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Bank dividends

Robert Peston | 12:46 UK time, Wednesday, 15 October 2008

There may have been a bit of a misunderstanding between the banks and the Treasury about the nature of the prohibition on dividend payments pending repayment of the preference stock they are selling to the state.

Apparently, according to well-placed sources, a sensible interpretation of the complex documentation drawn up for the banks' capital-raising would say the following:

1) there is a strict ban on dividend payments for a year;

2) thereafter there would be discretion for the Treasury to permit dividend payments to start again at Royal Bank of Scotland and Lloyds (as enlarged by the planned takeover of HBOS), irrespective of whether all the prefs had been repaid.

So what would determine whether the Treasury gives permission for dividend payments to be resumed?

Well it would depend on whether the balance sheets of the banks had been strengthened by their having disposed of many of their riskier assets and on whether the ratio of their capital to risk-adjusted assets (what's known as their capital adequacy) is back at world-class levels.

As it happens, the prefs are expensive, paying a 12% coupon. So it might well be in the banks' interests to repay them before allocating whatever spare cash is available to the distribution of dvidends on the ordinary shares.

But what should reaasure shareholders in Lloyds and RBS in particular is that there is no blanket prohibition from the Treasury on the resumption of dvidend payments (well except for the coming year - which is sensible in a climate of capital scarcity; and it's relevant that Barclays is not paying a dividend for the second half of this year, even though it is not taking capital from the Treasury).

I expect ministers to confirm all this before too long.

Which would be highly significant: it would rescue the takeover of HBOS by Lloyds TSB from possible collapse (see my note on this from yesterday); and it would make the new shares being sold by Lloyds TSB and RBS much more attractive to private-sector investors, reducing the risk that most of them will be dumped on the taxpayer.

Some will doubtless see all this as a u-turn under pressure by the Treasury. But the banks will probably simply breathe a sigh of relief.

That said, the scale of the misunderstanding between them and the Treasury was quite something, in that on Monday morning the assorted official announcements of the capital injection by taxpayers all stipulated that dividends would be ceased till the prefs were repaid.

The negotiations were, of course, carried on all through Sunday night till the sun rose on Monday morning - so perhaps important nuances were lost as exhaustion gripped the ministers, officials and bankers.


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  • Comment number 1.

    Right... Got to make sure we pay those shareholders. THAT's the problem we're all facing just now.

    The more I understand about the manipulation of credit and currency by banks the more I like the look of Digital Gold Currencies.

  • Comment number 2.

    Nothing then about management changes, cost cutting and Board composition then.

    If management fails, change the leaders and regroup. That is how most businesses handle problems. And..................

  • Comment number 3.


    Still does not look too good for private investors. Particularly unnerving is that shareholders that took up options during the various rights issues recently, are challenging what the banks told them at the time. Now I'm no fool, and I know perfectly well that share go down as well as up, BUT if you go to the bookies and place a bet on a horse and that horse loses a leg on the way to the start post, something is wrong.

    Politicians still go on about toxic debt, and getting the banks to lend to each other, but what is the exposure of the banks in question to CDS. Is CDS the toxic debt that they go on about? An important question. The CDS was created outside of the regulated market and the last count was worth $45 trillion globally at the end of 2007. How much are they now, and what is the exposure, these are the questions government and banks need to answer.

    Still cant make it to the chancellors party

  • Comment number 4.

    Well now. A Broon statement that looks water-tight with NO DIVIDENDS to the general public - to reassure them he's being TOUGH! Then when the fineprint is examined, its as weak as hell. What's the betting executives get precisely the same bonuses as before (or more) when the dust settles. Also assume that golden parahutes will still bring those failed directors back to earth gently.

    Why are you towing the Govt line so closely, robert?

  • Comment number 5.

    OK, fair enough, Robert, and Lloyds TSB shares clearly seem to up on this.

    But one question.

    The other banks that are not participating in the capital raising - Barclays et al - are nevertheless getting the benefit of government guarantees on their interbank lending I think?

    So what does the taxpayer get from them for having taken this risk?

  • Comment number 6.

    So bankerrs bonusses will be reality cheques for £00000000000 this christmas

    Thank you for the sensible interpretation Robert ,perhaps you would now like to give us a sensible interpretation of the prevension of errortism legislation viv a vis Iceland ,anyway what has sense to do with the sophistry game that puts lawyers and pollytitians at the top of the food chain .

  • Comment number 7.


    You're off again into the stratosphere with your writings on top-level funding, banks and finance.

    say - You're the business editor or the finance editor?

    You don't say much about business at this critical time.

    Maybe you can point me to a blog which does talk about business and the impact of all this mullarkey - occasionally. The BBc could be the 'voice of business' - it shure ain't Harriet harman..


  • Comment number 8.

    Seems rather unfair on Lloyds shareholders - they were the white knight who kept HBOS from crashing completely, although others admired by unicorns might choose to differ somewhat. On the other hand, we never did get to know what Lloyds had been hatching internally, so perhaps the Black Widow had some skeletons in its own cupboard to manage.
    Now this is on the road, what about the recession?

  • Comment number 9.

    If this is the some total of Treasuey clarification then my views of the sub-prime intelligence of many civil servants is confirmed.

    Nobody trusts govts, particularly where money is concerned. One year ban on dividends is sensible but after that there needs to be a simple formula to determine whether the dividend can be paid and how much. Govt discretion does not work. Without this all that will happen is that pension funds will dump RBS/Lloyds/HBoS shares because they have no sure dividend mechanism. Pension funds need dividend paying companies in order to pay out current pensions

  • Comment number 10.

    re the banks , a search related to Robert's blog today threw up this fascinating gem from his blog of January 2007 :

    "Yup - the new Brown/Balls consensus is that the banks are exemplars of Britain’s economic future, a “knowledge” industry where the UK has a competitive advantage. "

    dear oh dear oh dear..

  • Comment number 11.

    I fully agree the stupid decision to ban the banks from paying dividends to ordinary shareholders will kill these three bank once for all. Otherwise if follow the US model with governemnt taking minority stake and higher valuation with no limit on dividends payment, then share will rebound and the tax payers' money investment will have a real chance to make a good profit, otherwise if these three goes, next in line will be hsbc, barclays and the whole financial system will collapse in front of our eyes, because there is no plan 'b'. So the treasury and GB should now revise the terms of bail out plan and allow the banks to run as privately and independently as possible, also most crucial issue is allowing the banks to pay dividends to ordinary shareholders to attract private and income-based fund investment. This is the only way for getting out of the deephole they dug.

