Lloyds Bank shareholders 'mugged', claim lawyers

Lloyds Bank branchImage copyright Reuters

Shareholders in Lloyds Banking Group were "mugged" by the bank and its former directors when they were persuaded to back the takeover of Halifax Bank of Scotland (HBOS).

That's according to lawyers for shareholders, who are suing the bank and five former directors.

They claim the bank failed to tell shareholders the bank was effectively bust before the transaction completed.

The defendants strongly contest the claimants' case.

They include former chairman Sir Victor Blank and former chief executive Eric Daniels.

"We are saying that shareholders were mugged in this acquisition and should never have been kept in the dark.Disclosure was not made by the Lloyds board," Richard Hill QC, for the shareholders, told the High Court.

Mr Hill said the defendants had accepted that while asking shareholders to support the purchase in the autumn of 2008, Lloyds directors failed to disclose the following facts:

  • HBOS had received a covert loan from the Bank of England - known as "Emergency Liquidity Assistance" - totalling £25.65bn
  • After announcing the intended acquisition, Lloyds had secretly loaned HBOS a further £10bn
  • HBOS had also received covert financial support from the US Federal Reserve, then totalling $14.5bn (£11bn)

Shareholders were told in September and October 2008 there had been no significant change in HBOS's financial position when it had suffered a run on wholesale deposits, was surviving on emergency lending from Lloyds and the Bank of England and had gone from being a functioning bank to a failed one, Mr Hill said.

"The directors knew it;and they told shareholders the opposite," Mr Hill submitted.

"Mr Daniels was informed by government on 17 September 2008 that if he didn't announce a deal by the next day, then HBOS would have to be nationalised."

'Robust capital'

Yet when they announced the deal the next day, the directors made a series of assurances to investors.Sir Victor Blank called it "a good deal for customers and shareholders".

Analysts were told had "robust capital" and "very strong liquidity" - even after it was in receipt of $14.5bn of covert financial support from the Federal Reserve, Mr Hill said.

The claimants say the glowing description given to shareholders was in contrast to what was told confidentially to the Office of Fair Trading (OFT), which might have blocked the deal due to competition concerns.

A confidential OFT document disclosed in court said:"HBOS strongly believes that if the merger with LTSB were not to take place, it would no longer be credible for HBOS to continue as an independent bank without at least some form of assistance from the tripartite authorities."

'Absolutely involved'

Defence documents submitted to the court refer to support for the acquisition from the regulator at the time, the Financial Services Authority (FSA).

Mr Daniels was informed by Lloyds then chief risk officer Carol Sergeant on 1 October 2008 that the £10 billion loan to HBOS "would not be supportable in the normal course of business" but was part of a systemic rescue package and explaining that the FSA should "explicitly endorse the position".

On the 2 October, Lloyds obtained confirmation of FSA support from FSA chief executive Hector Sants.

Then director of wholesale banking Truett Tate told Ms Sergeant by email:"Hector wanted it noted, explicitly and word for word, that 'he was absolutely involved, in every aspect of the transactions, and supported it to the detail'.He added that they were very keen to have the deal go through and indeed felt that 'everyone' was increasing committed past the point of no return."

The case continues....

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BAE Systems and Cammell Laird to bid for Type 31 frigate contract

Type 31e frigateImage copyright Polaris Media Image caption Cammell Laid has previously built some of the most iconic Royal Navy warships

Defence giant BAE Systems is to make a joint bid with the UK's largest shipbuilder Cammell Laird to construct five low-cost warships.

It follows the announcement in September of a new national shipbuilding strategy[1] intended to benefit UK shipyards.

The Ministry of Defence plans to boost a depleted Royal Navy fleet with five Type 31e frigates, costing £250m each.

BAE recently revealed plans to cut almost 2,000 mainly air sector jobs.[2]

The defence firm is facing an order gap for the Eurofighter Typhoon and wants to slow production in its air sector.

The navy currently uses Type 23 frigates, which would be slowly phased out.

The contract for the new Type 31e General Purpose frigates is expected to be awarded in spring 2019, with construction beginning in the autumn.

A successful bid would see Merseyside-based Cammell Laird act as prime contractor.

Image copyright Gavin Trafford Image caption Cammell Laird are proposing an innovative design based on BAE System's naval ships

The MoD's shipbuilding strategy was formed in response to Sir John Parker's independent report into British naval shipbuilding.

