Game’s up for Blank and Daniels: Why they both have to go

March 6th, 2009

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The game is up for Sir Victor Blank and Eric Daniels. The chairman and chief executive of Lloyds Banking Group have only themselves to blame.

They were in charge of a thoroughbred and they went and paired it with the crazed bucking bronco that was HBOS. Their shareholders have been trampled. Tonight, their bank has ended up in the hands of the taxpayer. For this, Daniels and Blank will certainly have to go. It’s not a question of if, it’s when.

Daniels and Blank were fooled into taking on HBOS by Gordon Brown after he offered them the carrot of waiving competition rules. Then they were hoodwinked by the real villains of the piece – Lord Stevenson and Andy Hornby of HBOS – into buying a bank that liked to hide behind a veneer of box-ticking and supposed adherence to corporate governance best practice, but which in reality had been out of control for years.

This has been clearly revealed in new evidence submitted to the Treasury select committee by Paul Moore, who was fired as HBOS’s head of group regulatory risk because he tried to alert the bank’s board to the fact that they had embarked on self-destructive course.

Daniels and Blank allowed their own greed and reckless ambition to obscure their judgment – and didn’t care about what lay behind the curtain. Without bothering to properly evaluate the risks that permeated HBOS’s £666bn balance sheet, they proceeded with a deal that was no less lunatic than RBS’s earlier takeover of ABN Amro.

As Daniels admitted to the Treasury Select Committee: “If we’d had unlimited access … we probably would have put in somewhere between three to five times” as much due diligence.

Now the blinkers are off and I suspect that Lloyds shareholders (who include some former HBOS ones) are not going to be in a forgiving mood.

I agree with John Stepek, Editor of Moneyweek that it is almost forgiveable to buy a pup at the peak of the market as Sir Fred Goodwin did with ABN Amro. After all it has been done countless times before as evidenced most recently by BHP Billiton’s acquisition of Rio Tinto Zinc. Writing in Moneyweek, Stepek said: “Now, what would be really, monumentally stupid, would be for a management team to buy a company that it already knows to be a dud, right at the start of an economic meltdown of historic proportions.” This, of course is exactly what the idiots Blank and Daniels have done.

Doesn’t this mean their inadequacy as stewards of a public company, culpability for massive destruction of shareholder value and indeed their crass stupidity is if anything more extreme than that of Sir Tom McKillop and Sir Fred Goodwin?

Meanwhile, there is apparently to be a no-holds-barred inquiry into every decision taken by Sir Fred Goodwin during his ten year tenure at RBS, as the government seeks to claw back some of the disgraced chartered accountant’s £700,000 pension. The main inquiry is to be carried out by ‘magic circle’ law firm Linklaters with Slaughter & May handling a separate inquiry into the circumstances under which Fred doubled his pension on October 10th or 11th 2008.

Short URL: https://www.ianfraser.org/?p=770

Posted by on Mar 6 2009. Filed under Blog. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

1 Comment for “Game’s up for Blank and Daniels: Why they both have to go”

  1. […] To read a blog post dated March 6th in which I predicted that both Blank and Daniels would have to go because of their crass stupidity in acquiring HBOS, click here […]

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