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Daniels claims HBOS disclosures were “thorough”

January 12th, 2010

Eric Daniels, CEO Lloyds Banking Group, image courtesy of The Guardian

Eric Daniels believes Lloyds Banking Group’s disclosures relating to its disastrous HBOS deal were “thorough” and “accurate”. Oh yeah? So why didn’t they mention of the £25bn emergency government loan without which HBOS would have gone bust?

Watching the Treasury Select Committee hearing this morning, I was struck by the contrasting performances of Stephen Hester and Eric Daniels, respectively chief executives of Royal Bank of Scotland and Lloyds Banking Group.

To a greater or lesser extent, the RBS and Lloyds bosses seemed complacent, smug and eager to sweep questions about fat cat pay under the carpet. After all, they said, they have remuneration committees and “independent” remuneration consultants in place to ensure people in their banks don’t get paid too much and they have to remain “competitive”, don’t they?

What struck me most were the differences between Hester and Daniels (I won’t go into the performance of Northern Rock boss Geoff Hoffman here). I don’t know if it’s just me, but the RBS boss came over as man of genuine integrity — he calmly and patiently outlined what he sees as a public duty to return the bank to the private sector within three to five years, and to get news about the bank off the front pages and back into the business pages.

As Nils Pratley has suggested in the Guardian it may be that, since Hester is “generally regarded as a reasonable man attempting to manage a horrendously complicated situation”, the MPs had chosen to give him an easier ride.

By contrast, the Lloyds Banking Group chief executive Eric Daniels seemed like a man struggling to come to terms with the truth. Although seemingly polished, the American was totally unconvincing for much of the session — and at times came over as positively slippery. He also seemed to be suffering from a bizarre case of memory loss throughout.

His favourite phrases were “thank you for the question” (why?) and “I’ll have to get back to you about that.” Was this down to media / legal training one wondered?

There were at least six occasions where Daniels slipped up badly;-

A) Asked by Jim Cousins, MP whether the Treasury had been open and honest on September 16, 2008, the day his bank commenced its rescue takeover of HBOS, Daniels did not give a straight answer. Cousins repeatedly highlighted a recent National Audit Office report which revealed that the Treasury intended to “close HBOS to new business” that day unless a buyer was found. After much prevarication and visible squirming, Daniels eventually said: “I was certainly in the middle of the negotiations and the Treasury was highly concerned about the future of HBOS, but I don’t have a specific recollection of that.”

B) When asked whether, at the time of the HBOS deal in September 2008, the government and Treasury had “hoodwinked” Lloyds or whether Lloyds had hoodwinked its own shareholders (about the true state of HBOS), Daniels said: “I don’t believe anyone was hoodwinked. What we believe is that this is a very good deal for our shareholders including the taxpayer. We believe this was good for not only Lloyds but also for the wider banking system. If HBOS had gone down, it would have had much more serious consequences.”

C) Astonishingly, Daniels does not see anything wrong with keeping his own shareholders in the dark about the £25.4bn secret Bank of England loan to HBOS (without which the Edinburgh-based would have gone bust) when they were asked to vote on whether the deal should proceed.  He insisted the disclosure was “thorough” and “accurate”, which drew looks of astonishment from members of the Treasury Select Committee.

D) Daniels was disingenuous on the number of bust companies that Lloyds Banking Group now owns. Hester earlier admitted that RBS owns more than 1,000 companies (which have presumably come into the bank’s ownership as a result of administrations, broken covenants, debt-for-equity swaps etc) and my guess is that LBG now owns even more. However Daniels didn’t seem to know much about this and would have us believe that LBG only owns a handful of companies.

E) He doesn’t have a clue how many people have been fired by the merged bank so far — he claimed it was 6,000, which is surprising given his own spin doctors say it is 11,000 and the trade unions say it is 15,000. He also denied jobs were being transferred to India.

F) Despite repeatedly being given the opportunity, he refused to acknowledge that he and his boardroom colleagues are being rewarded on the basis of sacking Lloyds and HBOS staff. This seems odd given that their bonuses are dependent on whether they achieve the £1.5bn in cost savings that have been tageted by 2011 — a milestone analysts say will be impossible to achieve unless 30,000 jobs are lost.