The report made recommendations to transform the UK maritime industry and boost the prosperity of regions, shipyards and maritime supply chains across the country.

Cammell Laird has previously worked alongside BAE Systems in constructing 1200-tonne flight deck blocks for the Queen Elizabeth Class aircraft carriers, and blocks for the complex nuclear powered Astute submarines.

Chief Executive Officer John Syvret said:"The company is proposing an innovative frigate design known as Leander, based on existing and proven BAE systems naval ship designs.

"This design meets the T31e requirements with a high level of adaptability to attract the widest range of international customers."

Image copyright BAE Systems/ PA Image caption HMS Queen Elizabeth was built in blocks across six cities

John Hudson, managing director of BAE Systems Maritime, said:"We are pleased to be working with Cammell Laird with whom we have a strong and effective relationship, having worked with them on the Carrier and Astute programmes.

"We believe our expertise in warship design and engineering capability, combat management systems and export campaigns, together with Cammell Laird, means we are in an excellent position to contribute to the success of the Type 31e programme"

Cammell Laird is one of the most famous names in British industry with roots tracing back to the early 19th Century.

Located in Birkenhead on the River Mersey, it has a long history in constructing some of the most iconic Royal Navy warships, including HMS Achilles and HMS Ajax.

The Merseyside shipbuilder is currently building the £150m new arctic survey vessel, RSS Sir David Attenborough[3]....

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Unemployment drops by 52,000 but pay squeeze continues

Man working in Ford factoryImage copyright Getty Images

UK unemployment fell by 52,000 in the three months to August to 1.4 million, leaving the jobless rate unchanged at 4.3% from the previous quarter.

However, pay still failed to keep pace with inflation, with the real value of earnings down 0.3% over the past year.

Total earnings, excluding bonuses, rose by 2.1% from June to August, said the Office for National Statistics.[1]

The news will increase expectations that the Bank of England will raise interest rates on 2 November.

However, Kathleen Brooks of traders City Index said the Bank faced a tricky decision next month.

"The prospect of raising interest rates when real wages are in negative territory will make this potential hike a tricky one for the Bank to justify," she said.

The unemployment rate is still at the joint lowest level since 1975, although the claimant count increased by 1,700 to 804,100 last month.

The UK's key inflation rate rose to 3% in September.[2]

There were 32.1 million people in work in the UK in the June to August period, 94,000 more than between March and May and 317,000 more than in the same period in 2016.

The employment rate was 75.1%, up from 74.5% a year earlier, while the total number of unemployed people was 215,000 fewer than at the same time last year.

Employment Minister Damian Hinds said:"Our economy is helping to create full-time, permanent jobs which are giving people across the UK the chance of securing a reliable income.

"We've boosted the income for people on the lowest pay by increasing the national living wage and delivered the fastest pay rise for the lowest earners in 20 years."

The female unemployment rate is at a joint record low of 4.2%, while job vacancies have gone up by 3,000 to a 783,000.

The number of people classed as economically inactive, including those looking after a sick relative, on long-term sick leave, early retirement or who are not looking for a job, fell by 17,000 to 8.8 million.

Commenting on those figures, senior ONS statistician Matt Hughes said:"Many labour market measures continue to strengthen.Employment growth in the latest three-month period was driven mainly by women, with a corresponding drop in inactivity.Vacancies remain robust, at a near-record level."

Analysis:Andy Verity, economics correspondent

Image copyright Reuters

Unemployment drops!A record low rate!Earnings shrinking against inflation!

Once upon a time, these were all big headlines.But we've become so used to them now, they barely cause a ripple - and that has its own implications for interest rates.

The latest numbers reinforce what the new deputy governor of the Bank of England, Dave Ramsden, said on Tuesday:there's little sign of wages picking up in response to higher inflation.

Nevertheless, the City remains convinced the official rate will have to rise from its record low of 0.25%.

The pattern of trading in interest-rate derivatives - investments that effectively bet on when interest rates will rise or fall - suggests there is an 82% chance that rates will go up to 0.5%.

If so, it would be the first rate rise in more than 10 years.

We won't have to wait long to find out who's right.

Margaret Greenwood, shadow employment minister, expressed her fears at the continuing fall in the real value of wages.

She said:"With a record number of working people living in poverty, the news that real wages have fallen yet again is deeply concerning.

