Bankers protect their wealth at the expense of the majority

News Comment

The government has confirmed its remaining shares in Lloyds Banking Group have been sold, eight years after pumping in £20bn to save it.

Its return to the private sector is in stark contrast with the other bailed-out bank – Royal Bank of Scotland – that is still 73% owned by taxpayers.

The government has been slowly selling down its stake in Lloyds for the past five years. Ministers have claimed that all the public money used to buy Lloyds shares has been returned.

Lloyds’ profits of £4.2bn are the highest for a decade and the bank’s shares rose 4% after it promised a dividend of 3.05p a share – including a 0.5p one-off special payout.

The bonus pool increased by 11% while Lloyds’ chief executive, António Horta-Osório, was paid £5.5m for 2016. His basic salary is increasing to £1.2m, the second stage of pay rise from £1m two years ago. A total of 58 Lloyds’ bankers were paid more than £1m.

Corruption of Lloyds has continued through Government management. Six people, including two former HBOS, Lloyds Banking Group bankers, were found guilty of bribery and fraud that cost the bank’s business customers and shareholders hundreds of millions of pounds. Corrupt employees of the bank imposed a firm of so-called turnaround consultants on their small business customers in exchange for bribes, including cash and prostitutes.

Banks and financial institutions lined their own silk pockets at the expense of the average person in society. The super rich deposit some of their vast capital in these banks, and bankers work on their behalf to make their capital grow. The super rich through banks have developed circumstances that always protect their wealth at the expense of the majority. Tax payers’ have funded recklessness of bankers and Government takeovers are simply allowing them to continue.

ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا

“That is because they say: ‘Trading is only like Riba,’ whereas Allah has permitted trading and forbidden Riba.” [al-Baqarah, 2:275]

News Article

The Government has sold its last remaining stake in Lloyds Banking Group, meaning the lender has been returned entirely to private ownership.

In a stock market announcement, both the bank and the Government confirmed that a deal had been done to sell the final 638,437,059 shares that lay on the Treasury’s books.

At a price of around 70p per share, that should have raised around £466m.

It comes hours after the stake sale was first reported by Sky News, following the Treasury’s disposal of its final shares in Tuesday’s trading session.

Shares rose 2% following the announcement.

Lloyds said the gradual sale of the Government’s stake had returned £21.2bn to the taxpayer, about £900m more than the initial investment, including more than £400m in dividends.

However, figures published by the Office for Budget Responsibility (OBR) in March suggest that, taking account the cost of extra borrowing to pay for the bailout, the balance of profit to the Treasury would be closer to £100m.

The bank’s chief executive, Antonio Horta-Osorio, said his team had inherited the bank “in fragile condition” but added: “We’ve turned the group around.”

Chancellor Philip Hammond said it was a “major achievement” and “another example of the work being undertaken to return Britain’s financial sector to normal following the financial crisis and putting Britain on a sound economic footing”.

The announcement will not affect the running of this bank, but it does carry a great symbolic importance.

The Government has owned a stake in Lloyds since October 2008 and at its high point held 43% of the lender – which includes Halifax Bank of Scotland (HBOS) as well as Lloyds Bank.

It pumped more than £20bn into the bank as part of an extraordinary rescue package for the banking sector.

The Treasury has been gradually selling down its stake since 2013, with successive Chancellors agreeing that they saw no long-term point in the Government owning banks.

The former Chancellor George Osborne had promised to sell a huge tranche of the Government’s Lloyds stake to the public, but that plan changed last year when the proposal was shelved because of turbulent market conditions.

Mr Osborne’s successor, Philip Hammond, then decided that a sale to institutional investors would be quicker, easier and more effective.

The bailout of Lloyds, as well as an even more expensive rescue package for RBS, came at a time of turmoil for global business.

Lloyds had recently completed a hastily-constructed takeover of HBOS, a deal that hugely increased the size of the Lloyds Banking Group but also lumbered it with HBOS’s debts and complex web of liabilities.

In particular, HBOS had a hefty raft of commercial property loans that were beginning to unravel spectacularly in time with the global financial downturn.

Those issues, combined with the worsening effects of the financial crisis, pushed Lloyds into seeking unprecedented support.

The bailouts were sanctioned after emergency meetings involving the Government, regulators, commercial banks and the Bank of England.

A more extreme option of fully nationalising both Lloyds and RBS was considered, but rejected.

Those bailouts infuriated many, who saw them as a way of getting taxpayers to cover the excesses and mistakes of overpaid bankers.

But most politicians and economists say that the emergency support was necessary to ensure the British economy did not suffer a savage, and potentially catastrophic, collapse.

Mr Horta-Osorio took over as the chief executive of Lloyds in 2011.

He was confronted by such a horrible corporate mess that, six months later, he took time off for fatigue, having admitted that he had, at one point, worked for five days without sleep.

He has overseen a restructuring that has seen the bank become smaller and less exposed to risky investments.

It has not come without pain – some 57,000 jobs have been cut by Lloyds, branches have been shut and the bank has had to deal with a spiralling bill for PPI compensation.

There have also been fines from regulators, and the share price has barely moved for the past four years.

But Lloyds is now paying dividends, and making a profit.

Compared to RBS, it is in rude health.

Sky News

Leave a Comment

 

e536c0eb03b359179c339b2e5ba2fd45(((