Government to break up the banks
Lloyds, RBS and Northern Rock will be split up in state sell-off
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Independent Minds
Lloyds, Royal Bank of Scotland and Northern Rock will be broken up and parts of their businesses sold off to create three new banks, it emerged last night.
Government sources said ministers were "determined" to see more competition in the market, following the £1.2 trillion bailout of the sector which resulted in the loss of three independent banks and several building societies.
The European Union will today approve the split of Northern Rock into two sections, a "good", profitable, bank with no bad debt, and a "bad" bank. Ministers will begin exploring sale options at the start of next year when the split happens and a deal could be finalised before the general election. The remaining "bad" bank will remain in state hands for the time being although sales of "tranches" of the more risky mortgages it holds will be explored in the longer term.
The Lloyds and RBS sell-offs will follow over the next three to five years and will be supervised by UK Financial Investments, the government body set up to oversee taxpayers' investment in the banks.
The Government is understood to have made clear that existing larger operators will be banned from participating in the sales.
Ministers want to drive competition in a sector they believe is too concentrated in the hands of the "Big Four" of Barclays, HSBC, Lloyds and RBS. Virgin Money is known to be watching the situation closely and is in talks to add former Northern Rock chairman Bryan Sanderson to its board ahead of a possible bid for Northern Rock.
Spain's Banco Santander, which owns Abbey, Alliance & Leicester and part of Bradford & Bingley, may be allowed to get involved because it is significantly smaller than the big banking groups in Britain. But it could still be frustrated by the Government's determination to attract new entrants.
"We are keen to see greater competition in the banking sector as soon as possible," said a government source.
A deal to buy "good" Northern Rock would bring a new entrant around £20bn of deposits together with a portfolio of low-risk mortgages and a platform to expand operations that remain concentrated in the North-east nationwide.
Lloyds is expected to face a forced reduction in its share of the retail banking market from 30 per cent to 25 per cent, with the disposal of more than a seventh of its 3,000 branches expected.
It has been desperately seeking support in the City for a share issue of up to £15bn to keep it out of the Government's asset protection scheme that will cover it against losses from up to £260bn of risky loans.
But even if Lloyds can achieve this, it will be forced to sell parts of itself as a consequence of the Government's injection of nearly £15bn to recapitalise the bank at the height of the financial crisis. That will be seen as a blow to Eric Daniels, chief executive, who indicated at the bank's recent results that he did not expect to make significant disposals. A spokesman said: "We continue to work with European regulators."
Royal Bank of Scotland, meanwhile, is working on plans to sell off a "couple of hundred" branches, including RBS branded outlets in the UK and NatWest's Scottish branches. It is certain to join the government scheme although how much will be protected is not yet certain.
Final details on the Lloyds and RBS disposals are set to be announced alongside details of the asset protection scheme.
But an indication of the EU's "get tough" approach came on Monday when ING, which owns the ING Direct savings bank in Britain, said it would split itself in two to satisfy watchdogs unhappy at its bailout by the Dutch government.
Britain's banking sector was further consolidated on Monday with the announcement by Barclays of a deal to buy Standard Life Bank.
Government sources said that while the new banks would be relatively small compared with the big four, they hoped they would prove fast moving and innovative.
The effect Standard Life Bank had on the market when it was launched has been noted, although its activities were constrained by the credit crunch.
The Government currently has a stake of 70.34 per cent in Royal Bank of Scotland and 43.44 per cent in Lloyds. That gives ministers the whip hand over both banks. They are expected to take up the taxpayers' "rights" when Lloyds launches its share issue to maintain the size of its investment.
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Comments
read it and weep.
Down in the deep bowels of our financial empires:
"Hokey, have we got the gummint on side to sell this idea to the public?"
Doing all this jazz, we pass off all the debts to the public and "WE" keep the assets?"
How cool is that?
[Meanwhile down in the deep bowels of our financial empires]
Please pass the Port and cigars while we deal with the next item on the agenda:
"Bonuses!"
