Lloyds boss who quit after disastrous HBOS takeover to advise government

Published on Monday 1 February 2010 21:54

A FINANCE chief at the centre of the near-collapse of the banking system has landed a top job with the UK government, prompting an accusation of "a serious error of judgment" by Business Secretary Lord Mandelson.

&#149 Sir Victor Blank: Appointed an adviser by Lord Mandelson

Former Lloyds chairman Sir Victor Blank has been appointed as the government's chief adviser on bringing in investment from overseas.

In his previous role, he attracted criticism from some in the financial sector when he oversaw the takeover of HBOS – then had to ask the government to bail out his bank with billions of pounds of taxpayers' money to save it from collapse. The new Lloyds Banking Group, which received 17 billion from the Exchequer, ended up majority-owned by the government. Sir Victor stepped down as chairman after the crisis.

His departure was thought to have been hastened by the absence of public support for him from UK Financial Investments, which handles the taxpayers' stake in banks, including Lloyds.

But yesterday he was appointed by Lord Mandelson as an unpaid member of the advisory panel set up by Prime Minister Gordon Brown and Lord Mandelson last month as part of the government's growth strategy.

A government spokeswoman said: "The panel are going to help the government take a systematic and strategic approach to relationship management with the leading companies investing in the UK.

"The UK is the No1 destination for inward investment in Europe. Inward investment created 35,000 jobs in the UK in the last financial year and has created or preserved almost 500,000 in the last six years. Ensuring the UK maintains its position is key to our future economic success.

"This panel will advise on how government can strengthen its relationships with key potential investors, so government can understand their strategic direction, spot investment plans and secure them within the UK."

But the appointment has been greeted with astonishment by those who believe the bankers have been rewarded for their failures, which almost irreparably damaged the UK economy. Lord Mandelson was urged to think again.

Matthew Elliott, chief executive of the TaxPayers' Alliance, said: "It is farcical that Sir Victor, who oversaw one of the worst calamities of the banking crisis, should be given a job at taxpayers' expense. The errors (he] made should make him ineligible for any government job."

Lord Oakeshott, the Liberal Democrat Treasury spokesman, said: "After he ran Lloyds on to the rocks and lost the shareholders a fortune, Sir Victor Blank is the last man to reassure overseas investors that Britain is a safe home for their money.

"This shows a serious error of judgment by Lord Mandelson – why can't he see failed bankers are the worst possible ambassadors for Britain?"

&#149 Virgin Money's new chairman, Brian Pitman, has indicated an interest in buying branches of Lloyds and RBS. The veteran banker said he wanted to create a "solid bank" at Virgin Money, establishing a network of branches.