    The PM GB and AD are talking about restore market confidence, regarding investor confidence, driving bank share prices down and so-called nationalise happened to NR and Bradford & Binley and even happening now by nationalising more banks will once for all completely utterly destroy the stock market and investor confidence in the heart of UK economic life. The hourable thing GB, AD and this government to do is coming out clean and say an apology to share holders and investors, after all these investors are the real rock of British economy, the investors are both tax payers and investors who day in and day out driving the UK ecomony moving forward. Rob their shares and nationalise banks without paying proper conpensation to share holders will totally destroy investor confidence. If the government come out tomorrow morning and announce that they will properly pay conpensation to Northern Rock and Braford Binley share holders, then I can say the market panic will disappear and confidence will return in no time.

  • Comment number 12.

    I very much doubt there was any misunderstanding when the banks needed the money. They obtained the money, waited a couple of days and then decided to get the terms changed.
    As I posted here only a couple of days ago, Brown will go to the city huffing and puffing and then come back meekly giving the banks everything they want.
    My mistake was to say it would take two years for the banks to do what they want with the money in terms of bonuses, pay etc.
    It's taken two days.
    The tax paper will pay with unemployment, cuts to public services and real declines in wages for the banks profits and shareholder dividends. All the talk of financial regulation will come to very little.

  • Comment number 13.

    Key considerations about the finer points of the bail-out are clearly being more carefully thought through. That is a good thing.

    Dividend policy is a central consideration. It is surely sensible to encourage big funds with big holdings in bank shares, held primarily for dividend income, to retain these holdings - indeed, build upon them - and, subsequently, buy into the rights issues.

    Those involved in negotiations might also consider the position of individual shareholders. Most individual shareholders are not speculators; they have invested for an income, and will have to sell their shares if no income is forthcoming.

    There is a further problem for those individual shareholders who WANT to take up their rights, but who cannot possibly secure the required cash within a few weeks, without taking on debt.

    Why is it so vital that the full refunding required to give banks their capital, and at these very high tier one levels, must take place by the end on November? There must be a way of spreading the rights issue and of giving the small shareholders a chance to accumulate the required funds to take up their rights.

    Central to the government's position should be a sensible refunding of the banks within a sensible time scale, under circumstances which will require the smallest possible investment of taxpayers' money, and under terms of maximum security.

    Every measure which encourages funds and private investors to buy shares, and take up rights, can only be of benefit in this respect. The restoration of an independent, secure, and prosperous banking system is vital to us all. At this stage, a logical, well thought out strategy is imperative.

  • Comment number 14.

    If the banks don't like the Treasury deal they can go elsewhere, that would be the best solution for the taxpayer. If there is no money elsewhere and they have to have money they are stuffed. If they cannot trade without the money then they are bust and shareholders are stuffed. It is whether the banks can pay their bills or not, not what their assets are worth. If the shareholders are stuffed they dont have anything to argue about. If the shareholders had controlled the pay, perks and business policy of the banks this wouldn't have happened. Banks talking of dividends when they have to go asking the taxpayer for money miss the point. You cannot have capitalism on the way up and socialism on the way down.

  • Comment number 15.

    A quick look at the 2007 accounts for Lloyds TSB, HBOS and RBS shows that actual dividends paid in 2007 was, in round terms, £7 billion.

    Pension funds need the income so we need to see a revenue stream coming through to them. So the news that some flexibility might exist from the Govt as regards paying dividends is good news.


    This £7billion will reduce - ok that's understood - but the existing shareholders do not take up their entitlements then that amount would be diluted with Govt being the winner - not our pension funds/charities/etc etc.

    We need confidence in the three banks to rise and then existing as well as potentially new investors to take up the shares so that all that is needed is the Pref shares - which can hopefully be paid off quickly.

    Long term - at these bombed out prices, the shares must be attractive - provided they give some income stream.

  • Comment number 16.

    please the fat cats and keep the good times rolling for them is all this government seems to be about.
    as long as the banking and stock market sectors remain happily employed the rest of us mean nothing.
    well in this our govenment has done a great job and will win elections hands down, we the normal hard working public are of no concern to the government as we can see by unemployment rises and the cost of living going up above inflation.
    was the government elected for the banking sector and european interests or were they elected for the people of this country?
    to be honest i dont know from watching them of late.

  • Comment number 17.

    "I fully agree the stupid decision to ban the banks from paying dividends to ordinary shareholders will kill these three bank once for all."

    If it weren't for the money the UK taxpayer is putting in they would be dead anyway and the shares worthless. Likewise B+B and Northern Rock.

  • Comment number 18.

    spot on #9 this is already happening as equity income funds dump non dividend paying shares in RBS, HBOS and LLOY. The market price of LLOY shares though show that there is definitely a "clarification" or should we say a belated realization that in supposedly protecting the taxpayer and " punishing" the banks, the reverse is true -trhey are caning the pension and savings funds who are acting logically. It would be much easier and far less costly if they could raise fresh capital by promising a reasonable level of dividends. Regrettably this Government has never learned the Law of unintended consequences. This is yet another example, as is the utterly discredited tripartite scheme.

    Far from solving the crisis, the bail out reveals allthe hallmarks of a hastily cobbled together deal.

    The only reason that LLOY would stay in the picture is the extraordinary LT opportunity to create a giant retail bank without proper OFT/Competition watchdog rules. They also cannot have it both ways. Avoiding share price degradation AND buy HBOS on the cheap. It's too big and currently too toxic no matter how attractive the mouth watering LT prospects

  • Comment number 19.

    Per Lloyds TSB statement yesterday morning:

    "Under the terms of the preference shares, the enlarged Group will be precluded from
    paying a cash dividend on its ordinary shares whilst any of the preference shares remain outstanding"

    Seems pretty clear and water-tight to me. If the Government now relaxes this policy, make no mistake it is because they have been scared that the banks' share prices have declined. But the Govenment is there to act for the taxpayer and the populus not respond to the stock market - we do not want to see a transfer of wealth via dividends from taxpayers to shareholders.....the banks have had a wonderful period up until recently with lax lending policies and selling on packaged up debt leading to super-normal profits: now it has reversed and profits are down, why should the shareholders be compensated by the taxpayer .....???

    Robert - stop being a mouthpiece for a weak Government and look behind what is happening. This Government needs to stand up for the taxpayer and those who voted them into power, not cow-tow to the financial community.

  • Comment number 20.

