Andrew Tyrie, outspoken chairman of the Treasury Select Committee, has called for ‘arms-length’ unit which controls government stakes in state-backed banks to be wound up, warning it is being used to cover up a “high level of Treasury control” over the institutions.
UK Financial Investments was created in November 2008 as part of the UK’s response to the financial crisis, to manage government stakes in nationalised banks. It is responsible for managing the government’s shareholdings in the Royal Bank of Scotland and Lloyds Banking Group.
UKFI is also responsible for managing the government’s 100 per cent shareholding and loans in UK Asset Resolution Ltd, the ‘bad bank’ created from the split of Northern Rock, and its subsidiaries.
After questioning UKFI’s executive chairman James Leigh-Pemberton in a session this morning (21 October) with the TSC on RBS’s bonus annual decision, Andrew Tyrie, TSC chairman, said: “UKFI has a thankless task”.
He stated it was clear from Mr Leigh-Pemberton’s evidence that the government’s intervention in the running of RBS is “substantial”.
Mr Tyrie said: “This is scarcely consistent with his assurance that the Treasury operates as a shareholder on an arm’s-length basis.
“Whatever the reality, the perception will increasingly be that UKFI is being used as a fig leaf to disguise a high level of Treasury control of RBS, and probably Lloyds too.
“As the Parliamentary Commission on Banking Standards concluded last year, UKFI should be wound-up and its resources absorbed back into the Treasury.”
In 2009, UKFI was slammed by MPs for failing to provide the committee with details on bank bonuses for members of state-owned and failed banks.
