Banks for sale
So if we've been right with the speculation, who is going to buy the bits of Lloyds Banking Group and Royal Bank of Scotland that they are being forced to sell or float off?
RBS insurance division looks quite a strong prospect for a float.
It was put up for sale earlier this year, but the only offer at that time would have required RBS to finance it.
That didn't seem to make much sense for a company on a crash diet, so chief executive Stephen Hester walked away.
With the financial market a bit less volatile than earlier this year, the big insurers could be more interested than when it was last offered, particularly if they know it has to be sold.
Even if there's to be no rushed fire sale, that probably gives buyers a negotiating advantage.
Names like Allianz, Generali and Zurich are being mentioned.
Peter Woods, who got very rich by setting up Direct Line nearly 25 years ago, is reported saying he prefers to focus on his current interests - esure and Sheilas' Wheels - doubting that the Direct Line model is well placed to match the growth of price comparison insurance websites.
I've heard the same concern from other insurance analysts.
However, one question nags about floating off a successful insurance division: does that have anything to do with increasing competition in retail banking, or is it merely punishment for being big?
The Royal Bank's RBS-branded branches in England and Wales - numbering 312, to be re-named Williams and Glyn and with a bias to north-west England - have a strong business banking profile and are perhaps the most attractive package of all.
A suggestion from one who ought to know the bank market well, is that they could be a good fit with the Clydesdale and Yorkshire banks, which are owned and run from Glasgow and Leeds as a joint unit for National Australia Bank (NAB).
Clydesdale's response? It said with its annual figures last week that it has been rather good at organic growth in the recent past, and that's how it would prefer to continue.
While NAB would look at opportunities to increase deposit strength and capability it doesn't have, it says that would have to measure up against the options for those organic growth options.
Then there's Intelligent Finance, an online division of Bank of Scotland that employs more than 350 people, most in Livingston, some in Rosyth.
It seems likely Lloyds will attach it to Cheltenham and Gloucester, for the simple reason that it lacks its own banking licence, and getting a new one is not an easy process.
Nor is it cheap. Buying a bank requires not only the capital to buy the business, but a whole lot more capital to sink into its balance sheet.
And as for Lloyds TSB Scotland, perhaps renamed the Trustee Savings Bank on the eve of that venerable Scottish mutual's 200th birthday?
Lloyds clearly won't want its name used by a rival.
Barclays and HSBC might like a vehicle for expanding into Scotland, but it now seems the political pressure is on to ensure the current British big four don't cannibalise each other to retain their dominance.
It could be snapped up by a big foreign bank wanting a foothold in the Scottish market.
Bank of China is one of those that has ambitions, and it's already getting active in the UK mortgage market.
It may also be interested in the RBS network south of the border.
But what about a Scottish consortium? The place to look is to that group of people who fought to stop Bank of Scotland being taken over by Lloyds TSB last year, arguing a great Scottish institution should remain Scottish.
They lost that battle, and Bank of Scotland has turned out to be a lot less great than it looked even then, as the losses on its corporate division have unravelled.
Sir Peter Burt, former chairman of Bank of Scotland, was one of those opposing the takeover.
He says he's not now part of a Scottish consortium to get into the market for these assets.
He has his doubts about the ease of disentangling the Scottish Lloyds TSB network from its larger southern sibling.
But he likes the idea and backs the push for more competition.
Ben Thomson, chairman of Noble Group, is seen as the key mover and shaker in this group of financiers.
He denies he's leading a consortium to buy Lloyds TSB Scotland. But he also supports the idea - very strongly.
"There's an opportunity to get the right structures in place," he told me.
"We can be ahead of the curve, in terms of restructuring the financial services industry to be in a good position to compete in the future."
"It's a huge opportunity. And it's far too important an industry not to put a huge amount of effort into getting it right".
p.s. With details now published, the leaks and speculation got it broadly right, but didn' t stretch as far as the Lloyds sell-off plans.
Between 250 and 300 Lloyds TSB branches in England and Wales are on the market, bracketed with 185 Lloyds TSB branches in Scotland and the Cheltenham and Gloucester.
That creates a new unit with stand-alone potential, representing 5% of Lloyds Banking Group's current accoiunt customers and 19% of its mortgage business.
That scale and geographic reach makes a Scottish consortium bid look much less likely.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ³ÉÈË¿ìÊÖ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 3rd Nov 2009, nine2ninetysix wrote:What a shambles!
RBS is too big as a bank so make it sell its insurance arm, whatever for other than Neelie Kroes flexing her European muscles?
If the new "competition" comes from abroad how exactly does this help us in the long run once they repatriate profits? If it is indigenous who will pay for it? About the only good thing to come out of this debacle is that bonuses will be curbed, meantime at least.
