Outlook: Halifax largess

A YEAR ago, Jon Foulds, the Halifax chairman, was telling the City not to worry, because within twelve months there would be a big deal to earn some fees on. Twelve months later, with his 67th birthday approaching and after apparently talking to everyone in sight, from the Royal Bank of Scotland to Barclays and the Pru, it appears he has finally given up on dreams of empire and resigned himself to the more useful but undoubtedly less exciting task of keeping shareholders sweet.

To that end, clever old Halifax has come up with a wizard wheeze for shrinking the group's capital twice as rapidly as the old fashioned method of buying back shares, thereby halving the period during which it will have to put up with those irritating questions about what it might do with its surplus cash.

As a way of propping up the share price, buying back shares has proved to be rather less effective than investment bankers claimed it would be. The effect on the share price been short-lived, and because Halifax's share register is still dominated by a legion small holders, it has also been difficult to do on the kind of scale the Halifax needs if it is to fix its surplus capital problem anytime soon.