Nov 01 2009
One cheer for the government’s banks policy
I was delighted to learn this morning we are to have three new banks on the High Street – then disappointed to discover one of these is Northern Rock which we already have as a separate entity.
I was pleased to read RBS is being forced to sell off more assets, but worried that RBS will get yet more taxpayer support. We should be slashing taxpayer support, not increasing it, by forcing them to sell assets, cut costs and raise capital in other ways.
21 Responses to “One cheer for the government’s banks policy”
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
Why is Lloyds going to demerge TSB rather than HBOS?
Lloyds and TSB have been integrated as one for about 10 years now, and they got rid of all the duplicate branches. So demerging this would be a lot more difficult and more expensive than divesting HBOS which has very little integration other than a common parent company.
I added this comment to your post on Tory Immigration Policy. As it’s still awaiting moderation I assume that you’ve not yet read it and might otherwise miss it:
“This (uncontrolled immigration) is the subject keeping the average Brit awake at night.
There appears to be no mention of a serious points system like those that Australia or Canada operate. And why are we getting this from Damien Green and not David Cameron himself ?
Let’s take a current issue; the postal dispute. Why is the multi-millionaire Adam Crozier able to dictate to post workers on 250 quid a week that they must work harder for less ? Because of our open immigration policy – undertaken by our politicians in utter defiance of majority belief. This undermines nearly every working person in the UK. What is the point of a minimum wage if it is undercut via the black market ?
No wonder Brown is fretting about keeping the housing bubble going. And why he has resorted to the printing presses. He knows we’re going to start smashing the place up if depression takes hold.
This answer – in view of Tory impotence during Labour rule and the signing of Maastricht – is simply not good enough, John.”
That these banks are being put in play suggest three things.
One, The Government is keen for electoral reasons to move these banks off the Governments books.
Two, the City boys see a killing to be made from getting their hands on these banks.
Three, after the City boys have taken their slice in fees and bonuses they will end up in foreign ownership.
National interests and the tax payers interests doesn’t feature at all.
Must be good for bankers to have more banks wanting their services. Treble bonuses all round!
The sinister part of all this is the EU which, aparently, is interfering again. While being bossy about the small banks, it seems that the giant banks, which, of course, we are guaranteeing as taxpayers, are now going back into the James Bond Casino.
The EU is not democratic – it was never meant to be. Now, it seems, that it not only interferes in the tiniest details of our life, but also it sets an appallingly bad example of unaccountability to smaller governments like our own. They, in turn, suck the accountability and eresponsibility at Regional/County/Local/Parish level.
Can we really trust this government, or indeed Gordon Brown to oversee this significant change, involving these large banks, when so many people many people are affected right now, as a knock-on result of previous tinkerings with the economy and/or the City.
I find it so difficult to trust Brown these days, that I could imagine that he would use this opportunity, to ensure that his government would have some sort of access – via these new banks – to yet more funds, that he would then spend in a political manner (with an election coming up!).
There’s nothing like consistency!
The government forces HBOS to merge with Lloyds making the whole financially unstable, and then forcies Lloyds to sell off a different part part of the business because it’s too big.
Why didn’t the government leave Lloyds alone in the first place and just take over HBOS?
All it seems is that as a small shareholder in Lloyds, I’m going to loose out twice because the government clearly has no idea what it’s doing.
The Govenor of the Bank of England has said that the banking industry has received close to one trillion pounds in grant and loans (yes, £1,000,000,000,000 – thank goodness he means an American trillion) from the taxpayer. That is a gross figure (in more than one sense) and I would be interested to know:
- What is the net figure, allowing for the value of the shares owned by the government on our behalf?
- What is the value, whether positive or negative, of the “toxic assets” and what is the risk of their value deteriorating still further? Not only taxpayers but anybody buying a bank with toxic assets will want to know that value.
- Why has full disclosure not been forced?
Nothern Rock will revert to what it was, but without relying exclusively on the inter-bank lending market to raise money.
Who should the 3 banks be sold to? Virgin Money and Tesco have been mentioned. How good are Virgin Money and what markets are they active in? They were perhaps best known for the Virgin One Account but Google says the accounts have been sold to RBS. I’m a bit confused. Tesco is becoming a conglomerate, and conglomerates are difficult to manage. Any others?
Who is in charge of the future structure and markets of RBS and LLoyds/HBOS? The companies have their own ideas, the government has different ideas (which appear to lean towards Glass-Steagle style separation) and the EU a different plan again. Surely we need LLoyds to disgorge HBOS.
All in all, it is becoming very difficult for the intelligent layman to come to a view on the best sell off policy. We need to know the hard numbers and we don’t know them.
I am disappointed that policy leaks into Sunday newspapers especially as it cannot be effected this side of a GE. As for Lloyds why should it disgorge TSB which was a conventional takeover beeded down decades ago – far better to demerge HBOS and let the Government fund that regulatory disaster instead of making Lloyds Rights Issue look like another cash sink.
If the Lloyds Rights Issue founders The City will look even more stupid than when it voted 96% for Lloyds TSB to commit hara-kiri by buying Titanic-on-Iceberg HBOS
“The sinister part of all this is the EU which, aparently, is interfering again. ”
And what is really laughable it that our politicians pretend its they who set policy here, instead its the EU who is pulling their strings and telling them what to do with a key section of our economy. If they had an conscience they would feel like frauds when they do this.
