RBS went on a demented rampage of purchasing over the previous decade, bagging larger banks like Natwest, ones they couldn’t afford like ABN Amro, and ones with their toe in the US subprime market like Citizens, plus all sorts of smaller assets like insurance companies. Their unique combination of a vulnerable customer base and an overextended debt position meant that the bank felt the crisis more than most – now their empire is being broken up the European Union, eager to get the banking sector back to its private ways.

Advisors for RBS were telling them a fortnight ago to get rid of the insurance businesses (Privilege, Churchill, Green Flag, NIG and Direct Line) to placate the EU – now it’s looking more like they’re getting prised out of RBS’s reluctant fingers. After all, it looks like Lloyds is managing not to lose any of its assets, instead planning the largest rights issue in history to generate quick liquid funds as payback. RBS must have been hoping to remain equally unmolested; they had managed to hang onto the insurance businesses earlier this year, reversing the selloff desperately initiated by Fred Goodwin at the heart of the crisis. But the EU is playing hardball, and as well as the insurance businesses, they could lose Citizens, hundreds of branches, and see their investment banking operations scaled back. After the orgy of expansion, the party is well and truly over. 

Stephen Hester, RBS’s biggest cheese, is especially unhappy about potentially losing Citizens, saying that it’s a crucial part of RBS’s plan for emerging from the mire – with its 1500 branches, it’s a pretty sizeable cash generator, and the likelihood of getting a decent price for it is fairly low given the pressure on them to sell and the still relatively depressed marketplace. It of course would also sever RBS’s transatlantic ties, and severely set back their expansion.

So how will the high street change after all these sell-offs? Alastair Darling is keen to inject some more competition into the banking sector (we’ve already seen the potential suitors lining up for Northern Rock), and so we’ll see some brand new names on the high street pretty soon. Northern Rock’s quality assets will be parlayed into the astoundingly generic “BankCo”, while RBS’s branches will be taken over by the rakish and dashing “Williams and Glyn’s”, a venerable brand sucked into RBS in the mid-80s. The Sunday Telegraph, who reported these new banks, also said there’ll be one called “The TSB”, which truly is the brand that refuses to die.

A statement released by RBS today says that there should be an announcement before Friday on exactly which bits they’re going to lose. The adverse reaction on the stock and currency markets seems to endorse the fact that this is the sound of a bubble bursting.

Photo: Heart of Oak

Not George Osborne though, who has seen the pretty obvious vote-securing mileage in the bonus debate, and is going in guns blazing. He called yesterday for retail bankers’ cash bonuses to be ditched in favour of shares, which would be deferred for three years. The cash would then be funnelled back towards new lending.

The reaction from the banking sector has been somewhat frosty – everyone’s coming out with the usual jive about having to keep the City competitive and that not being possible without a bag of gold being plonked on everyone’s desk once a year. Meanwhile, Goldman Sachs’s vice chairman Lord Griffiths hasn’t helped rehabilitate the sector’s image by grumpily saying that people should “tolerate the inequality” – OK, it’s the elephant in the capitalist room that the system is geared towards making certain people richer than others, but you really shouldn’t mention it during a recession when everyone already hates you. But while it’s unequivocally clear that reform is needed fast, you can see the point in some of the beefs the bankers have with Osborne.

It’s true that his arguments are a little simplistic and mechanical, and certainly geared for maximum leverage among the electorate. The banks aren’t being held back from further lending by the cash earmarked for bonuses, and yet those are the terms Osborne has defined the situation in. And banks couldn’t possibly provide share-only bonuses without issuing more shares, thus diluting the value of the taxpayer stake and tying us to the banks over a longer term. Meanwhile he’s gone after the big high street banks which we all recognise and who have our taxpayer money, but not after the other companies who are instantly feeding their cash back to their workers instead of paying it out in a more stable and sophisticated way – the investment banks, the FTSE 100s.

