How did Brown do it? How did he talk Lloyds bank into taking on HBOS? It got him out of a problem; there was no re-run of the Northern Rock debacle. However, it ruined Lloyds, while their shareholders were all but wiped out.
Things haven't got much better recently. Today, Lloyds Banking Group reported a first half loss of £4 billion loss. Shareholders, which now includes the UK taxpayers, have HBOS and its rotton portfolio of mortgages to thank for that.
Lloyds also reported that its arrears had risen to 2.44 percent, compared with 1.79 percent at the end of 2008. The national average at the end of March was 2.39 percent. Since a hefty proportion of those arrears are coming from HBOS, we can safely assume that Lloyds would have been in a comparatively strong position had it not been for that disastrous merger.
There is a lesson here. Business people should never do favours for desperate politicians. Brown is still in office, can we say the same for the financial genius from Lloyds who agreed to help the PM out?