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Cracking Nuts With Sledgehammers at UK FI

Last week saw the start of ramping up staff numbers at UK Financial Investments, the 'arms length' company the Government is setting up to manage the investments in RBS and the merged Lloyds group.  It seems to me that the numbers involved amount to overkill - unless there are objectives to achieve that HMG are not saying...

According to the Treasury press release, the two main objectives are to:

- ensure rewards and incentives reflect long-term benefit and not failure

- ensure the banks deliver against the target of keeping lending at 2007 levels.

The first one requires annual management of any resolutions setting out reward packages for senior management - hardly a day-to-day process.  In any case, HMG is only going to be majority shareholder in RBS, so how does it intend to enforce this in the case of Lloyds?

The second could surely easily be handled by existing Treasury processes, or at the minimum by the Bank of England.

Why, then, do we need somewhere in the region of 10 people, no doubt at a high cost each (note that the guy coming in to manage the Lloyds and RBS investments is coming from an investment bank, and the Government declined to confirm the size of his package), to do what can hardly be a day-today job for even one person?

Even if these people were going to manage a steady process of orderly divesting the Government of the shares (a task that must surely be deferred for some time, given the low prices the shares currently command, and are likely to remain so whilst there is a ban on dividends), this could surely be entrusted to an investment bank.

It seems to me that we, the taxpayer, are being made to pay for yet more people on the public payroll, for what amounts to non-jobs - unless there are more sinister roles that this company is expected to play?


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