ALEX BRUMMER: Blackwell takes reins of Lloyds amid CBILS concerns


Lord Blackwell is not known as the most activist chairman of a High Street bank.

But as someone who once worked in Downing Street under the watchful eye of Margaret Thatcher, the Lloyds Bank boss has well-tuned political antennae.

By the time he succeeded Win Bischoff as chairman in 2014, the bank’s chief executive, Antonio Horta-Osorio, had once again made the bank safe after the turmoil of the financial crisis. Blackwell’s interventions as president were limited.

Under the microscope: Treasury reportedly infuriated by Lloyds’ lackluster embrace of CBILS

He took charge after Horta-Osorio was involved in a date while attending a banking conference in Singapore in 2016.

The chairman also played a key role when Lloyds was not thorough in taking responsibility for the way customers at the former HBOS branch in Reading were compensated following serious fraud.

Over the past week or so, Blackwell has had to step in again.

The Treasury is said to have been infuriated by Lloyds’ lackluster adoption of Chancellor Rishi Sunak’s Coronavirus Interrupt Loan Scheme (CBILS), designed to keep small and medium-sized businesses afloat during lockdown.

Of the £4billion in loans made since the scheme was set up, only £618million has gone to Lloyds customers.

Lloyds had a lengthy pre-application process that was off-putting to many borrowers. The blame for a clumsy process fell on Horta-Osorio.

The approach was a great contrast to the shrewd way NatWest’s Alison Rose responded to the challenge. The cumbersome UK system was contrasted with how quickly SME money was handled in Germany and Switzerland.

Blackwell has again been galvanized and making sure CBILS loans are up to snuff amid concerns over political scarring. It would be unacceptable for there to be failures among Lloyds’ SME customers as a result of past bottlenecks.

virgin gathering

Making deals in the middle of a pandemic requires a strong stomach. “Cable cowboy” John Malone, who once challenged Rupert Murdoch by taking a stake in his media empire, has no shortage of that.

Judged on financial data alone, a merger of Virgin Media, owned by Liberty, with British mobile operator 02, controlled by Telefonica, would seem logical.

Liberty loves to do deals and Virgin reduced debt by selling its Germany and Eastern Europe operations to Vodafone for £16.7billion in 2019 after lengthy regulatory scrutiny.

Telefonica, heavily in debt, has been trying to ease the burden for several years. He considered a range of options, including a merger with Hutchison’s Hong Kong-controlled network Three, which was blocked by the European Commission.

The Liberty-Virgin deal would be a neat exit, allowing Telefonica to unlock £3.5bn of cash. This would provide Virgin with a real buy in the mobile market, adding 25.8 million prepaid and contract customers to its 3.3 million.

The transaction also raises technology and competition issues. O2 was an innovator.

It’s one of the earliest players on 5G networks, long before conspiracy theorists started vandalizing cell towers.

Telefonica has also chosen Britain as a hub for much of its R&D activity. As part of a financially driven Liberty/Virgin, it’s not clear this would survive.

Even though Virgin is also a mobile operator, allowing the largest operator, O2, access to more than 3 million additional customers is unlikely to improve price, service choice or competition. Brussels has been very wary of mobile mergers.

If jurisdiction has returned to the UK, you wouldn’t expect the new Competition and Markets Authority to be as straightforward as it was when it allowed BT to sweep EE. Malone won’t find the O2 roping easy.

Loss leader

Warren Buffett’s annual meeting was different this year.

Instead of 40,000 loyal Berkshire Hathaway investors in Omaha, Nebraska, only Buffett and a potential successor, Greg Abel, appeared online.

Buffett’s decision to sell US airlines has grabbed headlines. But the biggest shock to investors was the £44bn paper write-down in the first quarter as the value of shares of big brands such as Coca-Cola plummeted.

Worrying? Probably not. The sage is still sitting on a £90billion cash buffer. And there is no reason to worry about a dividend cut. Buffett has never, ever paid!

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