dateline 10th November 2008

So the news is that Peter Burt and George Mathewson wanted to prevent the government-brokered takeover of HBOS by Lloyds TSB. Burt was chief executive of Bank of Scotland when it merged with Halifax to form HBOS in 2001 and Mathewson was previously head of RBS. These would be two guys who were part of the problem then wouldn’t it? After all, they were instrumental in setting up HBOS and RBS in their current forms, models that have faced difficulties since the credit crunch given their use of wholesale funding.

Shane O'Riordain, HBOS spokesman, gave the usual, ‘we are studying’ stuff then followed by saying the letter did not address the funding issues that all major banks are currently seeking to manage. Meanwhile the prospect of the UK government becoming a major shareholder in Scotland's other big bank, Royal Bank of Scotland, through a recapitalisation programme -- have become a major issue there. Last week, the bank accused a Scottish lawmaker of treating the bank as a "political plaything" after he said a rival bid to its planned takeover by Lloyds could emerge within a week.

Alex Neil, a member of the Scottish parliament who has campaigned for an alternative to the Lloyds offer, said he was "very, very confident" a second bid will be unveiled soon. Neil then declined to name the possible bidder or give details about their potential offer. He described the suitor only as a "financial institution with a global reach.”

Well that’s ok then, thanks for ensuring we all enjoy this new period of openness Neil. Now is it me, or are these guys starting to play a bit fast and loose? Oh wait, they’ve done that, so no change there then.

I bet myself it would only take 1 or 2 months before the infighting started, so it looks like I owe myself a nice jam sandwich. With a cup of tea, natch.

News reaches me of that juggernaut of the Motor Industry, General Motors. Now this is the company that recently went cap in hand for a hand out from the US Government bail out fund without success. It transpires that GM is turning to debt exchanges to deal with capital-raising needs. The financing arm of General Motors says it wants to exchange a “significant amount” of its outstanding debt for a reduced principal as part of a plan to become a bank holding company and to participate in the US government’s bank rescue package. Crafty old foxes they have at GM it seems.

I felt my blood run cold when the UK banking rate cuts were issued recently. Not the cut you understand, that was great news for all us borrowers. What made my blood run cold was when various members of the incumbent UK Government smarmed their way onto the TV channels telling us they had brought huge pressure onto the various retail banks they now have influence over. Alistair Darling, that Finance Supremo, put the banks in a half nelson by telling them he would consider ‘prescriptive’ measures to force them to tow the line. Now good as this may seem on the surface, I am not so sure I want a Political Party using the UK banking system as a vote winning tool. However, I did have a good chortle when I read that HSBC and Barclays had effectively stuck two fingers up at him. Darling and his acolytes were also told that this was it. I loved the quote by one bank executive who said “Base rates are now so low that our margins are desperately small, this point was made quite clear to the chancellor by several of the executives — we are not charities.” Ah, that’s where I’ll be going wrong then.

The next few months should prove fascinating.