"While the overall increase in employment is welcome, it's also clear from today's figures that too many people are struggling to find employment because of their age, ethnicity, disability, or where they live."

TUC general secretary Frances O'Grady commented:"Britain desperately needs a pay rise.Working people are earning less today (in real terms) than a decade ago.

"The chancellor must help struggling families when he gives his Budget next month.This means ditching the artificial pay restrictions on nurses, midwives and other public sector workers.And investing in jobs that people can live on."

Find out if your wages are keeping up with inflation

Enter your details below.Source:Office for National Statistics....

References

  1. ^ Office for National Statistics. (www.ons.gov.uk)
  2. ^ rose to 3% in September. (www.bbc.co.uk)

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Householders warned about 'blocked drain fraud'

man clearing drainImage copyright Getty Images

Householders with blocked drains are being warned to think twice before employing claims management companies (CMCs) to process a claim.

The insurance company Direct Line says that more than half the claims being made by such firms are "invalid, inflated or fraudulent".

Many people have cover for blocked drains as part of their home insurance.

However, sometimes a CMC will offer to handle the claim for them, charging a significant sum.

Direct Line says some people end up paying thousands of pounds to such companies when they could contact their insurance company for free.

The firm says there has been a sharp rise in the number of claims being made for blocked drains.

In the first quarter of 2017, it estimates the number increased by 22% compared to 2016, with no apparent or logical explanation.

Hefty cost

It's thought that in some cases, unscrupulous drainage firms are selling details of their clients to CMCs.

Those CMCs then approach the householder and ask them to sign a bit of paper, typically promising to give the management company 10% of the eventual insurance payout.

Direct Line says that in some cases, people can also be confused about whether they are dealing with a drain repair company or a CMC.

"It is important that vulnerable customers who have an issue with their property are not taken advantage of by companies that are looking to profit from their misfortune," said Katie Lomas, director of Direct Line Home Insurance.

"Fraudulent and inflated claims drive up the cost of policies for all consumers.Anyone that thinks they may need to make a claim on their insurance policy should contact their provider directly."

As part of its research, Direct Line examined more than 2,000 drainage claims made in the last year.It found that 54% of them had been inflated or were invalid, costing UK insurance companies £2m....

References

  1. ^ Claims firms take a quarter of PPI pay-outs (www.bbc.co.uk)

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Tesco to start selling green satsumas and clementines

The insides of green satsumas are just as ripe as orange onesImage copyright Tesco Image caption Tesco is to start selling green satsumas and clementines

Tesco has announced it will start selling green satsumas and clementines, as part of plans to cut food waste.

The supermarket chain says the green oranges are "perfectly ripe" and will be as sweet as orange-coloured ones.

Higher early season temperatures in Spain have slowed down the natural process by which the skin of the fruit turns orange.

Other UK supermarkets have also branched out to sell less-than-perfect produce[1].

In the past, retailers have been criticised for being too fussy.This has led to farmers throwing away large amounts of perfectly edible fruit and vegetables.

'Perfectly imperfect'

Satsumas and clementines actually grow as green fruit to begin with, and the skin only turns to orange as summer wanes and the nights cool.

However, in recent years, warmer temperatures during the early growing season for satsumas in September and October have continued to remain high into the autumn, thus delaying the natural process by which the fruit turns orange.

Tesco launched the Perfectly Imperfect range in March 2016, which features apples, pears, potatoes, parsnips, cucumbers, courgettes, strawberries and frozen mixed berries.

Image copyright Tesco Image caption Don't be put off by the colour - Tesco says these satsumas are just as ripe as orange-coloured ones

Tesco's aim is that no food safe for human consumption will go to waste from its UK outlets by the end of 2017.

"Key to encouraging consumers to buy these is communicating - for example, prominently at the point of sale - that the satsumas are ripe and shoppers can expect the same taste they are used to, perhaps even by offering tasters," Kiti Soininen, Mintel's head of UK food and drink research, told the BBC.

"From international examples, the success stories for initiatives to cut food waste by embracing 'ugly' fruit and vegetables have been the ones helping shoppers understand what to expect from the taste and quality of the food, and reassuring them that 'ugly' doesn't mean that the fruit and vegetables wouldn't still taste great."...

References

  1. ^ less-than-perfect produce (www.bbc.co.uk)

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