ALEX BRUMMER: Understanding how the culture of the banks broke down has never been fully explored
23:07 GMT, 12 February 2019
23:07 GMT, 12 February 2019
How extraordinary that, more than a decade on from the financial crisis, evidence of abuse is still emerging.
The allegation that Lloyds Bank conspired with turnaround outfit Baronsmead to push property firm Angel Group into administration is deeply worrying.
It provides a sharp reminder of how slothful the progress is in drawing a line under the unscrupulous behaviour of the banks during and after the crisis.
The allegation that Lloyds Bank conspired with turnaround outfit Baronsmead to push property firm Angel Group into administration is deeply worrying
It would be nice to think that, with the banks expected to unveil healthy profits in the next ten days or so, the chief executives might offer a mea culpa instead of hiding behind a smokescreen.
At Lloyds, Dame Linda Dobbs is still investigating the degree of knowledge at the highest levels of the bank over the extent of the fraud at the former HBOS, now a Lloyds branch, in Reading.
That is not all. The Financial Conduct Authority (FCA) has never come to grips with management culpability for the near-collapse of HBOS and how it ruined so many Lloyds shareholders, and resulted in tens of thousands of job losses.
Nor are we any closer to getting to the bottom of the way in which Royal Bank of Scotland’s Global Restructuring Group, in its enthusiasm to clear dodgy loans off its books, forced many firms into administration. The probe into this abomination was hugely unsatisfactory.
FCA chief executive, the admirable Andrew Bailey, inherited a flawed investigation process under Section 166 of the Financial Services Act, which meant the findings couldn’t be released. Eventually the knot was untangled with the assistance of the Treasury Select Committee.
What was slightly disconcerting is that the FCA decided against taking any formal action against the bank or those involved.
One of the most frustrating aspects of the whole financial crisis and its aftermath has been the piecemeal way in which it was dealt with.
Instead of a full judicial inquiry, where evidence was taken under oath, there have been endless Treasury Select Committee hearings, a series of discrete probes by the FCA (some still unpublished), and a belated prosecution by the Serious Fraud Office into four senior Barclays executives, currently in the Southwark Crown Court, all of whom have denied the charges brought against them.
Understanding how the culture of the banks broke down and ordinary citizens and companies were harmed has never been fully explored. So there has been no closure for executives, investors, staff, customers or enforcers.
At the risk of becoming the Daily Mike Ashley, it is useful to note that the burly tycoon doesn’t always get his way.
He was outbid in the effort to gain control of HMV and has withdrawn from the contest for Patisserie Valerie. Now we learn that his effort to take control of Debenhams, by means of a boardroom coup followed by a loan offer of £40million, is being resisted.
Debs is seeking to take control of its fate. It has managed to convince bankers that it has a sensible strategy for bringing the group back from the intensive care unit.
This looks to have three parts to it. A new loan facility from the banks of £40million, which is either brave or foolish, should give it time to regroup.
One of the perennial problems of retailers in trouble is the loss of credit insurance, which makes suppliers reluctant to part with goods.
Debs boss Sergio Bucher, removed from his board responsibilities, has managed to negotiate a decent arrangement with Hong Kong’s Li & Fung, which should keep supplies flowing.
Next task is to rid the group of its most onerous leases and concentrate on restoring confidence.
Debenhams remains a penny stock with little value. But the jump in the shares suggests that there may yet be some hope.
The pressure on the British Horseracing Authority (BHA) to get the £3.5billion bloodstock industry up and running again ahead of the March 12 start of the Cheltenham Festival must be enormous.
One imagines the bookies, who admittedly are much more diversified these days, have been pulling their hair out.
But the BHA’s admission that ‘there is some risk associated with racing,’ must be regarded as a trifle ominous.
When equine flu hit Aussie racing in 2007 the industry was shut down for six months and the all-clear didn’t come for a further ten months.