UK Financial Investments

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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 (10%)
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]

In 2015 UKFI and the Shareholder Executive became subsidiaries of UK Government Investments and in April 2016 both were merged.[10]

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".[11]

Holdings

UKFI have holdings in the following companies:

Company Shareholding
Royal Bank of Scotland Group plc 73% [7]
Lloyds Banking Group plc 10% [9]
NRAM plc (held via UK Asset Resolution) 15% [12]
Bradford & Bingley plc (held via UK Asset Resolution) 100% [13]

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.[14]

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.[15] 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]

  • James Leigh-Pemberton – Executive Chairman
  • Kirstin Baker
  • Lucinda Riches
  • Philip Remnant
  • Marshall Bailey
  • Jitesh Gadhia
  • Jane Guyett

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".[16]

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.[17]

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.[18][19]

See also

References

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External links