Eric Daniels: still deluded about the HBOS deal
August 7th, 2010
In an interview with the Sunday Telegraph (which is different from the video interview above) Eric Daniels, chief executive of Lloyds Banking Group, has at last started to talk some sense.
Daniels told Telegraph business editor Damian Reece that Lloyds TSB did us all a tremendous favour by taking over HBOS in September 2008. The not-so-quiet American said:
“I think we did the country a great service [buying HBOS] by not costing the taxpayer a bomb.”
I’m not sure how well this will go down with Lloyds TSB shareholders, who got shafted as a result of the Lloyds board’s surprising generosity to the UK government. However the claim is undoubtedly true. Indeed it is one of the few reliable things I’ve heard Daniels say since the deal was announced.
Daniels’ insistence that HBOS will eventually come to seen as a good deal — “Why am I not apologising about HBOS? Because I believe this will turn out to be a very, very good deal” — is far less credible.
A great many skeletons are going to rattle their way out of HBOS’s closet in coming months, including the fallout from the Bank of Scotland Reading scandal, a matter that is finally being investigated by the FSA under section 168 of the Financial Services and Markets Act 2000, and by other authorities.
Daniels, 59, also seemed sorely deluded in his belief that he an enduring government guarantee that the anti-competitive Lloyds Banking Group will never be broken up by the government.
The Lloyds boss seems to think that, in exchange for taking HBOS off its hands, the UK government provided Lloyds with a guarantee that the merged entity would be immune to competition law in perpetuity. The claim has already been challenged by the UK business secretary, Vince Cable, who told Reece:
“I’m not aware of any such reassurance. If Lloyds has it in writing, I would like to see it. That would change the framework we’re operating under. It’s never been raised with me, either by Lloyds Bank or anyone.
“This needs clarifying. My position is that the Banking Commission will operate from a clean sheet of paper and produce a set of proposals to make a safer banking system and provide maximum competition. If Daniels says he has an agreement, he’s got to produce some evidence.”
Read Damian Reece’s Telegraph article in full
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Short URL: http://www.ianfraser.org/?p=1544
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