MEP Complaint Over HBOS to EU Commission

23 November 2008
SNP Member of the European Parliament Mr Alyn Smith has written to EU Competition Commissioner Neelie Kroes querying the actions of the UK Government for failing to offer a level playing field to alternative bidders for HBOS or to the bank remaining independent in the operation of the UK Banking Recapitalisation Package.

The complaint comes after UK Chancellor Alistair Darling admitted on Wednesday that no other bidder "would have automatic right of access to the recapitalisation scheme" thereby confirming that the favoured option of the UK government is a takeover of HBOS by Lloyds TSB, to the detriment of all other options including HBOS remaining an independent bank.

A statement issued on Friday on behalf of Sir Peter Burt and Sir George Mathewson cited Alistair Darling's statement as a clear indication that the Government was not willing to support alternative bids saying;

"The Government's statement has raised several hurdles very high and has made it crystal clear that they do not want and are not prepared to facilitate HBOS remaining independent. Accordingly Sir Peter and Sir George reluctantly decided to discontinue their campaign.

"The complaint, supported by SNP MSP Alex Neil who has led the campaign in Holyrood against the Lloyds TSB - HBOS merger urges the Commission to ensure there is level playing field access for all to the UK recapitalisation scheme.

Mr Smith said:

"The UK Government has clearly set its face against any other option than the Lloyds TSB merger with HBOS.

"The recapitalisation scheme is offering essential support to our banking sector but it must be available across the board, on the same terms to all.

"There are plenty of concerns over this deal and the tactics being used by the UK Government to see it goes ahead but I believe the most significant is the specific operation of the recapitalisation available to the merged bank clearly favouring one outcome for HBOS while other banks are allowed to maintain their independence.

"Alistair Darling and Gordon Brown are threatening thousands of jobs in their own constituencies, as well as decision making and competition in the wider Scottish economy.

"Lloyds TSB has rightly pursued their commercial objectives throughout with the support of their shareholders however I find it sorely disappointing that the Chancellor, himself a representative for an Edinburgh constituency, appears more interested in seeing this deal through for political expediency than fighting to maintain the central place of HBOS and its employees in Scotland and Edinburgh's economy.

"The European Commission is the ultimate arbiter of fair play, and I believe the time is right to involve the Competition Commissioner as every UK check and balance has been comprehensively overruled.

"The Commission has approved recapitalisation in the UK and across the EU but has forced changes in its operation in other countries where it has not been made available to all on the same terms. I hope it will force Chancellor Darling to make the recapitalisation funds available to allpotentially interested parties, including an independent HBOS under new management."

MSP Alex Neil added:

"I am delighted that Alyn Smith has taken this forward.

"We have seen potential investors walk away as a result of the actions of the Treasury and the failure of the UK Government to offer recapitalisation on equal terms to all.

"As Peter Burt and George Mathewson have made clear the level playing field has not been there and the Treasury has shown preferential treatment to the Lloyds TSB merger.

"It is in the interest of every employee and consumer that every possible option is to enable an alternative to the merger is explored."