O happy day
620 Lloyds Bank branches plus all of Northern Rock are to be sold if George Osbone gives it the go-ahead over the next two weeks. No doubt you’ve heard about this already, but it really is the most extraordinary yarn.
The Northern Rock outlets proposed disposal is being handled by JP Morgan. You can be sure that Tony Blair will get some commission on this one, as he effected the introduction in 2008. That was the deal via which Morgan got all the juicy investments and good loans, and we were saddled with the rubbish. I’ve yet to have somebody I respect explain that one to me.
Deutsche are leading the charge on the Lloyds branch sales. They muscled their way in to get the job of assessing the plan’s viability and then, surprise surprise, they said yes it was viable, and oh alright then – if you twist our arms – we’ll handle the launch. Not too long ago, Deutsche narrowly avoided everyone seeing what a mess their books are in, by hastily buying Germany’s PostBank….with a great deal of help from friends in Berlin. The bank’s exposure to the Spanish crisis doesn’t bear thinking about, but as Geli Merkel is going to bail all her lovely banks out and blame the ClubMeds for taking the money, I suppose DB will be alright. Let’s hope so, otherwise this sale will rapidly descend into farce.
It’ll descend into farce sooner or later anyway, as it’s a fairly obvious case of the insane in pursuit of the unnecessary, the whole being managed by the insolvent. I understand that National Australia (NABU) are interested, as is Richard Branson’s Virgin Money. NABU is a profiteering former privatisation heavily criticised Down Under for its lending policies and senior management salaries. And Virgin is, well, Virgin.
But Branson must be able to see something I can’t in the UK retail sector of financial services. Whoever gets the prize is buying premises – nothing else. And what exactly are the punters going to buy? They won’t be given loans or mortgages, and at Zirp rates they won’t be depositing cash. Unemployment is rising (and will get worse), core indebtedness is in a terrible state, and Merv will do anything to keep interest rates down.
Branson deciding to devote the branches to small-business lending would be great; but I doubt that will happen – and it’s probably too late now to make any difference anyway. But old beardy has a amazing track record of reinventing the rules in every sector he enters, so let’s hope he gets what he wants.
If all goes well (which it won’t) the Treasury will net about £1.4 billion. Considering it coughed up £780 billion to bail out the banks, this isn’t much of a payday: anyway, the sale is only happening because of a monopolies objection by the EU. It’s a woolly ball surrounded by kittens; just watch as it gets hopelessly tangled up with EU exposures and a global depression.
The Slog 