Executives of some of the biggest and best business bank accounts in the UK recently warned that a bank break up could lead to taxpayers losing out.
The value of taxpayer stakes in both RBS and Lloyds Banking Group could be reduced, industry experts recently said. Nationalised bank management organisation UK Financial Investments informed the Treasury Select Committee that share price value could diminish for both banks.
UKFI chief executive Robin Budenberg stated that banks additionally need to preserve their bonus payment structure. Doing so ensures that talented executives are retained at each financial institution.
Stating that UKFI has examined the dramatic separation option, Brudenberg remarked that it was difficult to predict the full implications of such a move. However Brudenberg stated that UKFI has discussed the negative effect the move would have on share value with Treasury officials.
Among the other nationalised banks UKFI oversees is Northern Rock. The firm’s official in charge of the mortgage lender Keith Morgan stated that the bank’s public ownership could be ended by remutualising. Mr Morgan called the possibility a realistic one, yet committee member and Labour MP Chuka Umunna moved to table a motion for a feasibility study.
UKFI has recently invited investment banks to submit contract proposals for becoming the advisors on Northern Rock’s future. The bank is funded by retail deposits and split off from the portion of the bank that had contained £22 billion of government money and troubled loans. The resultant financial entity has been absorbed by the mortgages held by Bradford & Bingley under the UK Asset Resolution holding company. According to Morgan, the possibility of an approximate £1 billion equity value for B&B could exist following 2020.
Budenberg stated that Lloyds and RBS have expressed fears of being put at a disadvantage if split.