MEETINGS of the Treasury select committee have been among the star turns of Westminster and next week’s hearing is not likely to disappoint.
Lord Levene, normally referred to as a City grandee, will face MPs on Tuesday morning to answer questions over the aborted sale of 632 Lloyds branches for which Levene’s investment vehicle NBNK was a bidder.
NBNK was overlooked in favour of an offer from the Co-operative Group whose bullish former chief executive Peter Marks believed he had got the deal of the century. We all know what happened next.
The announcement yesterday that Levene will appear before the committee alongside his erstwhile chief executive Gary Hoffman coincided with news on the latest stage of the inquiry into the Co-op debacle. It didn’t just fail to tie up the deal, it made a right old mess of it and in the process exposed its underlying capital shortcomings.
Levene has never held back from expressing his dismay and indignation about the UK government’s decision to choose the Co-op over NBNK, which was backed by numerous institutions and considered itself well positioned to take on the task of building an alternative bank.
He will argue that the government was biased; that it wanted to promote the merits of mutuality and that the Co-op appeared to be one of its standard bearers. In the end, Lloyds went ahead with relaunching the branches under the revived TSB banner ahead of a flotation this year.
When everyone thought we had learned the lessons of the 2007-9 crash, the Co-op proved there is no such thing as “never again”.
Goldman adds pressure to EU’s bonus cap plan
The hike in pay awards to City bankers has started already. Who really believed that, by capping bankers’ bonuses, the European Union could really stop them putting their snouts in the trough?
There is some considerable support for what Brussels is proposing, and no shortage of ire that the issue continues to dog the industry all these years after the crisis that brought the sector to its knees.
Yet – and I have argued this many times – the ultimate winners will always be the bankers, who will find a way around the rules.
Goldman Sachs has done just that by implementing changes to basic pay, a move that critics of the EU plan have warned about all along: that by restricting bonuses to 200 per cent of salary they will only encourage the banks to increase salaries. Barclays and HSBC are already implementing new methods to do this in order to prevent an exodus of staff to other firms.
This is a case of EU directives versus the law of the jungle and the wild beasts of the City are proving they will not be beaten.
As my colleague Martin Flanagan highlighted here yesterday, there is a special conundrum concerning the Royal Bank of Scotland.
If its paymasters in government try to limit bonuses along the lines demanded by Labour leader Ed Miliband, then RBS risks being isolated and losing its talented staff to those rivals who will kick dirt in the faces of the eurocrats.
The EU’s argument is that the cap will suppress reckless behaviour. But the issue is dividing opinion at the highest level, with the Bank of England governor Mark Carney firmly opposing the EU’s bonus cap.