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.”