Bank break-up threat could hit Government's stakes in RBS and Lloyds
Monday 04 February 2013
Chancellor George Osborne’s decision to threaten UK banks with break-up if they fail to meet rules to make them safer could make it harder for the Government to sell its huge stakes in Royal Bank of Scotland and Lloyds, experts warned today.
At one stage the Treasury hoped it could start selling shares in RBS, where it has an 83% stake, and Lloyds, where it has 41%, before the next General Election in May 2015. The taxpayer was briefly — at the end of 2010 and start of 2011 — sitting on a small profit on the £45 billion and £20 billion pumped into RBS and Lloyds respectively in 2008. But since Sir John Vickers’ Independent Commission on Banking published its interim report suggesting “ring-fencing” of retail banks from investment banks, the shares have stayed below the price paid by the taxpayer.
Osborne’s speech today and publication of the Banking Reform Bill have “muddied the waters yet again” according to one senior banker.
“The ‘high stakes’ approach now being introduced to the ring-fence measures presumably will make it difficult for the Government to decide the optimum time to reduce their current holdings in UK banks,” said, Tony Anderson, banking partner and head of financial products at legal firm Pinsent Masons. “There could be significant political fallout for the Government from any proximity between a sell down of shares in a state-owned bank and a full separation of banking operations following a breach of the ring-fencing measures.”
David Buik of Cantor Index pointed out that ring-fencing would not have prevented either the UK bailouts or Lehman Brothers collapse in 2008.
He said: “It was injudicious lending and poor credit analysis that led to the crisis. It was Northern Rock, Bradford & Bingley, HBOS and Lloyds that were the major transgressors. Not those with investment banks.”
International regulators also questioned the need for ring-fencing over strengthened balance sheets.
“Higher capital and liquidity requirements are more important for stabilising banks than the separation of proprietary trading and deposit-taking business,” said Jaime Caruana of the Bank for International Settlements.
- 1 Woman 'suffocates newborn baby in plastic bag and puts it in her desk minutes after giving birth'
- 2 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
- 5 Chinese student carries disabled friend to school every day for three years
Nepal earthquake in pictures: Photos show devastation caused by 7.8 magnitude earthquake
Royal baby: Live updates as superbug closes ward at St Mary's Hospital in London where Duchess of Cambridge is due to give birth
Nepal earthquake: Rescuers forced to dig with their bare hands in search for survivors as images show damage to historic buildings
Ed Miliband and Boris Johnson in angry clash live on BBC's Andrew Marr Show
Bali Nine executions: British grandmother on death row in Indonesia Lindsay Sandiford says she 'just wants to get it over with'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...