Banking News Sainsburys Chairman And Former Lloyds TSB Director Put In Charge Of Nationalised Banks 2451
Sainsbury’s chairman and former Lloyds TSB director put in charge of nationalised banks
04 November 2008 / by Rachel Mason
Yesterday, the Chancellor Alistair Darling announced that the Government’s £37bn recapitalisation of RBS(Royal Bank of Scotland), Lloyds TSB and HBOS – will be managed on a commercial basis by a state-owned company – UK Financial Investments Ltd (UKFI), to be headed by Sir Philip.
According to Mr Darling, UKFI, which will also oversee the Government’s investments in Northern Rock and Bradford & Bingley, has been created to “protect and create value for the taxpayer as shareholder, with due regard to financial stability and acting in a way that promotes competition.”
“UKFI will work to ensure management incentives for banks in which it has shareholdings are based on maximising long-term value and restricting the potential for rewarding failure,” he said.
The Government says UKFI will also help to ease the mortgage market and make lending more affordable again, insisting that it will “oversee the conditions of the recapitalisation fund, including maintaining, over the next three years, the availability and active marketing of competitively-priced lending to home owners and small businesses at 2007 levels.”
Giving evidence before a Treasury Committee hearing on the banking crisis, Mr Darling told MPs that the that recapitalisation of Royal Bank of Scotland, Lloyds TSB and HBOS was an investment on behalf of taxpayers and not a handout to the bank, and insisted that the returns the Government expected to receive from its preference shares in the banks would “more than justify the initial sums put up”.
The UKFI board will comprise of a private sector Chair, three non-executive private sector members, a Chief Executive and two senior Government officials from HM Treasury and the Shareholder Executive. Sir Philip has already agreed to be chair and senior Treasury official John Kingman will be the chief executive. The rest of the board is yet to be recruited.
Sir Philip was appointed as chairman of Sainsbury’s in 2004, replacing Sir Peter Davis who was forced out by shareholders after receiving a very generous bonus despite poor performance. Before joining Sainsbury’s, Sir Philip worked for British Steel, British Gas, BT and Lloyds TSB, and in the 2004 Budget was asked to lead a review of regulatory inspection and enforcement. His review resulted in the Hampton Report, which led to the Regulatory Enforcement and Sanctions Act 2008.
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