I feel it isn't holding a qualification that matters, it is the content of the material that qualification represents.
I want the wee fatherly man sitting behind my bank manager's desk, the man who will keep me on a financially safe road. The man who clearly understands the loan to be used for driving lessons is far different from one to be used on a fancy kitchen or a cruise holiday.
I want that man to earn his wage by giving me the advice I need for my long-term well being, and not the advice that will give well being to his financial well-being in terms of current bonuses and targets.
That man is definitely no the MBA guy who made a killing selling gents shirts and ties.
He will give you a shirt for a price. You can examine that shirt with you eyes and hands. You can make your judgement about value for money and decide if you are going to make the purchase.
That it a far different scenario from buying debt such as a mortgage, or savings products. You can't touch a mortgage, or see how it wears with time quite so easily.
Qualifications will give an understanding of the maths. A quality life experience will give him the wisdom.
A wise man would not employ two sales agents selling debt when he knows he will have to apply another to wield scissors towards the very same credit cards 6 months later! A qualified man will understand how those debts work.
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#391 It would be nice wouldn't it? But now LBG has a lot of extra shareholders too. Lloyds small shareholders have been well and truly shafted.
Still, if one is the small-shareholder type (and I am), one is likely to be a bit better off than the many poor sods who will be lose everything because of this recession. Spare not one, but many thoughts for them and support your local community where you can.
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To those wondering if the reported 1.9% jump in house prices in January is some 'fix' by HBOS, I think it may be worse than that.
(Hammer Horror music!) It may be for real.
My son and I ventured back into the housing market this week to resume the search for somewhere for him to live. Only to find estate agents so busy they could barely answer the phone. One woman whizzed us round four sunless little shoeboxes in North London, none under 400K. We were allowed about five mins in each and in the process she told us - and I quote verbatim - I don't normally deal with clients under half a mill, but we're just so busy right now'... In other words, we weren't rich enough or mad enough to justify her time. We made our excuses and left.
I hope this is just a dead cat bounce as someone suggested, and not a sign that the whole madness is starting up again. Don't all these people taking out 4% mortgages realise that interest rates can't possibly stay this low for more than a year or so? What are they going to do when they double? Have we all learnt NOTHING?
I join Jericoa in feeling tired, powerless and frustrated.
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This crisis show many bad things about our way of life. Here are some:
1. Short termism is everywhere. Governments are elected for 4-5 years and are only keen on short-term gains. Company managements are keen to use the moment when they are on the top to grab as much money as possible.
2. Moral values (honesty, modesty, love of other people, etc.) are less important than more money and nice car.
3. Newspapers want to be sold at any cost even though their articles and headlines are irresponsible. They feel obliged to exagerate crisis and stir up people.
4. Whole society want growth and more growth. If economy growth this year less than last year - it is a disaster. Every holiday (even religious holidays) are turned into commercial madness with more and more presents each year.
This crisis is not only about greed of bankers and their mistakes. It is a wake-up call to Western style of life, which is based on individualism, consumism and short sight policies.
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I suspect this is a classic case of the incoming management clearing out anything they possibly can so that they can blame it on the previous management. What's the betting that they'll declare better than expected results next time round. Just to 'prove' the new management can do better than the old.
But then what do you expect from HBOS, the bank that pulled the plug on Farepak?
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A quick calculation of my losses as a Lloyds shareholder nearly caused my car to leave the road when I heard the news on the radio of the Lloyds/HBOS debacle.
The haring rush to take over HBOS by Lloyds was justified by them (Lloyds) as a once in a lifetime ‘opportunity’ (Sorry, they say, there wasn’t enough time to carry out due diligence properly – WHAT?) If shareholders had been made aware of their sloppy attitude - the acquisition would not have happened. It is elementary!
How many millions of times have Lloyds refused business loans to their clients because due diligence failed on an acquisition deal?
So, who was keeping an eye on Lloyds? No one, obviously, was aware of this gross act of negligence or even qualified enough to question the actions of the Lloyds chief executive and his equals. In my opinion this all amounts to a CRIMINAL OFFENCE because it withheld vital information from shareholders who were NOT presented with the full facts – or any facts at all.
The whimsical gambling of the banks in general brings to mind the case of the rogue trader Nick Leeson whose unchecked risk taking in 1995 caused the spectacular collapse of Barings Bank. Nick Leeson went to jail. He spent six and a half years in a horrendous Singapore prison for his actions. His wife left him and he was also diagnosed with colon cancer. He recovered against all odds and is now happily married again with children. (He must be more popular than ever at this time of financial global mess for his after-dinner speaking for which he is renowned.)
One thing for sure, Mr. Leeson was clearly not the only one with such trader tendencies. How is it that the chief players in this worldwide trading mess can therefore walk free?
Sadly, yet again, Joe Public is the expendable android in this global fiscal farce.
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As a long standing private shareholder (and ex member of Lloyds staff) we are being asked to endure immense pain - no div's and collapsing capital value. Please, please, please reintroduce the ban on short selling bank shares immediately. This may be valuable to either or both of HMG who brokered the deal or Lloyds as it might reduce claims if very sadly legal class action results!
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379 RMutt, just look at the Northern Rock legal challenge except the LTSB/HBOS situation is very different ie LTSB was perfectily viable and the treat of nationalisation would be state theft. If GB/AD resort to this then the 2.5m + LBG shareholders should take a massive action against the the theft. We need to make Vince Cable and Alistair Darling well aware that shareholders will not be walked over - in fact the majority of LTSB employees over the last couple of decades have been share buyers and they need to tell the politicians that they will not be sold down the river just to keep Gordon in power.
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# 391
Next time you see Vince Cable please can you ask him who's going to win the FA Cup in 2014. If only I could get my hands on that magical crystal ball.
Here are some reason quotes from Vince Cable – the expert on the economy.
1979 - There’s going to be a recession
1980 - There’s going to be a recession
1981 - There’s going to be a recession
1982 - There’s going to be a recession
1983 - There’s going to be a recession
1984 - There’s going to be a recession
1985 - There’s going to be a recession
1986 - There’s going to be a recession
1987 - There’s going to be a recession
1988 - There’s going to be a recession
1989 - There’s going to be a recession
1990 - There’s going to be a recession
1991 - There’s going to be a recession
1992 - There’s going to be a recession
1993 - There’s going to be a recession
1994 - There’s going to be a recession
1995 - There’s going to be a recession
1996 - There’s going to be a recession
1997 - There’s going to be a recession
1998 - There’s going to be a recession
1998 - There’s going to be a recession
1999 - There’s going to be a recession
2000 - There’s going to be a recession
2001 - There’s going to be a recession
2002 - There’s going to be a recession
2003 - There’s going to be a recession
2004 - There’s going to be a recession
2005 - There’s going to be a recession
2006 - There’s going to be a recession
2007 - There’s going to be a recession
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#397 - I wouldn't worry about the 1.9% price jump for real estate reported by HBOS in January. Prices will continue to fall:
As far as I understand the statistics (please someone correct me if I am wrong), there are ca. 30,000 mortgages approved each month at the moment. Say HBOS has 20% of the market share, makes 6,000 mortgages in January (is that ~6 per HBOS branch?). Now, 6,000 seems quite a small sample and one would expect fluctuations. Also, who knows perhaps HBOS have become more risk averse - lending to those with substantial deposits and who are not as price-sensitive thus paying a few thousand over the odds.
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Post 346 VialiG as no one else has answered your questions I will.
1) Yes there are. Each bank will have its own model of likely defaults based on its own experience and also on its perception of the likelihood of individual defaults.
HBOS may have used lower base default rates than Lloyds or alternatively Lloyds may have a more negaive and longer timescale view of this recession. The longer and the deepr the recession the worse the expected default rate and the bigger the losses.
No one can be sure until the loans get repaid or not and then we will see who was right or who wrong.
2) Barclays are using the same rules as everyone else. However they may interpret them more generously than some others.
Rules are generally there for interpretation and size of profits or losses may well depend on how stringent you are on following them. Barclays is generally pereceived to be a more "positive" bank in that it has a more sunny outlook on things than many others.
This tends to make their profits higher in good times and consequently lower when things are bad. To use a phrase they tend to be more cyclical.
However maybe this time maybe just mabe they have been smarter than the rest or maybe more lucky in, for example not winning the bid for ABN Amro.
3) Good question. At the moment they are probably more paper losses than real losses. However as some people have pointed out if more of the perceived bad debts actually pay up or loans in crisis actually repay in full future profits will be higher.
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There's not really any point of small shareholders in Lloyds TSB complaining about the acquisition of HBOS as decisions not in their interest were always likely when pension funds etc hold the bulk of shares.
It appears another strand of the inflated self importance exhibited by leadership in Britain.
RBS was a large Scottish bank. Bought Natwest and became a large British bank but not content at this, set about becoming a player at world level at any cost.
We're bogged down in Afghanistan and were in Iraq (until the money ran out) because political leaders wanted to portray us as some deputy super power. At the ultimate cost.
We've got newsreaders almost wetting themselves at Tesco profits.
We've got the City of London to boast about because regulations are loosely regulated.
We've got cattle trains of commuters crawling into London because 'top' companies must be sited in 'top' places not where able qualified people actually live.
We had house prices multiplying by the year, which maybe kept in line with City bonuses, but was racing away from the 2-3% pay rises across the real country.
We've got 7 figure salaries and bonuses because 'if you pay the best you get the best' while cancer patients go to court to get health authorities to pay for drug treatment.
Maybe depression/recession might give Britain a reality check:
We're a small/medium European country who should maybe concentrate on the lives of our citizens, the infrastructure of our country, the safety and promotion of our communities, providing modern affordable housing, putting purpose into our lives, improving our health and wellbeing, developing new technologies, making affordable strategies for starting and growing small businesses;
instead of
fighting other people's wars, congratulating ourselves on how rich we are based on inflated asset values and measuring achievement in monetary value.
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It would seem to me that most commentators are forgetting that "the quiet man of British banking", as he was known for years, Eric Daniles is now in charge of the shambles that was HBOS. I believe that given his reputation the outlook can only be better.
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Given the events of last year shouldn't shareholders in LLoyds have a reasonable expectation that their board directors would have done due diligence on the merger with HBOS?
As a shareholder I feel very let down that I have supported LLoyds through the years feeling that they, whilst boring and conservative, at least they were safe.
Why on earth did the board go to the casino with my money? And at a time when everyone knew what the dark side could be.
There must be recompense.
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Mr Peston,
I don't understand what is going on here, and why this fiasco is being reported solely as the fault of the banks concerned.
This matter erupted in September last year - when it did so, it was widely reported by the BBC and the supine press that Brown was actively encouraging the deal to go ahead. It was being said that with the involvement of the Trasury and the FSA, the merger could not fail.
If the banks were in such a parless state as you describe, why didn't Brown and co take action to prop them up at the time, instead of waiting for them to collapse?
I suspect it was Brown's intention all along to nationalise the banks, but he waited for this crash to ensure he could obtain the necessary shares at a rock-bottom price.
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#401 As a small shareholder in Lloyds you are not being asked to endure immense pain - You have chosen, and are choosing, to endure immense pain.
HBOS are irredeemably insolvent, no matter how much pain either you or anyone else elects to bear will impact on this position.
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