Preference Shares

Bank of England rescue plans beginning October 2008 (short overview)

Plans initially operated through UK Financial Investments Ltd (UKFI).  Now taken over by UK Government Investments (UKGI: www.ukgi.org.uk).

·       Royal Bank of Scotland

Initially raised £5bn in form of preference shares taken by UK Gov, plus £15bn ordinary shares, underwritten by UK Gov. 

Feb 2009:  Revealed biggest loss in UK corporate history.

6 Aug, 2015:  First tranche of government-owned shares disposed of at approximately £1bn less than original cost (5.4% of shares).

UK Gov now (28 August 2019) owns approximately 62% of total shares.

Scandals:

Feb 2013:  RBS fined about $560m for their part in rigging the LIBOR rates.

November 2013:  allegations that RBS has been deliberately forcing small firms into administration, then acquiring their properties at bargain prices (NB power of debt-holders vs power of share-holders).

Aug 2014:  RBS fined £14.5m for giving incorrect mortgage advice.  Would have been £20.7m but they got a discount by settling “at an early stage”.

Oct 2016:  November 2013 allegations resurfaced.

July 2017:  Fined $5.5bn for mis-selling mortgage bonds.

·       Lloyds Bank (ex Lloyds TSB, ex Lloyds and TSB (2 separate banks))

Lloyds TSB initially raised £5.5bn from UK Gov (£4.5bn ordinary shares and £1bn preference shares).  HBOS raised £11.5bn from UK Gov (£8.5bn in ordinary shares and £3bn preference shares).  Lloyds TSB took over HBOS 16 January 2009.

Attempt to sell off the TSB part of the bank to the Co-op Group (led by Paul Flowers ‑ Methodist minister with no experience of banking but a lot of experience of drugs and a very large expense account) failed in April 2013.

May 2017:  UKFI disposed of remaining Lloyds shares.