UK Financial Investments

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UK Financial Investments Limited
Type State-owned limited company
Industry Financial
Founded 3 November 2008 (2008-11-03)
Headquarters 2 Lambs Passage, London, EC1Y 8BB, United Kingdom
Key people James Leigh-Pemberton
(Executive Chairman)
Products Investment Management
Services Manages investments in:
UK Asset Resolution
Lloyds Banking Group (24.9%)
RBS Group (80%)
Owners HM Government
Website www.ukfi.co.uk

UK Financial Investments (UKFI) is a limited company set up in November 2008 and mandated by the UK Government to manage HM Treasury's shareholdings in banks subscribing to its recapitalisation fund. These currently include substantial holdings in Lloyds Banking Group (Lloyds) and The Royal Bank of Scotland Group (RBS); and previously also Northern Rock until that company was taken over by Virgin Money on 1 January 2012.[1]

On 3 November 2009, the government injected further capital into RBS in particular, which resulted in HM Treasury's shareholdings in that company rising from 70% to 83%.[2] Since then, the proportion of those shareholdings have fallen slightly to 80%, as of end-March 2014, because of new issues of shares to other shareholders during the past few years.[3]

HM Treasury's shareholdings in Lloyds dropped from 43% to 41% in February 2010 after it issued 3.14 billion new shares,[4] dropped again in 2013 from 39% to 33% after it sold £3.2 billion worth of shares, and is now down to 24.9% as of end-March 2014.[3]

UKFI also manages HM Treasury's investment in UK Asset Resolution which holds both NRAM plc and Bradford & Bingley.

Investment aims[edit]

The government said the aim of the company would be to “protect and create value for the taxpayer as shareholder, with due regard to financial stability and acting in a way that promotes competition” while also ensuring that the banks they own provide "competitively priced" loans to small businesses and homeowners "at 2007 levels".[5]

Holdings[edit]

UKFI have holdings in the following companies:

Company Shareholding
Royal Bank of Scotland Group plc 80%[6][3]
Lloyds Banking Group plc 24.9%[7][3]
NRAM plc (held via UK Asset Resolution) 100%[8]
Bradford & Bingley plc (held via UK Asset Resolution) 100%[8]

Board[edit]

It was envisaged that membership of the UKFI Board would comprise a private sector chairman, three non-executive private sector members, a Chief Executive and two senior Government officials from HM Treasury and the Shareholder Executive. Sir Philip Hampton became the UKFI’s first Chair and John Kingman become the first chief executive; both took up these positions in 2008.

Glen Moreno (Chairman of Pearson PLC), Peter Gibbs (Chairman of Turquoise), Lucinda Riches (ex UBS) and Michael Kirkwood (ex Citigroup) were appointed as non-executive directors in January 2009.[9]

Also in January 2009 it was announced that Sir Philip would become Chairman Designate of the Royal Bank of Scotland Group and step down as Chairman of UKFI.[10] He was replaced as Chairman by Sir David Cooksey in August 2009. On 28 October 2009 it was announced that Robin Budenberg would take over as chief executive of UKFI; Budenberg later became Chairman.

The Board comprises:[11]

  • James Leigh-Pemberton – Executive Chairman
  • Kirstin Baker
  • Lucinda Riches
  • Philip Remnant
  • Marshall Bailey
  • Jitesh Gadhia
  • Jane Guyett

Controversy[edit]

Robert Peston of the BBC said on 24 December 2008 "It's probably no exaggeration to say that—for the coming year or two at least—UKFI will be as important to all of us as the Treasury, or the Bank of England or the City watchdog, the Financial Services Authority".[12]

It has been revealed that Glen Moreno was a former trustee of LGT Bank, a secretive company based in Liechtenstein, and embroiled in allegations of tax evasion. He has stated that he is not interested in a permanent position at UKFI.[13]

In December 2012 an administrative error was uncovered in the wording of the loan agreements made by Northern Rock in 2008 for around 152,000 customers; the error may cost an estimated £270 million. As a result of the error the affected customers, who were borrowing £25,000 or less, may be entitled to a repayment of interest.[14][15]

See also[edit]

References[edit]

  1. ^ "UKFI confirms completion of Northern Rock sale to Virgin Money" (PDF). UKFI. 2012-01-01. Retrieved 2012-01-01. 
  2. ^ "Alistair Darling: RBS and Lloyds bonus clampdown 'better for taxpayer'". London: The Daily Telegraph. 2009-11-03. 
  3. ^ a b c d "UKFI Annual Report 2014". UKFI. Retrieved 30 July 2014. 
  4. ^ "Lloyds issue shrinks taxpayers' share to 41%". The Scotsman. 2010-02-12. Retrieved 2012-01-03. 
  5. ^ "New company to manage Government’s shareholding in banks". HM Treasury. 3 November 2008. Retrieved 2011-12-30. 
  6. ^ "Lloyds advised to strengthen TSB balance sheet". BBC News. 11 September 2013. Retrieved 16 September 2013. 
  7. ^ "Lloyds stake sale raises £4.2bn". BBC News. 26 March 2014. Retrieved 17 April 2014. 
  8. ^ a b "UKFI Wholly-Owned Investments". UKFI. Retrieved 3 January 2012. 
  9. ^ Treanor, Jill (2009-01-13). "Who's in charge of our money?". London: The Guardian. Retrieved 2009-01-13. 
  10. ^ "Stock Exchange Announcement". London Stock Exchange. 2009-01-16. 
  11. ^ "About Us". UKFI. Retrieved 24 August 2014. 
  12. ^ Robert Peston (2008-12-24). "We are the Banks". BBC. Retrieved 2012-01-03. 
  13. ^ Naughton, Philippe; Costello, Miles (2009-02-11). "Business big shot: Glen Moreno". London: The Times. 
  14. ^ "UKAR response to Ministerial statement regarding NRAM". Northern Rock (Asset Management) plc. 2012-12-11. Retrieved 2012-12-18. 
  15. ^ "Northern Rock's £270m error means borrowers pay no interest". The Times. 2012-12-11. Retrieved 2012-12-18. 

External links[edit]

Coordinates: 51°31′17″N 0°05′25″W / 51.5213°N 0.0902°W / 51.5213; -0.0902