Blair did it early last year when he took the best bits of Northern Rock with him to JP Morgan, and left the rubbish for us. He was paid well for it:
http://www.thespoof.com/news/spoof.c
1. Why are we the tax payer going to keep the bad bits. Surely they should be sold with the good aswell.
2. How is selling split up banks going to improve competition? Surley they are just going to get bought by other banks or is the govt going to vet who can buy them and control who they could then sell them on to.
I suspect in 3 years time these banks will just be part of other banks and at best a separate name on the high street but not independant and we the tax payer will still be carrying the rubbish.
The EU will make tougher competition legislation so that a single bank cannot control more than a certain percentage of the market (I think its about 33% at the moment but I am not sure) stopping other banks from simply buying them all back up. The people they hope to sell their shares too will be individual investers rather than other large banks.
Breaking up the banks has been on the table for a long time, Vince Cable has been saying this for months although not into good and bad but into service and investment banking.
all of this will take many years to filter out and I expect it will be a long time before we see our money back from all this.
When will the politicians start to learn the *principles* of past errors, rather than just the particulars? It's not just big banks we should be worrying about. Eggs. Basket. Get it?
We should all be issued with a share certificate showing how much of the crap we own. Can't they just package little bits of the bad stuff with the good so the buyer has to worry about it? Will the bad bits ever come good? Does anyone understand it? Are we meant to? Do they just make it up as they go along? Can't we just print loads and loads of money, and have a bloody good knees-up!
Oh, they've already done that - just we weren't invited!
So now all you debt junkie dolls can carry on, go on carry on, get a loan it's
what Mr brown wants , TODAY, to save his NECK, TODAY.
It's another QUCK FIX, for all you DEBT JUNKIES.
Will the bad debt be sellable , when government try to off-load ?
Who cares, that's TOMORROW.
The banking fraternity are safe and sound, as you would expect when the industry BRIBES our leaders with £millions.
How about banning our leaders (retiered or otherwise) taking money from the banks?
The Browns must be expect a very comfortable retirment give services redered to the banking industry!
This gov. seems intent on destroying this country and no one with any power has the courage, morals, or incentive to stop them. The only ones who could would be the monarchy and they don't dare fearing it would be the final nail in their coffin. But really, nothing would endear them to the public more than removing this kakistocracy. Time for them to reclaim their Protectors of The Country status rather than the high level sales people they've become. It's that or anarchy on the streets, either way I'm in!
Kakistocracy. A form of government whose rulers are the least competent, least qualified or most unprincipled of all citizens.
We now that bankers are no better than any other manager in other industries yet they manage to steal unchecked. Yes. I said unchecked.
I have long said that banks should be disinvented. Every day we hear another piece of stupidity from the idiots who manage to get into politics and appoint other similarly emotionally intelligently challenged bozos to jobs in the 'watchdogs'.
Look around you people of UK. The country is rotten. The politicians are rotten. The bankers are thieves.
I live in Mexico where life is also rotten but the British think they are above the rest of the Third World. I can tell you you are as corrupt and abnoxious as the other venal regimes.
Read....
Privatise the profits, socialise the losses
Why we the tax payers are not keeping the only bits of these failed banks worth a damn is beyond belief.
What are we doing! have we gone stark staring mad? Not only did we shaft our engineering, Ship building, Car truck bus Rail Aircraft industries to join this corruption known as the EU but now the only major industry we have left is being dismantled. They kill our free enterprise with not only through over regulation but regulations that are designed to smash any business.
In this I refer not only to Health and Safety but the Employment laws and of course the Criminal /Human rights act that frees murderers thieves and manages to prosecute the innocent. For instance in one employment tribunal case a wardress was unhappy about what one of her colleagues was doing. She reported it to her boss. As you do in management you listen and look at the reason behind this report and he decided it was nonsense. She was miffed and exercised her right to resign. In the resulting tribunal it was aid “She had been constructively dismissed “ the settlement was for £450,00.00. What a disaster and there are over 10,000 cases going through tribunals like this.
We should leave the EU . The Government should come clean on the long range plans for the EU that were established from the 1800's . We need to get out country back. We need to stop awoorying about hundreds of issues raised by this Government and recoghnise only one cause.... Get rid of this Government sop an election can be held ASAP. In that election we must vote for Independents UKIp and yes even BNP if we have to to stop the corrupt LibLabCon from dominating parliament.