    #2 - PrisonerNumber6

    'Nothing then about management changes, cost cutting and Board composition then. '

    This is becoming a bit of a tired old refrain. If you want to replace directors and managers who know a lot less about banking than they thought, your only choice is people who know absolutely nothing about it. More than a touch of 'out of the frying pan' if you ask me.

  • Comment number 21.

    #9 and 18

    Totally agree that the banks would be foolish to rely on the exercise of discretion by this Government. But presumably the 12 month moratorium starts from when the prefs are issued - well by then we will have at most six months more of this calamitous Government.

  • Comment number 22.

    In addiction recovery circles there is a saying:
    '... an alcoholic will steal your wallet; a drug addict will steal your wallet and then help you to look for it ...'
    There is a spiritual sickness at the heart of this global financial turmoil. If it is diagnosed correctly for what it is, then the treatment will be effective and the prognosis optimistic.
    The bankers have not got the power to destroy civilisations. The people destroy civilisations from the inside out. What the banks show is the tipping point of countless individuals as their lives are meaningless, trapped and turned over to the wrong guiding principles that inflame personal appetites rather than satisfying them.
    When sufficient numbers of individuals wish to change, then society changes. The change will be from the inside out, personally and then therefore collectively.
    Laws look to change people or systems from the outside in and hence generally fail in the long term to do anything but make more criminals.
    I hope that many people wake up, not to blame the misleaders, but to never again empower them.

  • Comment number 23.

    I think that it has to be noticed that at all the Banks, accountants managed to worm their way in and it is they who command the huge salaries and bonuses. If it was left to prudent Bankers the world wouldnt be in any of this mess. The accountants can ditch the companies they work for having made their money and now what is happening is all of a sudden nothing to do with them....BBC Radio Ulster had a contribution earlier from a man re switching off and on lights in the street and how accountants just expect that if its turned off it doesnt cost money....they should stay accountants instead of going into careers they know nothing about..

  • Comment number 24.

    The stock exchange is not the heart of the British economy, so please do not mix private woes with public ones.

    The pension fund argument carries some weight, but not much as the pension funds could sell the shares concerned to the treasury in exchange of government bonds.

    As post 17 said, if the government had not stepped in (which was a mistake in my view), then these banks' shares would be worthless, thus there is no debate here.

    This actually shows that the right course of action should have been: writing off the bad debts and assets (for whatever reason they became non performing) against reserves and equity. Hopefully declaring the current owners' stakes worthless and then recapitalising by the state. Unfortunately the first step was omitted and this creates all these technical problems.

  • Comment number 25.

    The system is bust. Every remedial action proposed so far incurs an opposite and equal re-action. A rights issue for HBOS? Introduce me to the chap who is going to take this up - I've got a bridge I'd like to sell him!

  • Comment number 26.

    15 singing brave heart

    I'm afraid the fact that a shareholder needs a dividend has nothing to do with whether one should be issued. If there is no profit then dividends have to paid out of reserves against future profit forecasts. If there are no reserves what then. These banks appear to be dangerously close to not being able to meet their obligations. If they can raise money on the open market then they, with their shareholders, are masters of their own destiny. If they can't they have a problem which is not going to go away in a hurry, that is why the share value has plumeted.

  • Comment number 27.

    Almost everybody now say that HBOS need to be rescued and Lloyds are forced by Goverment into the rescue takeover. I am not sure it is true! How do people know that HBOS is insolvent? Or is it just a rumour that spread and became accepted by many people? According to half-year 2008 results HBOS made a profit. Now, if Goverment manages to unfreeze interbank lending (that hurts all, not only HBOS) then HBOS is a successful, solid bank.
    HBOS has big (if not the UK biggest) customer base, including saving accounts. Its book value is something like 400-500 pence per share. Lloyds are paying less than quater of book value for HBOS. Surely, it is an excellent deal for Lloyds!
    Am I wrong? Please explain
    As HSBC shareholder I still cannot decide whether it is good or bad deal for HBOS.
    Sorry, my comment is on different subject.

  • Comment number 28.

    Can you explain something for us (well me).

    If LLoyds TSB are in trouble and need a bail out / capital injection, and HBOS (or any bank) is 100% guarenteed under the goverment scheme's (fully nationalised, or 75% nationalised).
    Why are Lloyds still going ahead with the bail out?? And not use the £12 odd billion in buying HBOS to safeguard their future.

    Surely if the bail out dictates certain conditions to Lloyds like no dividends for a period, or Golden Shares for the Goverment, by not taking the goverments helping hand this will help their share price thus saveguard their future, and give the current shareholders confidence that their investment will give the returns.

    Is this the banks still in the same mind set as pre the credit crunch and thinking, we can make a huge profit here?? Sod the expence?

    I think a good example of a bank is Barclays, their shareholders would have lost out on the deal, so they are raising the required funds themselfs.. And still run the company how they need to...

  • Comment number 29.

    And one more thing.....

    Before GB goes to his meeting to make proposals for reform of the international banking system, using your talents for explaining the complex in simple terms (and without expressing any opinions either way of course..... heaven forbid!) would you kindly host a discussion of some of the options that the world now has, or rather that the UK could propose, to help us towards better global regulation.

    I've three starter suggestions for cleaning up a small portion of this dudu all around us:

    - if you call yourself a bank (i.e. we give you a license to do so - it's us who have ownership of the currency after all) then you have to maintain just one pot of assets and liabilities. Absolutely no SIV's, or other farragos which were always a complete con, and a pretence that the bank bore no responsibility for those extra assets and liabilities, when of course they always did. (How on earth did the regulators ever allow them in the first place?!).

    - the word "bank" should have just one meaning for one type of organisation, as above. It should not be allowed to be used for organisations that go gambling as principals with other peoples money, and here I'm thinking mainly of Investment Banks who should be forced to change their names now to Investment Companies or Financial Advisors or something else..... hedge funds, betting indexes etc...... (no, don't say Iceland.....). The existence of so called "banks" that do completely different things from ordinary banks is highly confusing for the ordinary man in the street, and we should clear this up.

    - lastly, we should take this present opportunity to do something about the ridiculous string of dependencies and territories we call "offshore", where thoroughly dodgy dealings go on and where if a company is based there, then we all know what they are up to but no-one seems to be able to do anything. I wont mention any names here for fear of being 'moderated'. I think the deal should be - if you want to trade on being a British protected territory/dependency, and benefit from UK resources, then your financial outfits have to play the same game as if they were here in the UK. Lets leave the tax evaders/drug dealers etc to other countries to host.

