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 Robin Budenberg (Chairman)
Jim O'Neil (Chief Executive)
Products Investment Management
Services Manages investments in:
UK Asset Resolution
Lloyds Banking Group (40%)
RBS Group (82%)
Owner(s) HM Government
Website www.ukfi.co.uk

UK Financial Investments (UKFI) is a company set up in November 2008 by the UK Government to manage its shareholding in banks subscribing to its recapitalisation fund. They include Lloyds Banking Group (of which HM Treasury owns 40%), Royal Bank of Scotland Group (of which HM Treasury owns 82%), and until January 2012 included Northern Rock. The government is underwriting capital investments for RBS and Lloyds (which includes HBOS), totalling £37 billion.

On 3 November 2009, the government injected further capital into RBS in particular, which resulted in the government's stake in that company rising from 70% to 83%.[1] The UKFI holding in Lloyds dropped from 43% to 41% in February 2010 after it issued 3.14 billion new shares.[2]

UKFI's also manages HM Treasury's investment in UK Asset Resolution which holds both Northern Rock (Asset Management) and Bradford & Bingley.

On 17 November 2011 it was announced that Virgin Money was going to buy Northern Rock for £747 million.[3] The deal went through on 1 January 2012.[4]

Technically, UKFI does not itself own any of the companies it manages, since the shareholdings in each are still held by HM Treasury. UKFI is mandated to manage these Treasury assets on its behalf.

Contents

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, but also owned 100% of Northern Rock plc until 1 January 2012:

Company Shareholding
Royal Bank of Scotland Group plc 82%[6]
Lloyds Banking Group plc 40%[6]
Northern Rock (Asset Management) plc (held via UK Asset Resolution) 100%[7]
Bradford & Bingley plc (held via UK Asset Resolution) 100%[7]

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.[8]

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.[9] 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:

  • Robin Budenberg – Chairman
  • Jim O'Neil – Chief Executive
  • Peter Gibbs
  • Michael Kirkwood
  • Lucinda Riches - "non-executive director of The Diverse Income Trust plc (appointed March 2011), an Adviser to the Board of The British Standards Institution (appointed May 2011) and a Trustee of Sue Ryder (since 2008)." [10]
  • Philip Remnant - "Chairman of the Shareholder Executive, which was formed in 2003 to improve the Government’s performance as a shareholder in government-owned businesses." [11]
  • Julian Kelly

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. ^ "Alistair Darling: RBS and Lloyds bonus clampdown 'better for taxpayer'". London: Telegraph.co.uk. 2009-11-03. 
  2. ^ "Lloyds issue shrinks taxpayers' share to 41%". The Scotsman. 2010-02-12. Retrieved 2012-01-03. 
  3. ^ "Northern Rock sale announced by chancellor". BBC News. 2011-11-17. Retrieved 2011-11-17. 
  4. ^ "UKFI confirms completion of Northern Rock sale to Virgin Money" (PDF). UKFI. 2012-01-01. Retrieved 2012-01-01. 
  5. ^ "New company to manage Government’s shareholding in banks". HM Treasury. 3 November 2008. Retrieved 2011-12-30. 
  6. ^ a b "UKFI Market Investments". UKFI. Retrieved 2013-05-18. 
  7. ^ a b "UKFI Wholly-Owned Investments". UKFI. Retrieved 2012-01-03. 
  8. ^ Treanor, Jill (2009-01-13). "Who's in charge of our money?". London: The Guardian. Retrieved 2009-01-13. 
  9. ^ "Stock Exchange Announcement". London Stock Exchange. 2009-01-16. 
  10. ^ "The UKFI Board - Lucinda Riches". UKFI. Retrieved 2013-04-06. 
  11. ^ "The UKFI Board - Philip Remnant". UKFI. Retrieved 2013-04-06. 
  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]

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