But his attack on the apparent reluctance of banks to extend lending was given extra weight this week by the scrutiny on Lloyds, after their private equity arm has made a sixth of all buyout deals this year, plus a £400m deal currently being negotiated. The arm isn’t a free-standing unit with Lloyds’ branding, but uses the retail bank’s balance sheet to conduct its deals – the charge likely to be levelled at them is that they should be funding more small businesses rather than milking it off big established ones.

It’s good to have the likely future Chancellor pressing away at the issue of remuneration, but he has to do it on relevant terms – it’s in the interests of the banks to co-operate, given their image needs a major collective fillip, but aggressive and illogical attacks will only serve to prolong the already interminable progress of change, as a battleground rather than a round table is formed.

Which is what we have at the moment. Even if the regulators had cracked down instantly on bank bonuses, the resulting legislation would probably not have come into force by now anyway. But with the global discussions making their way through a very slowly yielding network of red tape, and the lobbying power of the banks still apparently very influential on the FSA, we can expect this same story next year.

Photo: Alan Dean

The first wave of hesitant calling of the end came in May, with Jean-Claude Trichet, George Soros and others saying an inflection point had been reached, with the economy heading back upwards. A quarter later, and people are saying that the recession is genuinely, officially over (there needs to be two quarters of consecutive GDP growth for it to be semantically, if not realistically, laid to rest). Ben Bernanke, US Fed chairman and recent receiver of mad love and props, said yesterday it is “very likely over”, with a reported rise in consumer spending seeming to underline his soothsaying.

Meanwhile, “arc of insolvency” members Scotland are saying they’re on the way up too, Lloyds Scotland’s chief economist Donald MacRae claims; Mervyn King says all’s well south of the border too, claiming “there are now signs that growth has resumed in the third quarter”; Mandy gave his optimistic two cents last week in China; these folks that the Guardian memorably interviewed at the beginning of the year seem to be on the up; and Wachovia’s senior economist Mark Vitner has said that we’re firmly in recovery mode though added, while upholding the tradition of dodgy meteorological metaphors beloved of economists: “Technically, it’s not freezing but it’s still pretty darn cold outside and you see ice everywhere”.

Yes, that’s the ice of real-term economic misery he’s clumsily referring to – while all this is pretty impressive given the dire straits we were in this time last year, unemployment is still a major inhibitor on quality of life and consumer spending. While the City is looking at the GDP growth, the likes of Next are looking at the high street: “we anticipate that the public sector deficit will become the dominant influence on the economy, bringing with it the combined downside risks of further increases in taxation and cuts in government expenditure”. Brown’s use of the c-word yesterday means that things like tax credits and general welfare could be cut, and taxes brought up to fight the massive deficit, thus impacting on people’s spending power. Meanwhile Chris Dodd, head of the US Senate banking committee, bluntly burst Bernanke’s balloon, saying “I don’t think it’s over”.

So basically until you see banks are overleveraging themselves into multinational deals, and people blithely acquiring 110% mortgages and living on credit cards, you can assume we’re still in the “bust” bit of the cycle.

Lloyds lost £4bn, but that was better than many people expected, and the bank said they thought the worst pain of losses from bad debts had passed – the renewed confidence in the bank sent their share price soaring, along with others in the financial sector, bringing the FTSE to a year high. Not that gains on the stock market should be regarded as evidence of long-term stability, but it did feel like a corner-turning of sorts.

But it’s heading back down now, as the rumoured rights issue means that the shares would be diluted, and returns for shareholders would fall. The issue is being designed to help Lloyds avoid getting quite so involved in the Asset Protection Scheme that they’ve signed up to – at the moment, they bank would end up being 60% owned by the government, and they want to scale that back, and if they’re right about their bad debt exposure lessening from now on, it’s a good idea not to spend money on insurance against something that isn’t that dangerous. But the government demands a certain level of capital and stability for Lloyds to reduce its protection, hence the share sale.