  • Comment number 30.

    A giant leep for Mandelson and a step back for Bankind ,in which bank willhe put his million deposit?

  • Comment number 31.

    There are some truly bizarre comments on here - especially from Justin150, who accuses civil servants of possessing "sub-prime" intelligence, but then himself goes on to write the phrase "some total". (FYI - its "sum total"). Although in fairness to Justin, his basic point is correct.

    Now for the real idiots - anh12345, for one.

    Preventing the bank's share price from plummeting by allowing them to pay dividends (which in turn prevents pension funds etc from dumping the stock) is NOT looking out only for the interests of the shareholders, it is looking out for all of us who might ever need to borrow or save money.

    If the banks' share price continues to decrease, they become more vulnerable to collapses, as happened to Northern Rock. If that were to happen to a big bank like RBS, we'd all be in touble.

  • Comment number 32.

    I tend to agree with your comment on what a business editor should be talking about,ie. business issues. I can think of a few examples to keep him busy.

    A. How are last week's goings-on going to affect job-destruction in what is left of 2008 and going in to 2009. What are the real unemployment projections?

    B. Mid November will see another "crisis" oil producers' meeting to shore the price of crude yet currently we are being fed the whopper that inflation should come into line in early 2009. Explain this to me like I was a five year-old,please, 'cause I just don´t get it.

    C. etc,etc... I could go on all day talking about business issues, but then again, that is what I would expect a business blog to be about.

  • Comment number 33.

    We are starting to see the real situation as regards the (in reality) open-ended pledges given to these banks.

    As in war, the outcome is uncertain, and more and more resources will be diverted to 'the front'. As this process continues, the sham that the government is allowing these banks to continue operating commercially will be exposed.

    Observe HM Treasury responding to market movements - THEY ARE IN THE BANKING BUSINESS WHETHER THEY LIKE IT OR NOT.

    Make no mistake, reardless of the 'over by Christmas' wish-fantasy of politicians, no-one knows where all this is heading.

  • Comment number 34.

    Many people use the term "Bail-out of the banks". I think this is wrong. The housing unsastainable boom and lack of adequate regulations over last 5-10 years created this financial crisis. It is a fault of Goverments, Central Banks, FSA and society as a whole. Banks, as any commercial companies, operated within the environment with the purpose to be succussful business and maximise profits. When crisis started over a year ago, Goverment's actions to stop it were far inadequate. The problem grew and grew. Goverments allowed crisis to become of huge scale and now they either completely or partially take ownership of good banks away from shareholders. Shareholders lose. Nationalisation, in this case, is very unfair to shareholders. Goverments created this crisis and now take ownership of good companies for almost nothing. Taxpayers should win here.

  • Comment number 35.

    HSBC & Standard Chartered also signed up top the gov't bailout, does that mean their dividends are suspended as well?

  • Comment number 36.

    What are "dvivdend payments"? And while we're at it, what does "aasure" mean?

    I've heard rumours about some crazy new tool doing the rounds in techy circles - it's called a "spelling checker". BBC journalists (every single one of you) could do worse than check it out.

  • Comment number 37.

    As 63% shareholders in RBS the UK government is the proud owner of 5.35% in Bank of China.

    RBS is currently an 8.5% shareholder in BOC this is a risk. Bank shares have been hit hard in China this year.

    What are the ramifications for this shareholding politically and financially?

    The UK Government needs to protect UK pension companies by reversing the 1997 $5bn stealth tax grab on pension dividends and allow payment to shareholders of common stock in banks on shareholdings of 1% plus.

    It is not rocket science just plain sensible to protect the banking system and economy you need to look after common shareholders and pension funds as well.

  • Comment number 38.

    please can you answer the correspondent who yesterday asked how it was that Lloyds TSB , an AA rated bank until only a few days ago can now suddenly become a basket case requiring a state handout?Is he right to suggest that there may well have been some(or a lot) of eye watering arm twisting in the background.In your opinion is this intervention actually a necessity for Lloyds?

  • Comment number 39.

    As 63% shareholders in RBS the UK government is the proud owner of 5.35% in Bank of China.

    RBS is currently an 8.5% shareholder in BOC this is a risk. Bank shares have been hit hard in China this year.

    What are the ramifications for this shareholding politically and financially?

  • Comment number 40.

    I give up on this blog looks like the Nu labour government is censoring it.

  • Comment number 41.

    Lloyds shareholders (me included), don't want any part of HBOS, at any price, regardless of the dividend concessions.

    Its a basketcase company and if the government wants to save it, it can do so by itself. If it can end up profitable, good on 'em.

    VIctor Blank....stop looking enviously at the House of Lords.

    Lloyds your Chairman.

  • Comment number 42.

    What we need is a little cooperation
    A little less greed
    A little more we, a lot less me

    Do the share holders deserve a return yes but firstly rescuing the banks means they have been saved billions on what would have become worthless assets the pension pots would also have gone down the same drain. If the tax payer has bailed them out as a white knight then the white knight should take preference but it could with cooperation and agreements be shared in a sensible way.

    But no the instant reaction of the spoilt brats is I’m taking my ball home, beggar my neighbour, dog in a manger, greed. No ones said sorry we did not curtail the excess of the fat cats by voting at the AGM we just took our fat dividend and let them carry on the road to hell regardless of who they damaged as long as it made us a return.

    Nor has any director had the decency to say look we had it wrong I am going to work tirelessly to get it right. Everyone in the banking world has just said good we’ve been bailed out by the suckers we rob every day [and they do cost everyone] so on as before guys order the Yacht and replace the Ferrari in the 2009 spring colour..

    You know it is not just a few of us that will not stand a chance with this attitude but all of us and those with the most to loose and the most to gain will absolutely in the end loose the most.

    Survival amongst a winning field is one thing surviving in a loosing one is altogether different it’s a different skill set, a different mind and the talents that built the banks and the markets and the boom we’ve had for ten years are not the talents that will save it, they should retire to the dressing room until it is repaired. This is Admiral Creighton time.

  • Comment number 43.


    "out of the frying pan and into the fire..."

    I'm not so sure about that statement. In any other business when you´ve been grossly incompetent and neglectful/ ( read deceitful) you get the boot without the huge wedge in your back pocket.
    A big part of the problem is that currently confidence in the competence of bankers does not abound.
    Why would I, or anybody else,trust any banking institution to be transparent.
    Remember that old phrase that has now become redundant;

    " You can take that that to the bank!"

  • Comment number 44.

    The intensity of the hatred towards "the banks" and "bankers" seems to emanate from a perception that "bankers" fit into a specific profile - one which is rich, greedy, amoral, deeply unpleasant, and wholly untrustworthy.

    The young lady who served me in my bank this morning was pleasant, courteous and helpful. Like so many of the tens of thousands of bank employees in my country, she works hard for an emplyer that she likes, is paid a modest salary and, although she didn't show it, is probably fearful of losing her job, in the midst of an approaching recession, under circumstances over which she has absolutely no control.

    There is a numerically small minority of "bankers" who deserve our derision. That is understood. But it must also be understood that there are big decisions being made about our banks, and all of their employees, and attempts to blanket all banks and "bankers" with bile can only be destructive for us all.

    An unemployed bank employee stops being a taxpayer and starts being a benefits recipient. Banks deprived of profits stop being huge taxpayers - as they have been for many years - and suppliers of income for pension funds.

    A detached and sensible perspective, please, and sensible suggestions for solutions.

  • Comment number 45.

    Dear Robert,

    I thank you for this information.

    However as a small shareholder of Lloyds TSB I cannot vote for the takeover for other reasons:

    I don't trust the Treasury's discretion to ever pay any dividends. They could decide that they don't want to for whatever reason including political pressure. there is not enough certainty.

    To keep lending at 2007 levels seems irresponsible and could lead to the creation of more toxic debt.

    No-one knows the level of toxic debt in HBOS.

    I don't trust the governments influence on the board of directors either through the Chairman who appears to be a friend of Gordon Brown or through the government appointed directors.

  • Comment number 46.

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

  • Comment number 47.

    Why can't we see all the documentation with regards to the bail-outs since shareholders are as much in the dark as the general public is and we are the one's supporting the bank at this time. If large numbers of shareholders were to sell then the whole thing could blow up again!

    Please remember the current long term shareholders (including YOUR pension funds)have potentially lost a lot of money and any angst about Bankers and the banking system should be directed at the main culprits - Bank Directors, FSA and Government, who have brought us to this state. Shareholders only get information after the event.

    Now, as I see it Gordon Brown is taking credit for a plan could may halt the breakdown of our financial system as we know it. However, by doing so he has put some of our banks at a disadvantage to other international banks by taking a large stake into public ownership and requiring banks to pay 12% on pref. shares. Whilst the USA has mainly provided money in the form of pref shares with an interest rate of only 5%. The current loss of jobs in the UK finance sector will probably by permanent and many of these jobs will go overseas when the markets rebound in about 18 months time. Our banks will still be shackled but hopefully to a conservative Chancellor.

    Mr Peston, pointed out a nobrainner about 10 days ago when Lloyds were trading well above the 0.83 figure for the agreed merger with HBOS. Why is then that at the new rate of 0.605 is the price gap still about 10-15% morethan this, and why are both companies shares trading well below the government fixed price for the bailout eg HBOS 85p v 113p. I can't explain it but if we were given the full details of the bailout perhaps the devil is in the detail and it seems we can only rely on Mr Peston to provide some answer.

    Can anyone tell me if the Banks have already received the bailout monies, and if not since the world has moved on a tick perhaps we could still reject the governments blackmailing tactics carried-out with Bank members who were effectively fired the next day. Not the best scenario to get deal for the shareholders or get an objective view of the future.

  • Comment number 48.

    I think the main point is that shareholders have become moneystrippers instead of business helpers. In that sense, once punishing them could be passable.

    But, in my humble opinion, shareholders still continue to be the main source of funding for all the listed businesses in the market. So my question is: how further the government can go when "nationalising" businesses... now banks, then who know?

    One fast (and cheap) answer is inflation: print more money and inject into the market.

  • Comment number 49.

    "The negotiations were, of course, carried on all through Sunday night till the sun rose on Monday morning - so perhaps important nuances were lost as exhaustion gripped the ministers, officials and bankers."

    Have I read this correctly ?? Are these the same people who can party all weekend and still crawl into work on Monday morning but cannot take a whole Sunday's worth of negotiations ??

  • Comment number 50.

    19 anh12345

    The government is trying to hit two birds with one stone when they have problems hitting one bird with one stone. The glitch is that the government wants rid of HBOS to LTSB when the deal should just be about supplying funds in exchange for assets. The deal is not clean so it starts to flounder. It is sell+purchase v sell+purchase with LTSB, rather than just sell v purchase.

  • Comment number 51.


    You are being used. Who fed you this market sensitive info?

    Let's start the guessing game - a high ranking person at Lloyds - pretty likely as such a person would everything to gain by the resultant (guraanteed) rise on Lloyds share price? or maybe a member of the government/treasury team who doesn't want Lloyds to back out of the HBOS/Lloyds TSB has a vested interest in talking up the deal?

    Of course, prices have risen today for Lloyds TSB. My guess is that your mole is in the Treasury they seem to have messed up and looking for a way of mending the terms of the nationalisation.

    Any other guesses? Are we allowed to "out" the culprit on this blog?

  • Comment number 52.

    Sorry to be pedantic but FYI Preference Shares do *NOT* earn interest !! They receive fixed dividends in preference to all other calls on the profits of the company including government loans !! That is why they are called "Preference Shares" !!

    They may also carry the right to vote in the company's general meetings as opposed to loan/debenture holders which have no such rights !!

  • Comment number 53.

    51 stevehemingfords

    Emm. Something about an orifice that passes all understanding. Deals should be private or open not spun. Nothing new with this government though. Appalling really.

  • Comment number 54.

    I have a theory that when the Large Hadron Collider was turned on, we were all swallowed up by a black hole, and reappeared in a parallel universe somewhat similar to Alice's wonderland.

    On that basis, I think that the logic of the finanical and economic system is now topsy turvy, and bares no relation to common sense whatsoever.

    "I don't believe there's an atom of meaning in it."

  • Comment number 55.

    When will the penny finally drop with the shareholders, depositors, general public and government that these banks are irretrievably BUST.

    Their liabilities exceed their assets, they have useless management, and they have no credible means of ever making a profit ever again, let alone paying back the taxpayer.

    They should be forcibly nationalised in their entirety, their positions unwound, and their depositors reimbursed.

    In order to avoid total chaos this should be done in an ordered manner over the next year or so.

    Let someone else set up a new bank with a clean balance sheet and start again from scratch.

    I know it's not very palatable but what other option do we have?

  • Comment number 56.

    Get some sleep Robert! Your spelling has gone completely to pot!

  • Comment number 57.


    So much for Mr Brown's drive towards transparency in financial matters.

    The fact remains that you have not been able to determine

    1.whether the preference shares can be redeemed at the absolute discretion of bank Boards.

  • Comment number 58.

    This looks to be a very bad deal for shareholders - notice that only the Government can subscribe for the preference shares paying the vast coupon of 12%. Lloyds TSB was supposed to be one of the least exposed to the credit crunch yet it looks as though the shareholders are getting one of the worst deals but in the circumstances there seems to be no option but to put up with this. The Treasury may say it is looking after taxpayers' money but in this case it is effectively defrauding one group of taxpayers to secure a better deal for others.

  • Comment number 59.

    Asking LloydsTSB shareholders to vote for the merger with HBOS really is like asking turkeys to vote for Xmas.

    A bank that claims to be solvent and whose shares are generally held for their yield is proposing to take over one that is in considerable trouble on terms that will see no dividends paid for an indefinite period and that has, quite predictably, lead to a steep fall in the share price.

    Have the directors forgotten that they have a fiduciary responsibility to their shareholders?

  • Comment number 60.

    So much for Mr Brown’s drive for transparency that you have yet failed to determine:
    1. Whether the preference shares are redeemable at any time within the next 5 years at the complete discretion of Bank Boards
    2. The exact terms under which dividend payments will be restored and at what level.
    This kind of sloppy approach to business by Govt, the media and I am sad to say the banks, is exactly how we got into his mess.

    The fact is that nothing has changed. The Govt proposals amount to theft and anyone with any knowledge of finance knows that. Lloyds must abort the merger and raise finance itself. Anything else risks commercial suicide.

  • Comment number 61.

    I'm a little confused.
    I was under the impression that the situation was so dire that the government was using taxpayers money to take control of the banks.
    But now it seems the situation was grimmer than anyone had anticipated and actually the inverse is true.
    The banks have taken our money and seized control of the government.

    Happy days.

  • Comment number 62.

    Dear Mr Peston

    Your “Peston Picks”’s is always interesting and well informed, but the emphasis on dividends about the Treasury – HBOS – Lloyds TSB part nationalization seems to be misplaced.

    In my view, as a shareholder of Lloyds TSB, the emphasis should be on the imposition of the Treasury on the enlarged institution to maintain the level of lending of 2007.

    I do not see why Lloyds should take on the risk of HSBO mortgage book in the first place and in addition commit to taking more lending risk as dictated by the Treasury.

    In addition, we have been reading in the news for a long time that Lloyds was one of the most prudent banks in the UK and now all of a sudden it should become one of the UK banks more exposed to the risks of imprudent mortgage and commercial lending.

    The share price of Lloyds TSB – as a prudent bank before the proposed HBOS merger – was well over 500 pence and now with the proposed merger and risk is at approx. 150 pence.

    Dividends or no dividends, I would think that both large institutions and individual shareholders of Lloyds TSB should vote the proposed merger down and ask for the prudent Lloyds TSB to continue with the traditional way of banking.

    This is unless you know better Mr. Peston. Have the newspapers been telling us incorrectly for a long time that Lloyds TSB was the most prudent bank in the UK?


  • Comment number 63.

    HMG's "agreement" to bolster the UK bank's capital was most clearly set up in haste. Dividend payments are fundamental, hence the LTSB/HBOS share prices have tanked, the institutions, which pay are pensions and annuities, are horrified. So HMG let's have some clarity and fairness. The non-call feature of 5 years on a preference share with a coupon of 12% is punitive. Directors should have the discretion to pay dividends after the FSA is happy that the capital base is adequate. Surely HMG should be trying to raise bank share prices ( and confidence) rather than the opposite?

  • Comment number 64.

    #16 u sceptic you....the iceland authorities and our government are working"day and night" to resove the banking crisis(the one that never existed 11 days ago). surely this is final proof what a fine job our leaders are doing for the likes of the working class!!!.

  • Comment number 65.

    ''Well it would depend on whether the balance sheets of the banks had been strengthened by their having disposed of many of their riskier assets''

    What about the rising defaults on secured and unsecured debts in the UK that will rise as unemployment does? That is going to take a toll on banks profitability and the share prices of banks.
    Northern Rock will announce in the coming week how many of its mortgage payers are 3 months or more behind.

  • Comment number 66.

    The coupon of 12% on the Preference Stock is paid after corporation tax of 28% and carries for an income tax payer an imputed 10% rate.
    Grossed up this suggests that 16.67% has to earned pretax on this capital and that seems inconguous against the return to the depositors still partially unsecured lenders and mortgage rates around the 6% mark.

    Around 12% might seem to be a much more appropriate rate for the depositors as well it should have been for much of the last decade against monetary inflation and certainly against my current annual price growth calculated for me by the BBC 'inflation' calculator.

    The bank borrower for a mortgage seems to be have been and being subsidised by the State and the saver by an incredible margin. Obviously it's Politically Reprehensible to say so but should this be more highlighted or do too many journalists have hefty mortgages?

  • Comment number 67.

    By the way, has any-one in the City or Government ever apologised for anything they did wrong? Mistakes they made. I mean ever. In their entire lives?

    Or is it standard wisdom in such circles to continually berate and blame the beleaguered taxpayer, whilst rifling through his pockets for any spare cash they didn't steal the first time around?

  • Comment number 68.

    Vote 'no' to the merger

    Nuff said

  • Comment number 69.

    Dear Robert


  • Comment number 70.

    hey #65 never mind secured and unsecured debts as unemployment rises how about the human cost to actual people!!!

  • Comment number 71.

    21 consecutive days without a single sale, in over 17years in this line of work I've never seen anything like this. I have clients in 40% of the countries of the world from almost every walk of life. This makes my normally thriving firm a very reliable barometer of how people are doing.

    Things are totally out of control. I think the stockmarkets are going to get shut down pretty soon. Some freaky re-orientation of things is coming, I'm absolutely sure of it.

    Guy Croft
    Owner Guy Croft Racing Engines

  • Comment number 72.

    If Blank and Daniels persist with this merger, I am going to go to the shareholder's meetings and throw my son's (full) nappies at them.

    And follow them to other places (eg cocktail parties). Still maintaining the nappy-hurling theme.

    If they back down, i'll subscribe for the extra shares in Rights Issue

  • Comment number 73.

    its all ok now....3 financial experts are being sent in to sort out the £859 million shortfall of councils tied up in iceland banks.....ive got the answer i reckon they will say to the councils " put up council tax bills to recover it" yes brilliant what would we do without these experts..... duh!!!!

  • Comment number 74.

    Isn't this just a backdown by the government (in the face of destroying the HBOS deal), dressed up as "misunderstanding" by Gordons mate Robert Peston?

  • Comment number 75.

    If you do have a source at Lloyds TSB perhaps he/she could pass on a message to Eric Daniels that he should get off his knees and at least try to act as a man who knows what he is doing.
    If Mr Daniels is unable or unwilling to act in the interests of his shareholders and end these merger proposals (or really exert proper influence over a desparate govt) perhaps he should resign before the shareholders end the merger for him.
    It does appear that Mr Daniels couldn’t negotiate his was out of a kindergarten.

  • Comment number 76.

    The whole mess associated with the banks is slowly coming home to roost but still the taxpayer is left in the dark whilst prudence appears to make secret deals with those who should no longer be in a job.

    Prudence knows no more about how to rescue a bank than any contributer here. It was he who stole £50 billion from pension funds, committed over £100 bilion in Private finance initiatives, and rallied to a defunct Northern Rock when the market should have been left to decide it fate.

    A headline today suggest that the cost of the safety net is £2,000,000,000,000 and who's if thats true or not.

    To my mind running a bank is no less complex than running a home. It just needs good organisation and discipline. Anyone cando it so please don't kid us that it takes a specialist.

    This mess was generated by the obscene greed of bank management who didn't give a hoot for the well being of anyone save themselves and still operate in the same way.

    To think that Prudence may now control the banking system like he has run the economy into the ground is really a case of letting the lunatics run the asylum.

    We need to stop listening to the experts because they are only guessing.

    If taxpayers ae paying the bill and there will be one make no mistake they ar entitled to knwo a lot more than has been slowly leaked out.

    For senior public company directors to say how strong their banks were then we find they were anything but is a bone fide case of a deliberate attempt to mislead.

    That is a punishable offence and those directors should be struck off as should all the other board members and heavy fines enforced

    We have enough problems with politicians being continuously economic withthe truth but we have all learned to to not believe a word they say for our own sanity.

    But here we have grossly overpaid bank executives lieing and they must not be allowed to get away with it.

    If the market reckons HBOS is a worthless basket case, then the shareholders lose everything as may their lenders.

    If RBS is only worth 10p a share then that is the price to be paid to distribute the shares in the public domain but to give them to the government of Prudence Stalin is madness and shows how faith in the market is lost.

    We should rue the day Prudence took the wheel and pray the failure of this world saving plan does not cost us yet more.

    How can a market ever rally when a failed prudent Prudence is pulling the rug from underneath it at every opportunity.

    Lets not believe this rhetotric, any more than the earlier spin always being spewed out.

    We need a new broom to sweep clean as the present one here is generating more mess than ever.

  • Comment number 77.

    GB has staked his reputation on the Lloyds / HBOS deal going through...

    He REALLY wants it to go through...

    If it doesn't... where will that leave him?

    So I say - "Stupid ! It's the economy... "
    and the economy may well kill the deal...

    I stand by my previous posts....

    We are heading for....

    FTSE less than 1000
    Dow less than 5000

  • Comment number 78.

    OK, I might be missing something here, but why on earth should the Lloyds-TSB/HBOS merger still go ahead?

    If the problem which forced the merger was insufficient funds, then surely the large stake that the Govt. has just bought should provide the necessary fluidity.

    If it has not, then what on earth has the FSA/Treasury/BoE been doing, if it has, then lets keep them separate, which would mean more competition, fewer job cuts and more room for innovation in the retail market.

  • Comment number 79.

    Robert many thanks for your coverage of this fiasco but as a suggestion for your blog could you give a list of banks/building societies that are not caught up in this mess and are a sound investment.....and also investigate why so many councils have so much money invested in icelands banks in the first place.....

    Councils are not in place to make a profit and if there are surplus's it should surely have been given back to the council tax payers....i do understand that they need a contingency fund but the amounts being talked about seem to be far in excess of what i would call a contingency....

  • Comment number 80.

    October 14, 2008, 10:03 am
    A Thumbs Up From the Ivory Tower

    Academics and other outside economists were highly critical of the Treasury’s original rescue plan, arguing that taking over banks’ bad assets would do little to solve the problem. Right, left and center, they said that what was needed was a plan to recapitalize the banks – a plan like the Treasury plan has just announced. Here are initial reactions to the plan (some have been edited for length) from some leading economists.

  • Comment number 81.

    It is a great shame that the Gov't ran to Nationalization so quickly.

    The end reszult is the loss of bank branches and staff across the country.

    The way Capital raising has been handled, ie buy our shares, and then nationalization a week later has destroyed investor confidence.

    I speak as a shareholder in one of the nationalized banks.

    I have no idea what shennanigans the Directors were up to, but I still believe the bank in question (b and b) could have been continued as an independant entity, able to add competition, and maintain jobs for its ordinary staff.

    I am not staff and I regarded miy investment as part of my pension.

    Anyway, if these re arrangements go ahead the Public will lose in many more ways than just the pound in their pocket, their future pension.

    Imagine queueing at the only Bank in town?

    It could get to that stage.

  • Comment number 82.

    Given the doomsayers have talked us into a crisis (perhaps a bigger crisis than it may have otherwise been).

    Are they happy now?

  • Comment number 83.

    I guess the Treasury is panicking in response to the following headline and wants to reassure shareholders in LTSB:
    "Shares in Lloyds TSB were the biggest faller on the FTSE 100 index of leading shares, with its shares falling 6.6 per cent to close at 151.3p. "
    However, the whole deal stinks for existing shareholders in LTSB and they should walk away from it - it is a stitch up between Sir Victor Blank and Gordon Brown and the current shareholders are the turkeys dressed up for Christmas.

  • Comment number 84.

    How about a real scoop? Something that really rocks the boat? Instead of all this kite-flying on behalf of our illustrious leader.

    What are LTSB hiding? At the end of September they claimed to be in good shape and now suddenly they are being lumped together with HBOS, RBS and all the other failed financial establishments.

    It's clear to see they may need some help if they take on HBOS, but why would they? This takeover is manifestly trashing shareholder value, and completely rewriting the principles LLOY has stood for over many years. Guess what folks - shareholders are not just fatcats in the city; it's you and your pension as well.

    So how about doing some really digging and give us a real scoop?

  • Comment number 85.

    Just a few lessons we may take from the current (an impending) economic malaise

    1. You cannot borrow growth, sooner or later you have to pay it back

    2. The idea of a post industrial economy where everyone earns lots of money by selling houses, cutting hair and the smoke and mirrors of complex financial games is defunct.

    3. In a capitalist economy if you do not modestly regulate risk taking and sales practices they soon mutate into deception and naked greed

    4. If you do not learn these lessons soon enough a whole generation has to pay for failing to do so.

    5. If as a nation, the lessons still remain unlearned then either a whole country goes bust or its' money and assetts have virtually no value, or both.

    .....well these are the lessons I take from the mess

  • Comment number 86.

    Perhaps we should propose RP for the Upper House?

  • Comment number 87.

    All of this is far too serious for misunderstandings surely. The government needs to ensure that its policies are spelt out with clarity to avoid confusion which will only make the situation worse.

  • Comment number 88.

    Please advise;
    1) When are the banks due to receive the cash from the the government.
    2) Are the banks allowed to pay off the preference shares at any time . I had heard that they could not be paid off for at least five years leaving the banks with an expensive coupon to pay for a long time.
    Thank you.

  • Comment number 89.

    Like at least one other (JJFWilson) I am suspicous of the fact that only HMG can get the preference shares. As an HBOS shareholder who foolishly (it transpires) took up the offer this summer I would rather like some of that 12%.

  • Comment number 90.

    An interesting set of comments and views.
    Mr Peston, comments have been made in the 'private' blog which are not being clearly made in the public domain of news reporting. However I appreciate that the 'truth' does not always make good television (not always the reporters fault). However your comments in your blog have boosted you in my estimation.

    As a retired member of Staff of one of the Banks now 'nationalised' I am disappointed by the way the news is being reported and my ex colleagues are gutted how their industry is widely despised by much of the British Public without justification - the Banks are still major employers and tax payers.

    The dividends are a key stream of income for staff (I am not talking about the top Management), members of the public, and especially to everyones Pension Schemes (particularly if you are on a money purchased scheme).

    I saw the Press release for the rescue package and could not believe the 12% Government Dividend or the 5 year lock in for repayment of the Preference Shares. If these rules are not reviewed I cannot see how the 3 Banks can survive for 5 years without paying dividends. Which Pension Fund Manager is going to explain to its board that it receives no income from its investments?

    And for those of your correspondents that seek the closure/sale of the Banks beware of what you wish for. Remember that there are Foreign Banks already looking at buying UK Banks and do we really want UK PLC being owned by the Rest of the World (kiv EDF, British Airports Authority and British Steel).


    PS I await a reply from my Chairman as to why he allowed the Bank to end up in this state.

  • Comment number 91.

    the old adage " if you cant beat them join them" i think i will start up a bank act totally irresponsibly lend out 100 000 to somebody on 50 quid a week and at the end get a good pay off and stick 2 fingers up to joe public , courtesy of a government bail out...perfect ive been in the wrong game all these years.

  • Comment number 92.

    Robert Peston

    Where did he come from?
    Punchy ~ pertinent ~ precise,
    Foe's beware ~ he's on the case
    With striking mechanical delivery
    A new hero ~ long may he reign
    Rapid firing 'Piston Peston'!

  • Comment number 93.

    what price now gordon's cunning plan? (which he stole from the swedes but had to fiddle with it) .....i can see the stock markets being suspended very soon as the real cost of all this support hits home.

  • Comment number 94.

    All fine and Dandy. Life carries on at the banks.
    What about share dealing?
    That will be next to come undone big style.
    The numbers attached to the value of shares is utterly and completely meaningless in todays system. There is no way to validate, express, or predict what it really should be. It changes on a whim, always seemingly surprising expert commentators and economists. It is such a good job we did not take HM governments advice to become a land of share holders. What choas would there be now if we had?
    Surely some serious questions need asking about the whole kerbang?

  • Comment number 95.

    does this now mean,that i as a possible small time private investor,can purchase ordinary shares with the same risk element as say a year ago,before this mess appeared?

  • Comment number 96.

    how will the banks dispose their riskier assets. Who wants them?

  • Comment number 97.

    #90 A reasonable summary of the untenable Treasury proposition not to allow the paying of dividends for up to 5 years and to expect therefore that shareholders (who are UK citizens, taxpayers and pension holders) pay twice for the government intervention.
    I thought the government wanted to stabilize banks, not to use the bank crisis to make as much profit as possible out of it (destructive profit maximisation and short term thinking seem to be very widespread problems in the upper echelons of power).
    Compare the UK rescue package with the package in the US (5 percent interest, repayable at any time the banks want to repay). Which rescue package is more likely to stablize banks?

  • Comment number 98.

    Everyone keeps talking and talking and talking about the fear of recesssion, and everybody panics, and makes recession come a little closer.
    I'm fed up with so called experts predicting a recession. You don't have to be an expert on the economy to predict a recession at the current time. I predict a recession - does that make me an expert?
    I think some people just like the sound of their own voices. We don't need anymore warnings about recession, what we need is action now to get us out of it, because were already in it.

  • Comment number 99.

    I think this dividend news is a smoke screen.

    Northern Rock, how to loose billions of pounds, get paid millions of pounds and get away with it.

    "The nationalised bank revealed yesterday that it would not sue its former directors - including Mr Applegarth, who was criticised for his role in the bank's move into risky short-term funding - or its auditors over the bank's collapse."

    "Northern Rock said that its external advisers - Freshfields, the City law firm, and KPMG, the accountants - had completed a review of the role of its former management team and had decided that there were insufficient grounds to proceed with any action for negligence.

    The board has also decided that no action is warranted against PricewaterhouseCoopers, the company's auditors.

    Ron Sandler, the chairman of Northern Rock, suggested that the decision had the full backing of the Government. “The Government, through their representatives at the bank, have been closely kept abreast of this decision,” Mr Sandler said.

    He refused to be drawn on the bank's careful distinction that there were “insufficient grounds” to sue the directors but no action was “warranted” against the auditors.

    Mr Applegarth and his former colleagues are now free from the threat of litigation because the two hedge funds suing over Northern Rock's collapse - RAB Capital and SRM - are suing the Government, not the former directors."

    I cannot begin to say exactly how I feel about this. I am very, very, very upset - the utter contempt and disrespect being shown by these people !

  • Comment number 100.

    Why cant the private investors plus people like Buffet and overseas funds club together and buy all the capital such that HMG isnt involved at all and save capitalism from those petty bureacrats and 2nd rate ministers.


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