Of course the EU doesn’t have any issues with the monopoly of the French Government owned EDF who control something like 80% of Frances power generation. Now why is that, could it be that the EU knows better than to meddle in Frances internal issues, where as our craven and decedent politicians roll over at the first sign of interest from the EU, or is it that France being a EUphile country has an EU blind eye turned to them, where as the EU needs to have the EUsceptic UK brought to its knees? Which ever, the fact is our traitorous Politicians do the EU’s work for them, and won’t under any circumstances fight for British national interests (in fact I think our politicians would be completely shocked to even consider that we do have a national interest)
PS I wonder what market share Santander controls in Spain?
Just hold the single cheer for a while, you don’t seriously expect the government not to make an expensive botch of the whole business?
Take NatWest away from RBS and Lloyds away from the Halifax, Job done.Doesn’t take much working out.
I’m against nationalising businesses in any form but the banking sector is now somewhat confusing for the average man in the street to wrap his head around. More banks would lead one to believe there will be more competition and so a better deal for the consumer but the government has effectively removed all risk from the banking sector by ensuring (and insuring) that they cannot and will not go to the wall regardless of their financial performance.
One wonders what impact this will have on the thinking of bankers in the near to medium term future in their chase for ever higher profits? (and any banks who don’t chase the profit will be left behind so you can rest assured it will be business as usual)
I honestly don’t know whether it would have been better to let the two Scottish banks (and I am Scottish) fail to a greater or lesser extent rather than ’save the worlds banking system’ by giving them a blank cheque followed by the issuing of truly massive levels of new currency.
Labour Government economic policy.
To the tune of the Oki Koki.
Labour ‘ll nationalize the banks, They’ll denationalize the banks,
Nationalize, denationalize and shake them all about.
Do the oki koki and turn them upsidedown.
‘Electoral advantage’ all for Mr Brown.
Ohhh Labours Oki Koki, ohh the oki koki.
and so on.
I wonder just how much money printing will be done to keep house price insane?
Mike
What does any of this matter ? Cameron has just wriggled out of his ‘cast iron guarantee’ that we would have a referendum on the Lisbon Treaty.
Vote Labour – get leftism
Vote Tory – get leftism
Don’t vote – get leftism
I’m sure there is a hidden agenda in the way that this country is deliberately mismanaged: to make us all so dejected that we fall gratefully and exhausted into the arms of the EU.
It appears we are being flannelled with connivance of the press. TSB is not being demerged simply that Lloyds branches in Scotland will be renamed “TSB” before being unbundled just as RBS branches in England will be renamed “Williams & Glyns” before being unbundled……it is also not likely to happen for 4 years.
This is simply a figleaf to cover the fact that the Government is to inject a further £27-40bn into these banks and is on the hook for restructuring costs.
This is an ongoing nightmare and the coverage of Japan’s miserable public finances suggest Britain could be heading for decades of stagnation and decline lacking as it does Japan’e export machine to create any real growth.
I will be interesting to see how bondholders in these banks react
John
I have all but given up on even trying to make some sort of sense out of anything this Government says or does anymore, to the point where I am now just accepting that it will go on, and on and on, until they are crushed in a General Election or we have gone as a Nation, bankrupt.
No matter what reasoned arguments or sensible comment are put forward by other Party’s, economic experts, commentators and the like, they just go their own sweet way.
What is the point of putting into the Banks another £30,000,000,000 in order to hive off THE PROFITABLE BITS. whilst keeping £250,000,000,000 of the toxic rubbish.
Your comment on the morning news yesterday (Sunday) was neat and to the point.
By all means sell off parts of the Banks, but do not leave the Taxpayer with the rubbish.
Think the Tory Party could do with you as the spokesman on this subject, everyone else seems to fail to highlight the simple facts and get them accross in a meaningful way.
Please do not give up, some of us are listening to you, in the hope that more will do so.
Never know perhaps the BBC will have you on again for a longer period, given that they have found you are now a supporter of selling off some of the Banks.
Kevin Peat: “What does any of this matter ? Cameron has just wriggled out of his ‘cast iron guarantee’ that we would have a referendum on the Lisbon Treaty.”
Bingo!
Cameron is, despite John Redwood’s protestations to the contrary is a EUrophile.
He has surronded himself with Europhiles, he activily recruits geriatric EUrophiles to his shadow cabinet. First Clarke, now Hestletine, why? You would have thought that after twelve years in the wilderness the Tory party could have come up with some new blood.
Cameron recruits ancient EUrophile relics because by and large he is out of step with the party rank and file on the subject of the EU. A bit like Heath really.
We all know how well Edward Heath’s administrations worked out don’t we?
Reply: He has not recruited Heseltine, and he is not a Europhile.
It’s all caving in, isn’t it?
Philip Hammond, reported on Bloomberg last week, saying that loose money had helped a recovery….
Cameron in the Telegraph, reneging on a referendum…
If this is true, John, the war is over…., and for UKIP the fight is just beginning….
JR: “He has not recruited Heseltine, ”
Good. Holds breath waiting for the announcement.
JR: “and he is not a Europhile.”
We’ll have to wait and see, ‘but we won’t let it rest there’. Oh! that doesn’t sound very original.