UK Financial Investments

UK Financial Investments Limited
Private limited company
Industry Financial
Founded 3 November 2008 (2008-11-03)[1]
Headquarters 100 Parliament Street, London, SW1A 2BQ, United Kingdom
Key people
 James Leigh-Pemberton
(Executive Chairman)
Products Investment Management
Services Manages investments in:
UK Asset Resolution
Lloyds Banking Group (7.99%)
RBS Group (73%)
Owner HM Treasury[2]
Parent UK Government Investments
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.[3]

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

History

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%.[4] 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.[5] The government's stake had further decreased to 78.3% by August 2015.[6] That month, UKFI disposed of 5.4% of their shareholding in RBS.[7]

HM Treasury's shareholdings in Lloyds dropped from 43% to 41% in February 2010 after it issued 3.14 billion new shares,[8] and dropped again in 2013 from 39% to 33% after it sold £3.2 billion worth of shares. A trading plan of incremental sales during 2015 reduced the stake to below 10% by the end of October.[9] A further sale in November 2016 reduced this holding to 7.99%.[10]

In 2015 UKFI and the Shareholder Executive became subsidiaries of UK Government Investments and in April 2016 both were merged.[11]

Investment aims

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".[12]

Holdings

UKFI have holdings in the following companies:

Company Shareholding
Royal Bank of Scotland Group plc 73% [7]
Lloyds Banking Group plc 7.99% [10]
NRAM plc (held via UK Asset Resolution) 15% [13]
Bradford & Bingley plc (held via UK Asset Resolution) 100% [14]

Board

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.[15]

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.[16] 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:[2]

Controversy

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".[17]

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.[18]

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.[19][20]

See also

References

  1. ↑ "Introduction" (PDF). UKFI. Retrieved 21 March 2015.
  2. 1 2 "About Us". UKFI. Retrieved 24 August 2014.
  3. ↑ "UKFI confirms completion of Northern Rock sale to Virgin Money" (PDF). UKFI. 1 January 2012. Retrieved 1 January 2012.
  4. ↑ "Alistair Darling: RBS and Lloyds bonus clampdown 'better for taxpayer'". London: The Daily Telegraph. 3 November 2009.
  5. ↑ "UKFI Annual Report 2014" (PDF). UKFI. Retrieved 30 July 2014.
  6. ↑ "Government starts RBS share sell-off". BBC News. 3 August 2015. Retrieved 3 August 2015.
  7. 1 2 "RBS: Government sells £2.1bn of shares in bank". BBC News. Retrieved 4 August 2015.
  8. ↑ "Lloyds issue shrinks taxpayers' share to 41%". The Scotsman. 12 February 2010. Retrieved 3 January 2012.
  9. ↑ Cruise, Sinead (29 October 2015). "Government trims Lloyds stake to single-digits as retail offer looms". Reuters.
  10. 1 2 "Government sells more shares in Lloyds Banking Group". BBC News. 22 November 2016. Retrieved 22 November 2016.
  11. ↑ "Government creates new company to deliver record asset sales programme". HM Treasury. 20 May 2015. Retrieved 21 May 2015.
  12. ↑ "New company to manage Government's shareholding in banks". HM Treasury. 3 November 2008. Retrieved 30 December 2011.
  13. ↑ "Government agrees record-breaking £13 billion sale of former Northern Rock mortgages". HM Treasury. Retrieved 13 November 2015.
  14. ↑ "UKFI Wholly-Owned Investments". UKFI. Retrieved 3 January 2012.
  15. ↑ Treanor, Jill (13 January 2009). "Who's in charge of our money?". London: The Guardian. Retrieved 13 January 2009.
  16. ↑ "Stock Exchange Announcement". London Stock Exchange. 16 January 2009.
  17. ↑ Robert Peston (24 December 2008). "We are the Banks". BBC. Retrieved 3 January 2012.
  18. ↑ Naughton, Philippe; Costello, Miles (11 February 2009). "Business big shot: Glen Moreno". London: The Times.
  19. ↑ "UKAR response to Ministerial statement regarding NRAM". Northern Rock (Asset Management) plc. 11 December 2012. Retrieved 18 December 2012.
  20. ↑ "Northern Rock's £270m error means borrowers pay no interest". The Times. 11 December 2012. Retrieved 18 December 2012.
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