Banking update: RBS and Lloyds parts to be sold off to the cheapest bidder too?

Tonight the BBC are reporting that a major announcement will be made by the UK Government tomorrow, November 3, regarding the future of the Lloyds and RBS banks that it owns major stakes in following the bailouts of last year. It seems likely that tomorrow's proposal for Lloyds and RBS will be similar to the proposal for Northern Rock featured on this blog last week. At present speculation suggests that both banks will have to split off parts of their branch network to form new 'good banks' (without toxic assets) for sale within four years, while the taxpayer keeps all the bad bits. As with the Northern Rock, the good part of which seems likely to be sold off before the 2010 election, surely the worry must be that four years will not be sufficient for the taxpayer to gain a return on the banks as they return to profitability. However, the hope must be in the Lloyds case that this will undo last year's shotgun marriage between Lloyds TSB and HBOS, one of the largest mergers in UK corporate history, and which the Office of Fair Trading recommended against due to the combined market share of the two banks combined. Whatever happens is bound to be very interesting indeed - it will be interesting to see where this will leave the remains of Scotland's banking industry.

Rangers F.C. partly nationalised?

A quick Sunday post. The team manager of the Scottish football club Rangers, Walter Smith, has revealed that the club is unable to enter the transfer market because the club is now being run by its bank, the Lloyds Banking Group, which is 44.4% owned by the UK government via its vehicle UK Financial Investments Ltd. Rangers have, despite having a vast support, successive championships, and their own chain of sportswear shops in Scotland and Northern Ireland been overspending on players for years. While the bank has not taken a stake in the club, if the bank is forced to bail the club out (they could let, say Albion Rovers fail, but to let Rangers fail would be political suicide) it is possible the bank could end up with a stake in the club. Just as with the DSB Bank owner Dirk Scheringa and his club AZ Alkmaar, football has once again proved that it is incapable of being run as a business, now to the extent to which the state may have to intervene by proxy.