As always, the architects of the problem, in this case Applegarth, Hornby, Goodwin and whoever was really supposed to be regulating them have been able to walk away with money in the bank and in Hornby`s case a nice shiny new job in retail, proper retail this time. More than can be said for those who are already suffering or will in time suffer from their incompetance and greed.
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Comment number 2.
At 3rd Nov 2009, Douglas Daniel wrote:It's a shame the TSB and Bank Of Scotland were ever merged with Lloyds and Halifax in the first place. It really would be ideal if these could just be split from the LloydsTSBHalifaxBankOfScotland behemoth and somehow retained as Scottish banks rather than just selling them off to foreign banks or to Tesco. Hopefully the SNP will do all they can to see if this can be done.
However, I've yet to see any HBOS or LloydsTSB banks being rebranded since the fateful merger, which suggests they may still be relatively separate entities - is it too simplistic to suggest that the merger just be reversed somehow?
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Comment number 3.
At 3rd Nov 2009, verysceptical wrote:Another £39bn for lending to businesses? Whoopee. I'll wait and see if this now means that the EFG loan I applied for 3 months ago, and was told by RBS was absolutely 100% compliant with the scheme and that agreement to lend was given in principal, but about which they seem to have done nothing else, not even in the last couple of weeks the courtesy of returning my phone calls, finally makes it through the endless mire of banking spin.
It would be pleasant to finally be able to supply a globally buoyant & profitable product for which I have both orders and supply.
But I'm not holding my breath.
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Comment number 4.
At 3rd Nov 2009, motorsportwise wrote:The UK government, for once, should refuse to bow down to an EU diktat. We should not sell off any banking assets until we are ready- a fire sale is just what the european, and other, predators want- get some more UK assets on the cheap and then rip-off the customers in the future..e.g E.On, NPower, EDF, Thames Water, BAA etc. We should keep them in our pension funds for the future and let the taxpayers who have funded the bailouts get as much of their money back as possible. If they try to fine the UK then we could always set them off against our contribution- if they can actually enforce anything....in extremis we could pull out- hooray!
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Comment number 5.
At 3rd Nov 2009, Jovial wrote:Wow what a mess ,just the mere mention of Trustee Savings Bank adds a breath of fresh air to a very stale & musty industry. Trustee Savings Bank would be perceived as a return to the way banking used to...with trust, whoever pulls that off is buying credibility as the name is not associated with the credit crunch and all the greedy hacks that caused it.
With the way things are today trust & credibility are exactly what is needed & by the skip load!
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Comment number 6.
At 3rd Nov 2009, Wee-Scamp wrote:We all know that increasing competition levels in the UK generally leads to much poorer levels of service, lower investment in new products and services and the eventual sale of companies to overseas buyers.
It won't work. Greed and short termism are endemic in the financial services sector.
The only sensible thing to do with these lousy companies is to nationalise them 100%, throw out their boards and let them be run by people who are intellectually capable of reconnecting the banks with the rest of the economy.
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Comment number 7.
At 4th Nov 2009, nine2ninetysix wrote:#6
"The only sensible thing to do with these lousy companies is to nationalise them 100%, throw out their boards and let them be run by people who are intellectually capable of reconnecting the banks with the rest of the economy".
If we exclude politicians, bankers and economists from those intellectually cappable who is left?. We have also tried capitalism, socialism, nationalisation, privatisation and free for all before and found them wanting. Monarchy, democracy likewise.
Benevolent dictatorship seems like a good idea, applications for the post of deputy dictator to me please.
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Comment number 8.
At 4th Nov 2009, lloydstsbemployee wrote:I would like to thankyou on behalf of my lloyds tsb scotland fellow employees. If it wasn't for your blog we would still be pretty much in the dark. As a frontline worker we should have caught on after they refused to replace ex staff, increased sale targets,refused to refund first time bank charges for even the desperate of customers, increased average apr on loans to a norm of 25% no matter how much borrowed or time scale, aswell as reducing savings rates. Although at the same time offered higher savings rates at hbos excellent incentives for customers regarding home insurance up to £100 cashback the list goes on....we along with our scottish customers have been misled from the start of this shamefull takeover one that we never wanted in the first place.
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Comment number 9.
At 5th Nov 2009, oldnat wrote:7. nine2ninetysix
"applications for the post of deputy dictator to me please."
Thanks for taking this task on. However, I'll give you the job anyway.
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Comment number 10.
At 7th Nov 2009, Jovial wrote:I think there is a lot of resentment about this development not only from the employees but the tax payers who are having to foot the bill On the other hand I think it is beginning to capture the publics imagination,there is even a facebook group called Bring Back The Trustee Savings Bank (TSB) Now! I think Mr Fraser has hit upon what a lot of people are thinking and wanting.
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