Yesterday the news broke that the European Commission has compelled LloydsTSB to sell 632 branches to Cooperative Bank as it was deemed that Lloyds had become too big due to its acquisition of Halifax Bank of Scotland, but what no-one mentions is that the chancellor of the exchequer of the day - Gordon Brown - lent very hard on Sir Victor Blank and Eric Daniels, who were heading up the bank at the time, to purchase HBOS.
This purchase then led LloydsTSB into their current difficulties, making a government bail out necessary.
As a customer of LloydsTSB I was angry with Gordon Brown at the time and now I am annoyed with the EU for forcing this sale. One of the few advantages of this merger – a bigger branch network – is being stripped away on their order.. No wonder the Co-op is picking up these properties at the sort of knock-down price and easy terms you would expect from a forced vendor.
The Telegraph says the following: By the time the deal is complete, more than 3m of Lloyds’ personal accounts will be transferred to the Co-op. Of course, those who strongly oppose the deal can vote with their feet and switch their accounts to any bank they like – even Lloyds – but this will mean considerable nuisance. That’s why, for example, you are statistically more likely to get divorced than to change banks.
So customers, many of whom are also – like your humble correspondent – shareholders in Lloyds, have good reason to feel disgruntled about the deal. While it might sound like mere snobbery, it would be unbusinesslike to overlook the obvious question: how many of Lloyds’ core customers in Middle England will be pleased to pull out a Co-op cheque book or credit card?
On a brighter note, some of the nicest people I know bank with the Co-op and its long-standing commitment to ethical banking has certainly separated it from the pack, demonstrating you can do well by doing good. They have certainly done so with this deal. Co-op also has better customer satisfaction ratings than Lloyds, although its current account pays no interest and its cash individual savings account (Isa) yields a dismal 0.5pc.
Even after a 1pc uptick in Lloyds' share price today, this feels like the latest in a series of decisions taken way over the heads of the bank's customers and shareholders which will prove bad for our wealth.
- Labour can never trusted with our finances.
- We need to come out of the European Union.
And a conservative government would have let HBOS fail?
ReplyDeleteOr would they have saved shareholders and depositors by bailing it out with more taxpayer money/benefits cuts to the sick and needy?
Did Lloyd's really need that much encouragement to devour its debt stricken rival?
That's what I was expecting you to say. You will recall that the worldwide banking crisis that started with Lehman Bros and then caused Northern Rock to fail, was exacerbated in this country by Gordon Brown's decision to remove banking regulation.
ReplyDeleteHe had already almost given away our gold reserves and declared that he had abolished boom and bust. He then made an already weak bank take over one that was even weaker, which shows an extreme lack of judgment. What a proper Conservative government, not the awful coalition we have at the moment, would be likely to do would be to raise more share capital through bonds. Quantitive Easing would be another solution, but weakening the banking structure even further would not have been on their agenda.
You will also recall that Labour plced all their eggs in one basket by relying almost exclusively on the banking sector. Because we have a Push-Me Pull-You of a government at the moment, with an absolutely front bench - from both parties - I couldn't possibly say what they would do if they had the freedom to do it. As it is, their hands are tied and they have to do as our unelected masters in Brussels tell them.