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[ 2010-06-07 ]

Bankers to fight rules from split G20
London (UK) – 07 June 2010 – The Times - The heavyweights
of international finance are primed to intensify efforts to
postpone tougher regulation after a divisive meeting of G20
finance ministers exposed diplomatic fissures over new bank
rules.

Those rifts were also visible on the wider question of the
global economic recovery. In the space of only a few weeks —
and in a move for which George Osborne was keen to claim
credit — the G20 switched its position from supporting
fiscal stimulus to one in which it endorsed the efforts of
countries such as Britain to cut spending.

With sudden changes of stance now more clearly possible, the
financial sector is understood to be preparing to move
against sweeping regulation on capital. Concern is rising
that by attacking its capital requirement proposals, the
banks could mount a serious challenge to the G20’s
credibility as a forge for strong international agreements.

Leading banks have spent months lobbying hard against
stiffer capital requirements and are expected to use an
industry gathering in Vienna this week to release
predictions of wider economic calamity should the new
capital rules be imposed as planned by 2012.

Analysts at UBS have already suggested that the proposed
rule changes on capital could force the world’s banks to
raise a combined $375 billion. Banks have argued that as
well as causing a considerable dent in profitability, their
scope to lend would be reduced and with it their ability to
fund economic recovery.

Many such forecasts — some very bleak, indeed — have been
dismissed by regulators as deliberate scaremongering by the
banks.

However, the financial sector, according to one Asian
delegate at the G20 summit in South Korea, will probably
have sensed weakness in the meeting’s final communiqué. The
two-day gathering ended with a signal lack of agreement over
plans to impose a worldwide tax on banks — a levy designed
to hand over the burden of future bank bailouts to the
industry itself.

After clear political opposition to the idea, principally
led by Canada and China, the G20’s final communiqué
recognised merely that there was “a range of policy
approaches”.

Despite warnings by several delegates before the meeting
that G20 could see efforts to water down capital requirement
rules, the language of the communiqué appeared to show
common resolve.

The ministers agreed to support the work of the Basel
Committee on Banking Supervision as it devises capital and
liquidity rules “of sufficient rigour” to shore up the banks
against any future financial crisis. The new rules should be
crafted in time for the G20 leadership summit in November,
the meeting added.

However, in what some observers said was yet another symptom
of widening disagreement among G20 finance chiefs, the
resolution came with a caveat that the new rules “will be
phased in as financial conditions improve and economic
recovery is assured”.

The new banking rules — known as Basel III — will require
banks not only to hold a greater quantity of capital, but
also require that its quality be more strictly defined and
policed.



Investors fight for £14bn lost when Lloyds bought HBOS

London (UK) – 07 June 2010 – The Times - The campaign by
Lloyds shareholders to win back some of the £14 billion lost
in the value of their shares after the HBOS merger will
start on Wednesday.

Lloyds’ leaders and the Treasury could be sued by Lloyds
Banking Group shareholders aggrieved by the merger.

A campaign to recruit more of Lloyds’ 800,000 shareholders
to pursue the claim will start in Reading on Wednesday.
About 500 shareholders have joined the group already. Lloyds
Action Now claims that Alistair Darling, the former
Chancellor, and Lloyds TSB directors unlawfully withheld
vital information about HBOS’s finances when shareholders
were considering whether to back the group.

The Government lent HBOS £25.4 billion in October 2008,
about the time the Lloyds deal was brokered. The size of the
loan was not disclosed to shareholders until November 2009.


Lloyds Action Now has sent demands for compensation on
behalf of test claimants to the Treasury, Sir Victor Blank,
the former chairman of Lloyds, and Eric Daniels, the bank’s
chief executive. The Treasury has 90 days to respond before
the group takes formal legal action, which could lead to
huge lawyers’ bills.

A Treasury spokesman declined to comment last night.

The shareholders claim they were misled into voting for a
takeover of HBOS as they did not realise the size of the
£25.4 billion loan that the Government had made to the bank.
Lloyds investors have lost £14 billion between them in
total. Dividend payments were stopped in 2008 and have been
suspended until at least 2012.

A spokesman for Lloyds said: “We provided thorough and
appropriate information to shareholders about our liquidity
position and that of HBOS, including the general use of
government-backed liquidity schemes. We disclosed the fact
of the support.”

Jim Rai, of Winckworth Sherwood, which is acting for Lloyds
Action Now, said there could be no doubt there was secrecy
over the loan not only “for the possible advantage of the UK
banking system” but also “so that Lloyds TSB shareholders
were not put off” a takeover of HBOS.

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