  • To watch the three hour broadcast from BBC Democracy Live click here
  • To read key quotes from the “grilling” from Reuters, click here
  • For a detailed dissection of Eric Daniels’ dishonesty by Andrew Withers of the UK Libertarian Party, click here

Short URL: http://www.ianfraser.org/?p=1005

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5 Comments for “Daniels claims HBOS disclosures were “thorough””

  1. I found the whole performance of Eric Daniels very depressing and disappointing. He’s a man with his back against the wall and he’s been coached in O’Riordanism’s. “Thank you for the question”, “Thank you for giving me the opportunity to answer this question” “I don’t have that information to hand” “if I could just answer continue with what I was saying”. Yes, what ever Eric.
    Actually, he answered very little, coughed a lot, drank a lot of water and looked thoroughly haggard – and I would have done too in his position.
    Eric Daniels is no longer the vibrant American running Lloyds – he’s bogged down with dictates from the Government to cover up an unholy mess that was not of his making. And if I was him, I would be well aware, that when this cover up goes completely wrong, he will carry the can,
    I don’t particularly like Mr Daniels, he’s done me no favours and may be responsible for doing me much harm – but, even so, he didn’t cause the HBOS fiasco but he may well pay for it. His performance today hasn’t helped.

  2. Don’t sweat it Ian. All the thieves will be behind bars within 24 months.

    It will be characterised as ‘protective custody’.

  3. OPEN LETTER TO ERIC DANIELS

    HBOS logo courtesy of MV Picton

    Mr. Eric Daniels
    Chief Executive
    Lloyds Banking Group
    25 Gresham Street
    London EC2V 7HN

    13th January 2010

    Dear Mr Daniels,

    You are one of the few people with the ability to instruct lawyers to put a motion in to Court adjourning the next hearing to repossess the home of Paul and Nikki Turner — at least until the FSA investigations, requested by James Paice MP and others are concluded!

    Make that phone call and you could start the process of rehabilitating the reputation of Lloyds Banking Group and perhaps also of shedding your new nickname, Mr “in Denials”.

    Another way in which you could achieve these goals would be to enter into a meaningful discussion with the hundreds, perhaps even the thousands, of casualties created by HBOS/Bank of Scotland, dating back to 1990-91 with the Baker’s Dozen.

    It would make sense to sort these things out before you hand over the reins at Lloyds Banking Group to Mark Fisher or whoever else. (See the comment on Ian Fraser’s recent Mark Fisher article).

    It would also help if you could confirm that you’ve read this letter and that you are aware of articles and blog posts on this website and elsewhere which catalogue the long history of wrongdoing at HBOS/Bank of Scotland, to ensure that we’re not wasting time trying to breach your apparent “in denial” state.

    Perhaps the problem is that you’re not being told the truth by your colleagues and subordinates at the bank? If this is the case, then you could alert us by using the comment facility below or by emailing me at CBRHQ@hotmail.com.

    Life’s too short for all the misery that you’re causing both to yourself and to thousands of others by continuing to bury your head in the sand, and continuing to postpone the inevitable “settlement of claims” day.

    One final thought. I understand that, as chief executive, you have a duty to report fraud. You wouldn’t want to be called before an inquiry, similar to the current Chilcott Inquiry, to explain why you failed to do that, would you? It might be even more uncomfortable than your experience before the Treasury committee yesterday.

    If you want to regain your normal calm exterior all it’s going to take, initially at least, is one phone call to your lawyers and perhaps another to the prime minister Gordon Brown.

    It’s really that simple! Then you would be able to plan your departure date, and the 20-year long culture of fraudulence and malfeasance at HBOS/Bank of Scotland will no longer dog your life. Ruin it in fact, just as it has ruined the lives of the casualties of the flawed bank that you were “smooth-criminalled” into rescuing from collapse.

    Yours sincerely,

    Alan Edwards
    CBRHQ@hotmail.com

    Casualties of Bad Regulation

  4. […] Lloyds’s investors) when they sold him the Edinburgh-based bank in September 2008. Daniels visibly squirmed when grilled about this by the Treasury Select […]

  5. […] For more on why I believe Lloyds Banking Group has failed to cover itself with glory since its HBOS acquisition — and why these ads should be stopped (which might be easier now that the bank’s communications director Shane O’Riordain is leaving) — click here and here. […]

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