UK resolves to save in New Year

Almost half of Brits have made a New Year’s resolution to save more in 2009, according to research by the Association of British Insurers (ABI).

Forty seven percent of those polled said they have resolved to save more this year, whilst 51% felt that the recession will make them ‘more likely’ to boost their savings.

ABI’s director general Stephen Haddrill said the apparent change in the public’s attitude to saving is ‘good news’.

According to Haddrill, ABI research has found that 13 million Brits - half the UK’s working population - aren’t saving enough towards retirement.

As such, ABI wants the government to step in to encourage savings.

The government has a ‘golden opportunity’ to help people save more as saving is growing in popularity, Haddrill said.

He added that the government should increase the ISA limit from £7,200 to £10,800, and that auto-enrolment for pensions should come in as early as possible.

National Savings and Investments recently said that the New Year is a good time to plan savings.

Lloyds TSB/HBOS merger under threat from pension trustees

by Kay Murchie

Pension fund trustees at HBOS are threatening to block the proposed merger with Lloyds TSB until better protection is put in place for the scheme’s 80,000 members.

Out of the nine trustees, seven are due to meet at the end of the week to decide whether to challenge the merger in the Scottish courts. The remaining two trustees are conflicted due to positions within HBOS.

Roger Boyes, acting chairman of the trustees and former Halifax finance director, said the issue is for Lloyds to provide us with some comfort that the scheme’s members will get their pensions.

Earlier this month, the trustees expressed their concerns prior to the HBOS meeting of shareholders to approve the deal, when the trustees said the merger would ‘substantially’ weaken the fund’s protection.

The merger has already been given the go ahead by the majority of shareholders at both banks.

A spokesperson for Lloyds said HBOS pension trustees and members of the HBOS Scheme can expect to see a strengthening of the supporting covenant.

We will seek to give equivalent treatment to all pension schemes under the enlarged group and have made this clear to the HBOS trustees, added the spokesperson.

Should the merger go ahead, it will create a new banking giant called Lloyds Banking Group, which will comprise almost 150,000 staff and 3,000 branches.

However, substantial job losses are expected as a result of the merger.

RBS may abandon sale of insurance operations

by Kay Murchie

There is speculation that the RBS (RBS) may abandon its £7 billion sale of its insurance unit.

RBS has to decide within the next 8 weeks whether or not to proceed with the sale.

The insurance arm, which includes the Churchill and Direct Line brand names, was put up for sale earlier this year and a long list of potential buyers emerged but many withdrew their bids.

According to the Sunday Times, RBS turned down an offer from private equity firm CVC Capital Partners, citing it to be not in the interests of its shareholders.

It is also understood that RBS is in negotiations with another private equity firm. However, many believe that the whole sale will be completely abandoned.

Newly-appointed chief executive, Stephen Hester, is expected to seek buyers for some of RBS’ assets overseas, particularly its 4.3% stake in Bank of China, which is valued at over £1.5 billion.

RBS was bailed out by the taxpayer last month due to the small take-up of its £15 billion share offer by investors, the Government now owns 57.9% of the bank.

RBS is the second-largest general insurer in the UK and the businesses have a workforce of approximately 18,000. It is Britain’s biggest insurer of cars, plus a major player in home, travel and pet insurance

Finally, there is also speculation that the bank will announce a profits warning in the New Year.

Two banking giants were on verge of collapse, reveals BBC’s Panorama

According to the BBC’s Panorama programme, The Year Britain’s Bubble Burst, screened last night, HBOS and RBS were on the brink of collapse in early October.

The programme unveiled that the banks were finding it difficult obtaining short-term funding.

It is believed that the banks would have collapsed without the funding and were forced to obtain funding via loans and guarantees from the taxpayer.

£350 billion worth of loans and guarantees were provided by the Treasury and the Bank of England to prevent the British banking giants from going under.

The Bank of England’s Deputy Governor, Sir John Gieve, told the BBC that after exhausting all other possibilities, the only one provider was the taxpayer.

RBS received the sum of £20 billion and is now nearly 60% owned by the taxpayer, while HBOS and Lloyds TSB are set to receive £17 billion.

HBOS and Lloyds TSB are set to merge, shareholders of both banks have approved the merger and it looks likely that the taxpayer will own over 40% of the new group, which is to be called Lloyds Banking Group.

Sir John Gieve also told the Panorama programme that the severity of the current financial crisis was underestimated by the Bank of England.

Sir John Gieve said the Bank was aware that borrowing was at “crazy” levels and that the cost of houses and other assets were rising unsustainably.

However, Sir John said the Bank failed to understand the severity of the problem and what the implications would be for the rest of the economy.

Sir John Gieve is a member of the Bank’s rate-setting Monetary Policy Committee.