Banks `split on Maxwell loan package'

The Maxwell Trial; Day 29
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Financial Correspondent

Lloyds Bank wrote a "scathing report" on NatWest's plan to raise a huge multi-bank loan to assist the Maxwell empire, a jury heard yesterday.

Mr Brian Brown, from Lloyds media corporate division, said that in early 1991 - some months before Robert Maxwell was found dead in the sea off the Canary Islands - NatWest asked Lloyds if it wanted to join in the loan proposal.

In a confidential report, written by Lloyds at the time, it was noted: "NatWest is not doing Maxwell any favours with such a shoddy presentation of such a difficult deal."

The note added that the other bank's proposal was "one of the most unprofessional reports we have seen" and went on: "NatWest is asking for an act of faith rather than giving an objective view."

Mr Alun Jones, defending Kevin Maxwell, referred to "bitching" between banking competitors and asked if Lloyds had felt that NatWest was too close to Robert Maxwell and was prepared to lend him anything.

Mr Brown replied that Lloyds would have been quite happy for the other bank to lend the money but the perception was that NatWest wanted other banks, who were not so close to the tycoon, to do the same thing.

Lloyds did not accept NatWest's proposals. One Lloyds executive had written that the "problem" with Robert Maxwell was "personality, unpredictability and inconsistency".

The court heard of the changing fortunes of the group. In the "happy days of 1988" banks were awash with money.

Substantial loans were made and in 1990 Lloyds was owed about pounds 450m by the Maxwell empire.

The recession caused a change of attitude by the banks and by April 1991 the group, pressed to reduce its loans, had got its debt to Lloyds down to just under pounds 300m.

In 1990/91 the group paid pounds 200m in interest charges, and in the following year it was estimated that the figure would be half that amount.

By November 1991 - the month Robert Maxwell died - his son Kevin was "thinking about selling off everything", Mr Brown said. The tycoon's death brought an atmosphere of crisis to the relationship of the banks with the group.

Kevin Maxwell had to talk to a formidable number of people, including bankers and accountants in trying to sort out the problems, and was working extraordinarily long hours.

Kevin Maxwell, his brother, Ian, and two former Maxwell aides, Larry Trachtenberg and Robert Bunn, all deny conspiracy to defraud.

Kevin alone denies conpiring with his father to defraud the pension fund by misuse of pounds 100m of investments.