Lloyds banking group recruits as the political parties announce plans for the banks

Lloyds banking group recruits as the political parties announce plans for the banks

14 April 2010 / by Lois Avery

Lloyds Banking Group, which is 41 per cent government owned, is set to add to its investment banking team in a move to keep up with its rivals.

The bank is reported to be hiring an extra 35 staff in its investment banking division after competitors Royal Bank of Scotland and Barclays accelerated their earnings in this sector over the last 12 months.

The recruitment is said to be part of an attempt to reverse the £6.3billion loss seen by Lloyds Banking Group in 2009 and return to profit this year after it received more than 20 billion pounds of taxpayer support.

The news comes as the political parties unveil their manifestos ahead of the May 6 General Election, with reform of the banking sector a central theme.

But what have the different political parties promised to do to the banks, if they are elected?

The Conservatives said last month that they supported imposing a levy on the banking sector, while Labour has said it is more likely to maintain the status quo, only bring in the tax if it is agreed internationally. The Liberal Democrats have promised to ban bonuses for loss-making banks and cap other bonuses at £2,500 annually.

Meanwhile, in an interview on ITV1's Tonight Prime Minister Gordon Brown apologised for letting the banks of the leash in the years leading up to the recent financial crisis, admitting that the Labour government ‘should have done more’.

Speaking to Citywire, banking analyst for Credit Suisse, Jon Pearce said:  “A majority Labour government would largely maintain the status quo for the banks, but a Conservative government or coalition including the Liberal Democrats might bring a more immediate and unilateral tax and increased medium-term uncertainty over the structure of the sector.”

He went on to say that it was vital for investors who own bank shares to understand how the major parties could impact the banks, and that the industry is the most likely to see any major changes following the election.

And with speculation that the UK could see the first hung parliament in four decades investors and business’ could be facing even more uncertainty and a possible delay on action to reduce Britain’s debts.

A survey of Chief Financial officers (CFOs) carried out by financial advisory firm Deloitte revealed that 93% of CFOs think a hung parliament would be negative for the UK recovery programme.

Deloitte’s vice chairman Margaret Ewing, said: “What emerges from these findings is that financing conditions for larger companies are slowly improving. However, that still leaves corporates with plenty to worry about in terms of the pace of the recovery and the election.

“CFO sentiment appears to be consistent with the current general mood of uncertainty about the pace of UK recovery and speculation that the general election may deliver a hung parliament.”

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