Downing Street Says

Asked what role if any, the Prime Minister had had in the potential merger between HBOS and LloydsTSB, the Prime Minister s Spokesman (PMS) told the assembled press that this was a matter for the companies involved and there had been no confirmation from either of them of any potential merger.

In general, you would expect the Treasury, the Bank of England and the Financial Services Authority (FSA) to remain in close contact with all the major financial institutions in the UK and obviously the Prime Minister was kept informed of that.

Put that there had been no direct contact between the Prime Minister and the companies involved, the PMS said that he would not comment on individual meetings or conversations the Prime Minister may or may not have had. The Prime Minister spoke to all sorts of senior business and financial figures all of the time. This was a commercial matter and it would not be appropriate for the Government to comment any further at this point.

Put that there would be no public money involved in securing this potential merger, the PMS replied that he was not saying anything about any potential merger, because there had not been any confirmation at this point and we would not comment on individual companies. In general, the Chancellor did make clear yesterday that we would do whatever was appropriate to maintain the integrity of the UK financial system.

Put that in the US and elsewhere there was some kind of regulatory intervention and also on occasion government help in order for these things to take place and was the Government party to those discussions, the PMS said that these were highly market-sensitive matters. The PMS added that he was not in a position to be able to comment on individual companies and all he could do was refer people back to what the Chancellor had said yesterday, that we would do whatever was appropriate to maintain the integrity of the UK financial system.

Asked whether the Prime Minister supported Mervin King s view that it would be morally hazardous to do anything that would bail banks out, the PMS told the journalist that he was selectively quoting things Mervin King may or may not have said. The PMS would not get into a discussion about what selective quotes the Prime Minister may or may not agree with. The Government s position was set out very clearly by the Chancellor yesterday.

Put that there were reports on the BBC that the Prime Minister had talked personally to the chairman of LloydsTSB, the PMS replied that the Prime Minister spoke to a very wide range of senior business and financial leaders, as people would expect.

Asked about where we were on the depositors protection scheme and were there plans to speed the process up, the PMS said that we had consistently stressed the urgency for our proposed reforms to be implemented and we would be bringing forward legislation as soon as the House returned in October.

Asked whether the guarantee given last year to Northern Rock depositors covered HBOS as well, the PMS said that he would not comment on individual companies. The FSA had said this morning that they were satisfied that HBOS was a well-capitalised bank that continued to fund its business in a satisfactory way. Asked whether last years statement that a guarantee would be extended to other banks in a similar position to Northern Rock still stood, the PMS replied that that was what the Chancellor had said last year and that remained the Government s position. The Chancellor had made clear yesterday that we would do whatever was appropriate but we would not be commenting on individual companies.

Asked if there was any frustration over the driving down of HBOS prices by hedge funds, the PMS said that if there was any inappropriate behaviour, it was really for the FSA to deal with.

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» Wednesday, September 17, 2008

HBOS

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