It’s the first major bit of action from new chairman Win Bischoff, hired last month to the indignation of some who saw the appointment as betraying a lack of imagination. Not just from Lloyds as well – Bischoff was being considered for a range of chairman roles, making it seem like the pool of talent was shrinking to a tiny handful of established names.

You’d think that a lower reliance on government aid would prompt confidence in shareholders, but two shareholders interviewed by Reuters this morning have said they’re not convinced by the rights issue’s ability to secure enough capital. “It would be quite surprising if there is that much appetite for Lloyd’s stock”, said one of the bank’s top ten shareholders. Ouch.

On a side note, the one person that this story really benefits is Rupert Murdoch, whose much-discussed decision to start charging for the Sunday Times online last week has been comprehensively validated by an exclusive story that reminds everyone of the value of the paper’s business section. That’s the kind of story that people of a certain workaholic tendency would pay for to read online on a Sunday, while everyone else relaxes with the ink edition.

First of all, UKFI’s people are doing it for the love – they must be the worst-paid fund managers in London. Senior teachers make more than these guys. John Kingman takes home £143,000 for heading the company, but the others, including the ironically-named Lucinda Riches, make either nothing or no more than £40,000. There’s a Remuneration Committee that sorts out the pay for these people, presumably with a big flashing Powerpoint slide reading “REMEMBER FRED GOODWIN” playing throughout. Mind you, they have all worked for the likes of Credit Suisse, PWC and Merrill Lynch, so they’re not exactly going to be getting the bus home.

As well as reminding everyone that they’re NOT involved in the day-to-day running of the banks, and that they’re not going to “discourage them from operating efficiently” (good call), they’re outlining how they’re planning on easing the banks back into private profitability. They’re going to be prodding RBS along with their retreat from overextended global megabank status, nurturing a “broad group of investors who are comfortable with the direction that the banks are taking, and who are willing to step into our shoes over time”, and are basically going to be in this for the long haul. They maintain that even if share prices go up, and remain robust, they’re going to wait for the economy to catch up before selling off their assets. And they’ve got a long way to go – take a look at this most depressing of tables:

So losses have decreased by over £7bn in five months, which is encouraging, but they’re still £10.9bn. It’ll be a long time before the government can reasonably frame a selloff as being profitable and defensible in a resurgent economy.

Their plan is to avoid big headline-grabbing selloffs, and instead play it slow – they suggest that a series of small sales, that don’t distort the market either before or after a sale, and that incrementally build confidence, are the way forward. They’re also planning to use a variety of different types of selloff – as well as traditional placements, they might deploy exchangeable debt issues, where a “sale” is made now at an agreed price, with the shares actually being sold at later date as long as that price is met or exceeded.

They’re also keen to show that, along with the rest of the Treasury and its attendent bickering sisters, they’re dedicated to reforming compensation, risk management, and executive appointments. The FT reports that thanks to the outcry over Stephen Hester’s bonus at RBS, more conditions are to be placed on him receiving the cash. He’ll have to wait five years rather than three to get it, and he would have to hit new profitability targets.

So we just have to sit tight and hope that the massive and unpredictable asset pools of Lloyds and RBS continue to provide returns, and that the confidence of the banking sector as a whole remains high(ish). The government is going to wait until the economy is healthier before selling off its bank assets, and the economy is only going to get healthier if banks continue to provide credit; an upswing in the banks’ fortunes could yet be undercut by wider problems in the economy like unemployment, and wider problems in the economy could yet be created by a fresh loss of confidence in the banking sector. For those reasons the government may end up being in the position of having to stay in the casino even when they’re sitting on a lot of winnings – taxpayers are going to have to be patient for their returns.

Bischoff was chairman of Citigroup Europe before taking the full chair position in 2007, taking over from Clinton’s Treasury secretary Robert Rubin. When things got tough over at Citi, rumours started flying that Bischoff would get the chop, but Citi came out in November and publicly supported him. Losses were so bad though ($8.29bn in one quarter bad) that a scalp was needed to show they were doing something, anything, about the situation, and Bischoff fell on his sword in January. 

Since then he’s been tooling around, making reports with Alastair Darling on how to steer the banking system between stifling regulation and absurd risk-taking, also saying that a splitting up of the investment and retail sides of banks, as has been much mooted recently, would be a silly thing to do. It looked like he could become chairman of UKFI, the Treasury company that manages national stakes in bailed-out banks, but it seems like there was no other decent candidates for the Lloyds job, and so the government, who own nearly half of the bank, bumped Bischoff up to the big job.

He’ll now be working with CEO Eric Daniels, whose position looked a little shaky amid the shareholder wrath, but who has been cemented in place by Gordon Brown. Bischoff’s reputation was damaged somewhat by the Citi fiasco, where it’s said that he didn’t guide Vikram Pandit enough – Daniels is more experienced than Pandit, but nevertheless shareholders and indeed taxpayers will be keeping a close eye on how he helps Daniels cope with Lloyds’ risky, unwieldy, and potentially anti-competitive assets.

It’s a slightly worrying appointment. Bischoff asserted a year ago that there was no “limit, in terms of management, in relation to size” – in other words, Citigroup wasn’t too big to fail, but could be managed despite its size. Even if Bischoff was a victim of circumstance to a certain extent, forced to leave a company that was plagued by the Charles Prince era, it shows that he is not fully comfortable working with a huge bank, which Lloyds undoubtedly now is.

How is the appointment of chairs being made? Simply on pedigree? Experience certainly counts for a lot in banking, but can the potential pool of suitors be so small that Bischoff is being considered for chair of Lloyds and Standard Chartered? As well as the mechanics of regulation, one lesson that could potentially be learned during the recession is how to change hiring practices. When the only man seen as a safe pair of hands has come from a bank that filed a record corporate loss only four months ago, you have to think you’re not looking hard enough.

How weird that all seems now, as the banking sector divorces itself from government and cruises back to the single life. First there was Goldman stating its intentions, then JP Morgan, and yesterday we had Lloyds paying off the Treasury to the tune of £2.6bn. And now today in the Wall Street Journal is the news that the U.S. Treasury expects the initial payback of bailout funds to be in the $50bn ballpark, twice as much as they originally expected for this point in time.

Of course, no-one’s really healthy just yet, and Lloyds in particular still has a long way to go. As well as the insurance premiums it must keep paying to the government to have its assets backed by the Treasury, the government still owns 43.4% of the bank. In the recent share offering, Lloyds has used the money gained from private investors buying new common shares to pay off the preference shares that the government held, but as the government also bought £1.7bn-worth of shares in that offering, the £2.6bn pay-off merely prevented the government’s stake in the bank from reaching above 60%. Lloyds should be disappointed to see that takeup of the common shares by private investors was only 76%, showing that faith in the bank hasn’t fully bounced back. They also announced 1500 more job cuts today as they heavily peg back the Cheltenham and Gloucester brand.

It’s also a bit worrying for what we previously looked at today, compensation. Many banks want to escape the restrictions on pay that are a condition of bailout money, and there’s a worry that there hasn’t been enough time to legally implement a new style of compensation before the banks escape back to the world of risky bonuses and lavishly refurbished offices.

But while the government wasn’t able to reap that much interest from the preference shares, considering they only had them for a few months, they did still get £250m. Maybe the best case scenario, of some banks failing while the others make the government lots of money while absorbing assets and creating a leaner banking market, will happen yet.

He’ll be taking on a company that’s looking pretty rosy despite the slowdown in consumer spending – sales for the year to March 31 were up 16%, creating pre-tax profits of £13m. It does still have a huge amount of debt on its books though, after chairman Stefano Pessina, along with private equity firm Kohlberg Kravis Roberts, bought the company out for £12.4bn in 2007; the bill for that finance ran to £853m last year. At least Hornby is used to the after-effects of highly leveraged buyouts!

Pessina said he would invest £1bn in the company, and so far he’s been steadily pumping cash into establishing the Boots brand across the world, refurbishing and rebranding stores in areas like Scandinavia and the low countries. He also spent £184m on acquisitions last year, and is hoping the beleaguered Merckle family want to sell their drug wholesale business Phoenix.

It appears that Hornby’s constant moaning that HBOS was already crocked when he took the helm has proven persuasive – he must be relieved that the episode seems not to have scuppered his career. The established narrative places Hornby as merely being in the wrong place at the wrong time. The real blame has fallen either side of him – the disastrous assets and overextended position of HBOS being caused by James Crosby, and the massive losses at new owners Lloyds being thanks to the greed of Lloyds chair Victor Blank. In going to Boots, Hornby is back on familiar and less high-profile ground, having successfully headed up Asda in the 90s.

While Hornby has been rehabilitated, something tells me that Fred Goodwin might find it a little harder. Is he still hanging out with Jackie Stewart in Switzerland? Well, no-one really knows, and according to his spokesman, “Some of the guesswork so far has been pretty wide of the mark”. Goodwin also managed to further distance himself from the love of the British public by threatening to sue Viz for depicting him burning banknotes to stay warm. Let’s face it – this guy is never going to work again.

Of course, it’s not just jubilation at Blank leaving that prompted the faith in Lloyds. They also announced plans to raise £4bn that will pay off the preference shares bought by the government back in the excrement-fan days of last October – an investment opportunity that has sent the share price up. It’s also a sign that the government is beginning to retreat from its investments in banks – they’d originally pledged to take on all the shares from this issue, effectively swapping around preference shares for common shares, but now they’re only taking up 43% of them, and letting other investors in on the action. Lloyds is doing all this because it wants to stop paying the government the interest on preference shares, as it’s costing them £480m a year. 

Blank resigned because everyone was realising that no heads had rolled for the HBOS merger that saw Lloyds saddled with defaulting loans and toxic assets – they announced in February that HBOS lost £10.8bn last year. Rather than get slaughtered at the annual shareholder meeting, Blank stepped down, avoiding an ugly end to his career at Lloyds and also sparing Gordon Brown, relatively speaking, from any blushes – Brown had allowed the Lloyds/HBOS merger to go ahead without impediment from competition law after Blank schmoozed him at a Whitehall cocktail party.

As the FT notes today, UKFI, the Treasury body managing government stakes in banks, has not sided with Brown but instead has been listening to hesitance from investors over the quality of Lloyds’s leadership. But rather than publicly side with those investors, tantamount to “an open insult” to Brown, they diplomatically nudged Blank towards the edge and suggested that jumping might be an awfully fun thing to do.

Yesterday the FT’s Lex column suggested that Eric Daniels, Lloyds’s chief exec, “should not delay in preparing his own exit”, the suggestion being that a shareholder revolt against him would be inevitable as he and Blank are “inextricably linked” over the HBOS deal. But today there are suggestions from sources that Daniels could be safe: “Eric has some serious supporters out there”; “Eric is the right guy to make a success of this”; “Eric’s Sino-Germanic heritage suggests mystic power combined with ruthless efficacy, while looking like an exceptionally wise ape – this will surely be enough to survive”. That last one was me, but it’s true! Anyway, even Blank probably won’t leave for a good few months – posting a new chairman won’t be a quick task, and certainly won’t want to be seen to be rushed.

But just as we’ve seen with Goldman Sachs et al recently, a less competitive banking sector has thus far meant massive profits for the ones who have survived. As Pesto suggests on his blog, the sheer amount of assets that Lloyds now has as a result of the HBOS deal will eventually help it turn some massive profits once people stop defaulting and they’re not tied to the government any more. Some are calling the merger “the worst deal in British corporate history”, but thanks to that deeply irregular Brown-sanctioned waiving of competition rules, Blank gave Lloyds a once-in-a-lifetime opportunity to amass a huge chunk of assets, which could go on to make them (and therefore the taxpayer) a lot of money.

And while the cocktail party decision smacks of Labour being in thrall to the private sector, as well as being quite simply rash, the government is getting a healthy return on its investment. Whether a contracted banking sector starts to mean a less competitive atmosphere, it’s too early to say, but right now the government’s exit strategy is looking strong.

He’s going to call for greater capital ratios, which are the amount of capital a bank has relative to its risky assets. It’s a buffer to cash designed to absorb losses made if someone, say, defaults on payments for their house. As you may have noticed, quite a few people have been doing that recently, so banks have needed recapitalisation, i.e. bailouts to plump up their capital reserves and give them the confidence to start trading again. Now Darling’s making sure that capital ratios will be big enough in the future to deal with unexpectedly massive levels of defaulting, so that the government never has to intervene again.

This comes as ratings agency and all-round financial services pie-fingerer Standard and Poor’s has announced new regulations regarding capital ratios in the US. “Current regulatory ratios are not satisfactory”, they said, bringing in their new risk-adjusted captial (RAC) ratio, that allows for less capital if you’re dealing in safe-as-houses investments, and demands more if you’re working with riskier assets. They’re saying if you use their plan, you could have ratios as little as 5.5% and still weather a financial crisis, surprising considering Lloyds is currently at 14.5% to make sure it’s healthy. I think Darling will be demanding rather more than 5.5% – he’ll use a big standardised ratio format to make everyone feel super-confident, and him look like a safe pair of hands.

Their new wheeze to avoid this is to flog their exchange-traded funds (ETFs) business in order to get the buffer of capital it needs - ETFs are investment vehicles that behave like stocks, tracking the course of a stock market index, like the Dow Jones, but which don’t actually trade in the stocks held on it.

Their ETF business is called iShares – yes, even fund managers can’t help but stick “i” in front in things to make themselves sound personable and funky in a noughties kinda way. The sale could net up to £5bn, the same amount that the government is expected to charge them for the insurance scheme. Investors must think that Barclays are going to stay independent of the government because of this sale, because Barclays shares jumped after the news broke yesterday.

But there are few reasons why selling off iShares might not be a great idea in the long run for Barclays. Firstly, it’s a growing business that is trading in a still-popular investment strategy – Barclays would miss out on all that future revenue. Secondly, it’s looking like they may not get the price they want for it – amid the recession, large banks have the cash to buy it but are reluctant to use it, while other ETF managers simply don’t have enough money in the first place. The price could get driven down below the amount of capital Barclays need. And while there is potential for growth, right now it’s not happening – ETF assets fell $83bn in the first two months of the year. To sell amid such a slump would get Barclays a bad price for a potentially good company.

There are some, however, who are questioning the ongoing value of ETFs, and of iShares – a source who spoke to IFA Online said iShares had an “unsustainably strong reputation” and that “the perception of growth in this business” was greater than it actually will be. So maybe it’s actually a good time to sell, with ETFs potentially losing profitability over a longer term than expected.

But why sell it at all? Why not just sign up to the insurance program to restore their capital ratio to the 14.5% now being enjoyed by Lloyds? FT’s Alphaville puts in succinctly: “State-interference must be avoided at all costs since that would cost Barclays its lucrative tax avoidance business and also cost Messrs John Varley [chief exec] and Bob Diamond [president] their jobs.” While Gordon Brown wouldn’t necessarily get rid of Varley and Diamond – he explicitly preserved Lloyds’ chief Eric Daniels last week in the name of stability – the clever tax avoidance would certainly come to an abrupt end. Barclays is said to avoid £1bn in tax a year through Jenkins’ loophole dancing – if the government part-owned the bank they could kiss that revenue goodbye. And there’s also the little matter of Diamond and other employees losing their ongoing income from iShares stock options – Diamond made £7.76m from them in 2006 alone, though then again, if they believe that iShares could tank, maybe they stand to make more from selling on their stock to a buyer.

Sources the FT spoke to said that the sale of iShares didn’t have anything to do with trying to avoid the asset-insurance program, but we’re not sure whether to believe that. Would they really be able to get away with another rights issue, effectively handing over yet more equity to the Middle East? The Mail is claiming today that Roger Jenkins has gone back to his sheikh chums to get more capital, as well as to buy iShares and pass it on to a consortium of US-based ETF managers. A source told the FT over the weekend that Jenkins was putting something together as well. Watch this space to see exactly how this deal pans out.

So wha’ gwarn? Lloyds had a busy weekend, signing up to the government’s insurance scheme that Darling set up back in January, which has the government take on banks’ “troubled assets” (still loving that bit of euphemistic psychological terminology). Lloyds needed to do this because of the massive amounts of these assets held by HBOS, whom it bought out last year. So under the scheme, Lloyds pays the government a £15.2bn insurance premium to have it insure its £260bn of potentially bad assets – things like defaulted mortgages – so that if they do turn out to be bad, the government will absorb the losses (after the first £25bn of losses is taken on by Lloyds themselves). The hope is that the confidence given to them by not having to worry about these assets will improve its health – it’ll start lending again (it’s promised £28bn over the next few years), the economy will pick up, not as many of the assets will turn bad, and the ol’ capitalist machine will whirr with renewed vigour. 

Well, let’s hope so, because if it doesn’t then the taxpayer is shouldering the burden. And Gordon Brown must be hoping so too, as the political mileage gained by his rivals will be enough to sink him if it doesn’t work out. Brown allowed the takeover of HBOS by Lloyds last year to pass unheeded by competition rules, and with five times less due diligence – this will come to be seen as rash and clumsy if it doesn’t work out. Michael Fallon, the Tory chairman of the Treasury sub-committee has already waded in, calling the soiree where chairman Sir Victor Blank persuaded Brown to waive the rules “the most expensive cocktail party in history”, adding: “Brown should never have egged Victor Blank on by offering to waive the competition rules. The law is there for a good reason”. Expect a lot more of this in the next few days.

But while we should wait until we actually take on assets before we get angry with them (though The Times isn’t bothering), shareholders are already mad at Blank and chief exec Eric “Fat Dr. No” Daniels. Considering 83% of the assets insured by the government came from HBOS, shareholders can’t believe that their investment has been dragged down by Lloyds chasing cheap acquisitions. The deal cut by Lloyds is less favourable than the insurance package for RBS, who paid £6.5bn to the government for insuring against £325bn of its assets. Daniels can’t seem to please anyone, having “pissed the Treasury off” during the hashing out of the deal, according to a source quoted by the FT. Still, they’ve both got Brown’s support, who said: “When we rescued RBS last year, we removed the chief executive and chairman. That is not happening at Lloyds”.

Elsewhere, the papers are gamely encouraging us to get all riled up at the news that 40,000 junior Lloyds employees are still set to get bonuses of around £1000 each, not really the story that “Lloyds bankers in line for £80m bonuses” promises. Don’t worry – Daniels et al are still not getting any bonus action this year (though Daniels is getting a £3m pension).

So while the shareholder revolt foments, hopefully resulting in the trashing of Blank’s pathetic attempt at a car and fresh tears from Daniels, another one is brewing over at Barclays. Despite them taking on tons of Middle Eastern investment to avoid a government bailout, they might need to sign up to the insurance scheme anyway. Alastair “Don” Darling is clearly making everyone offers they can’t refuse – fingers crossed it all works out.