Wednesday, 15th October 2008

Will there be a manifesto commitment to privatise the banks?

James Forsyth 10:43am

Events have moved so fast this week that there are a whole string of questions that we have not really thought about. For instance, when will the government sell off its stakes in Royal Bank of Scotland and the bank to be created by the TSB-Lloyds HBOS merger?

Obviously, the government would be foolish to announce the schedule that it is working towards as the answer will depend on market conditions. But it doesn’t seem unreasonable to ask whether the parties’ manifestos at the next election will contain a commitment to place these shares on the market before the end of the next parliament, which will in all likelihood be in 2014.

It will be an interesting ideologically canary in the coal mine to see whether any party is prepared to pledge to do this. If they are not, it will be proof that the political plates really have shifted.

Previous Back to Coffee House Next

Actions: Email to a friend | Permalink | Comments (7) | Subscribe

Post this entry to: del.icio.us | Digg | Newsvine | NowPublic | Reddit

Post comment

David C

October 15th, 2008 11:23am Report this comment

What NuLabour pledges in its manifesto is irrelevant - the document is worthless.

Ian C

October 15th, 2008 11:44am Report this comment

The banks' nationalisation scheme is already running into obstacles as the details emerge. The FT today reports that the banks are balking, quite rightly in my view, at the terms of Preference shares.

Apparently they require 12% to be paid for a minimum of 5 years, regardless of ability to repay sooner, and dividends on ordinaries will not be payable for that fixed minimum period.

Pointless and foolish terms as the shares will go nowhere until dividends are in sight so the banks will simply hoard their cash fro exactly 5 years and not lend.

There is plenty of crisis yet to come - as clever-cloggs Broon grandstands his success prematurely.

TrevorsDen

October 15th, 2008 12:01pm Report this comment

Lack mof dividends will also affect pension funds - you tell me but presumably they will be stuck and unable to sell untill prices rise and be reciving no icome in between.

How come Lloyds needs money - it was considered sound enough to buy crippled HBOS a couple of weeks ago.

at every stage the government have been behind the game - now they spin them as our saviour (with OUR money)

oldtimer

October 15th, 2008 1:13pm Report this comment

The terms offered to the banks (or should that be "imposed on"?) look more and more like an asset stripping exercise. Labour does not need to nationalise the banks. Of course Brown and Darling do not want to run the banks - that is not the point. What they want, and what they will get from the banks forced to participate is cash out, something that seems assured by the rapacious terms imposed. After all the government, via the FSA, set the "bullet proof" tier 1 ratios, made these a condition of further Bank of England support, and prints the bank notes to acquire new shares.

This is certainly the case for Lloyds-TSB shareholders if they are daft enough to vote through the merger with HBOS. They will finish up paying for HBOS irresponsibility and, when all the dust has settled, passing over 40% of their assets to the government.

The financial and political engineering behind this bank "rescue" looks sinister to me.

The consequences for pensions and long term savers who depend on bank dividend income are dire. Not only will they lose that; their capital values have been shot to pieces too. Any company pension scheme not already sunk by the 1997 dividend tax is in serious danger of being holed below the waterline by the way this "rescue" has been structured.