I could understand the meaning of the word ‘rescue’ in the context of Northern Rock, where billions of taxpayers’ money was spent saving the brand and jobs, and perhaps salvaging the reputation of the Financial Services Authority and the government, although I am not convinced by that last point.
But with HBOS, although no hard figures are available, it looks like over 1,000 branches are for the chop, although estimates of 40,000 job losses have been described as Obviously 25,000 to 30,000 would be much more reasonable. The bonus here is that there is an understanding that there won’t be any job cuts in the Prime Minister’s native Scotland.
Then there’s the issue of the brands that might disappear. The rescue might save jobs in Scotland but not Scotland’s very own bank, and on a personal note I will be sad if Halifax should disappear.
Back in 1953 it gave my mum and dad, who might now be termed economic refugees, a mortgage and my son and I bought our first homes with the help of a Halifax loan.
The brand is as much a part of our culture as Marks & Spencer and Branston Pickle and the PM is unlikely to get any Brownie points for smoothing its demise by assuring the chairman of Lloyds TSB, Sir Victor Blank, that the Competition Commission will turn a blind eye to the deal.
Part of the problem is that the acquisition of HBOS, rather than a rescue, looks like a bargain. Just compare the 12.2bn Lloyds TSB is paying for HBOS with the 19bn it bid for the UK’s second largest lender Abbey National in 1991.
Back then, surprise, surprise, the move was blocked by the Competition Commission. Timing, as they say, is everything.
I am not of course suggesting that there’s a deliberate conspiracy at work but a conspiracy of circumstances which were compounded by the tripartite authority’s failure to get on top of the situation.
The FSA announced a ban on short selling after the HBOS deal was done. Short sellers had been deemed to be the demons that caused the landslide in HBOS shares on September 15.
But come the following weekend FSA chief executive Hector Sants was admitting that market panic, not short selling, had been the problem – apparently under 3% of HBOS shares had been on loan that fateful Monday.
The FSA really understands what’s going on, doesn’t it? And as for the long term, if the nationalisation of NR was criticised for creating an unfair playing field what will the creation of a bank with a 34% share of all outstanding mortgages and a monopoly of personal savings do?
Adrian Coles, director-general of the Building Societies Association, does not agree with my rhetoric and told me that when faced with a meltdown of the market, “clearly it was important to put financial stability first”.
But looking ahead, he was concerned that “a new Lloyds TSB could use its position to under-price the market to gain market share”. That I think is a real risk.