Goldman was both underwriter and investor in Lloyds refinance deal
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Goldman Sachs was both an underwriter and an investor in the Lloyds refinancing deal in November last year.
According to a report by the Financial Times, Goldman “demanded” last minute changes to the structure of the deal so that Lloyds Banking Group bonds’ pay out was increased, which materially benefited Goldman as an investor, says the FT.
Last November’s £23.5bn Lloyds refinancing deal was the largest in corporate history. Lloyds Banking Group is still 41 per cent owned by the UK Government.
The report also says Goldman Sachs structured the bond “waterfall” - which determines which bonds pay out first - in such a way that the Lloyds 6.9 per cent bond was top ranked. The report says Goldman had bought nearly half of that particular $1bn issue.
The FT says Goldman denies any conflict of interest due to Chinese walls within the set up of the investment bank.
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Readers' comments (2)
Mike Humble | 23 Apr 2010 9:33 am
If there was an actual or even a potential conflict of interest, the question must be "Who allowed this to happen and what will be done to ensure that there is no repetition?"
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John Whipple | 23 Apr 2010 11:53 am
Anti trust law time again?
Perhaps now is the time to consider as the US did when breaking up the Oil gints an anti trust law so that these "conflict" of interest issues do not arise it is not only politics that needs cleaning up.
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