Lloyds can't recall if Govt said HBOS was on brink of closure on day of takeover
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Lloyds Banking Group chief executive Eric Daniels has admitted that he “cannot recall” whether the Government told his bank that it was considering closing down HBOS the day that Lloyds TSB acquired the troubled bank.
Speaking at a Treasury Select Committee today, Daniels (pictured) could not confirm that the Treasury revealed to the bank that it was considering closing HBOS for new business or that it was considering a public turnover on 16 September 2008, the day Lloyds bought the lender.
When questioned by committee member MP for Newcastle Upon Tyne Central Jim Cousins on details revealed by the report by the National Audit Office, an uncomfortable Daniels said that while the “gravity” of HBOS’ problems were clearly perceived by Lloyds, no details were given by the Treasury during acquisition wrangling as to the immediate fate of HBOS should Lloyds not invest.
Cousins repeatedly asked: “The report tells us that on September 16, the treasury considered informing HBOS that it would be closed to new business unless a rescue could be arranged - did the Treasury share that information with you on the day that you were negotiating?”
Daniels finally 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.”
Daniels also admitted that the Tripartite had not expressed that it may nationalise HBOS on the day of negotiations, but he said that: “there was no doubt” that the Government would take action should the Lloyds deal fail.
MP for Sevenoaks Michael Fallon questioned why the prospectus of the acquisition did not include the secret £25bn emergency loan offered to HBOS by the Bank of England. Daniels said: “We admitted there was emergency funding and it was substantial.”
But Fallon replied: “Why should shareholders not have been given the figure?”
Daniels repeated: “It wasn’t deemed to be necessary. I believe the disclosure was absolutely thorough.”
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Readers' comments (12)
PensionsMan | 12 Jan 2010 4:33 pm
Surely thats the kind of statement that one could not easily forget?
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Anonymous | 12 Jan 2010 4:48 pm
And if you believe this you will believe anything
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John Whipple | 12 Jan 2010 4:51 pm
"Deal of a lifetime"
His boss called it at the time.
Are Mr Daniels Pants on fire?
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Peter Duffy | 12 Jan 2010 4:53 pm
LOL, as I believe the young people say....
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sandyb | 12 Jan 2010 5:20 pm
Beyond incredible!!!
As a Lloyds Shareholder, I am struggling to believe that Mr Daniels cannot recall whether HBOS was being closed down. What did he have on his mind, is it fish fingers for lunch, did I tie my shoe laces this morning.
He has taken one of the UK's safest financial organistations to the brink of destruction.
His position is completely and utterly untenable, he should do the decent thing and go back to the states.
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o busby | 12 Jan 2010 6:15 pm
What a totally convenient situation, is this the reason so many thousands of loyal employess have lost their jobs.
This whole process is morally currupt at the highest levels of LTSB and number 10, both employees and taxpayers have been abused and misled
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michael Brayne | 13 Jan 2010 9:45 am
It must have been mentioned in the "Reason Why Letter".
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John Harding | 13 Jan 2010 11:55 am
'I don't have a specific recollection of' whether or not the Treasury told me that one of the largest banks in the world, that we were in negotiations to take over, was likely to be closed to new business by them within 24/48 hours if our deal failed!
Two comments
1) He is telling the truth that he doesn't remember whether he was told or not! Something that important is rather memorable so his whole position is untenable.
2) He was told but declines to share this with us. Meaning that he knew before the takeover that this was not 'the deal of the century' his Chairman was claiming.
3) He was not told by the Treasury but despite being a cautious banker who had steered Lloyds clear of most of the problems other banks had got into he was blinded by the possibility of creating a 'mega' bank and egged on by the Govt. promising to keep the competition authorities out of the way.
Perhaps the most likely is that he was not formally told, so that he could fudge the issue if asked, but that he still totally understood the situation.
For any of the above the FSA could declare him not to be a 'fit and proper person' to be in charge of running any financial firm, so why is he still there?
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Anonymous | 13 Jan 2010 12:24 pm
20 years after Ernest Saunders was the first man to recover from pre senile dementia, we now have a second case.
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Anonymous | 13 Jan 2010 12:56 pm
Just another example of how untrustworthy Bankers have been in the past and continue to be in the present.
Selective amnesia is a wonderful excuse for not answering the truth.
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