Read Black Horse Ride: The Inside Story of Lloyds and the Banking Crisis by Ivan Fallon Free Online
Book Title: Black Horse Ride: The Inside Story of Lloyds and the Banking Crisis|
The author of the book: Ivan Fallon
Edition: Robson Press
Date of issue: June 11th 2015
ISBN 13: 9781849546423
Format files: PDF
The size of the: 927 KB
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Loaded: 1939 times
Reader ratings: 3.8
Read full description of the books:
In the time I worked in banking I experienced two mergers (well, one merger and a takeover). The first involving Lloyds and TSB was, in retrospect, fairly easy: ok, the IT systems didn’t speak to each other for an age, but on the staff side it always felt like we were all pulling in the same direction. The second one was different. When Lloyds ‘rescued’ HBOS in 2008 the banking world was in turmoil and after the deal was done, and particularly after it became clear how swallowing this toxic beast had impacted the healthy bank, it felt… well, difficult to swallow.
For most staff I knew in the new Lloyds Banking Group there were three questions we wanted (but never got) answers to:
1. Were Victor Blank (Chairman of Lloyds) and Eric Daniels (CEO) pushed into the takeover of HBOS by the then Prime Minister, Gordon Brown?
2. Did Daniels, as he later suggested, fail to complete satisfactory due diligence before the takeover was signed and sealed – and if so why didn’t he extract guarantees from the government to protect Lloyds against unforeseen problems in the HBOS business?
3. Why was the deal done without a guarantee that the government would look after competition issues (including Brussels) to prevent the need to sell off branches later?
The answers to all these questions are here, and a good deal more too. I found it to be a comprehensive walkthrough of the recent history of Lloyds Bank, the strategic challenges it faced leading up to the 2008 banking crisis and a pretty detailed meeting by meeting account of how events played out. It also provides an interesting view on what the longer term impacts of the takeover are.
The scope of this book is actually wider than just the Lloyds/HBOS issue, taking in the impacts on all the UK banks and also exploring the global picture. It’s familiar stuff to anyone who followed the news at that time, but I learnt a good deal more about how events played out.
It’s not possible to tell just how accurate this portrayal is, but the author is a well respected journalist and he seems to have gained access to many key sources in writing this account. Through it all, Blank and Daniels actually come out of it quite well – better than I thought they would. It’s pretty damning of the Treasury, the Bank of England and the Financial Services Authority, though. Brown, too, doesn’t come come out of it well at all.
By the way, the answers to the questions are:
1. No. Daniels had been talking to Andy Hornby (CEO, HBOS) for a couple of years about a possible merger. They hadn’t progressed due to the competition issues. The financial crisis provided a window of opportunity to slip this deal through.
2. No. Due diligence was completed to the standard you’d expect in a takeover of this kind. The problem was twofold: Lloyds couldn’t see the detailed lending book until the deal was completed and the economic downturn ran much deeper than anyone predicted, thus throwing out all the calculations anyway. But, the guarantee was never sought – and given the pace of events it should have been.
3. A verbal confirmation was obtained, but this was never confirmed in writing. Interestingly, in his conclusion the author suggests that this might turn out to be a blessing in disguise. Lloyds probably ended up with too many branches and in batching up and selling off TSB it actually disposed of something that was cost heavy and revenue light.
A compelling read for anyone interested in learning more about how the banks and the government worked their way through the crisis and also anyone who has a hankering to learn a bit more about how top executives in big businesses earn their crust.
Having spent just about 40 years with TSB, then Lloyds TSB, then Lloyds Banking Group, I know how it felt to go through the HBOS merger from the inside: the bad feeling and suspicion from the staff of both banks and further down the line the growing certainty that the whole deal had been botched. It'll be interesting to see what some of the people who were involved in framing and executing the deal have to say about it. I don't expect the whole truth - this will, no doubt, come out in time - but I'm looking forward to hearing their story, all the same.
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