Why banks won't be allowed to forget interest rate swaps
Outlook
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.It may have achieved a good price for its remaining stake in TSB, but Lloyds has just been given another headache in the form of one of those pesky “legacy” issues neither Sabadell nor TSB has to worry about. It has come from the sale of interest rate swaps again. Remember them? They were those derivative thingies sold alongside loans to businesses, ostensibly to protect borrowers against the risk of interest rates rising.
Unfortunately, when they did the opposite and fell sharply, the businesses that took them out (and they were often required to as part of their loan agreements) found themselves facing huge bills. Small businesses have been compensated through a review; larger ones have had to pursue claims through the courts. And that’s exactly what a certain Gary Hartland is doing. For the second time.
Mr Hartland says a 2011 settlement he and his investment group Wingate Associates agreed with Lloyds should be invalidated because of the bank’s involvement in fixing the Libor interest rates to which his loans were linked. Unsurprisingly, the bank argues otherwise. It may have to take this one all the way because if it doesn’t you can be sure Mr Hartland won’t be the only businessman beating a path to lawyers’ doors.
There will be more of this sort of thing to come. The legal fallout from recent banking scandals is only just beginning to hit the ground. Banks may face years fighting innumerable civil claims. This claim could hardly have come at a worse time for Lloyds, with the Government gearing up to sell part of its remaining stake in the bank to retail investors.
Many have likened the planned privatisation to the British Gas sell-off, backed by the famous “Don’t forget to tell Sid” advertising campaign.
Too many more like Mr Hartland, and Sid might be advised to drop his mobile phone in the sink before heading somewhere nobody can find him.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments