A great juxtaposition on the front page of the Sunday Times business section at the weekend:
HBOS board to consider rights issue
FSA’s shorting inquiry widens to other banks
Alert readers will remember that HBOS was at the centre of that rumour-furore back in March, when wild chatter of liquidity problems and an overstretched balance sheet at HBOS caused a run on the bank’s shares and runs of a different kind at the Bank of England and the Financial Services Authority.
Now that HBOS has confirmed the existence of liquidity problems by preparing to tap the BoE’s new-fangled SLuSh facility for a cool £9bn and tacitly admitted, in considering a £4bn rights issue, that its balance sheet is overstretched, isn’t it about time the authorities also grew up and admitted they haven’t got any wrong-doing to investigate?
To be clear, the rumours in mid-March centred on the suggestion that HBOS had been forced to go to the Bank seeking emergency assistance - the corollary being that Bank officials had had to cancel travel plans to deal with the crisis. But since an unnamed HBOS spokesman was gaily telling the news wires at the time that HBOS had “an exceptionally strong balance sheet,” asserting now that the rumour-mongers were somehow criminally off-beam back in March is laughable.
According to reports, the FSA’s investigation into the HBOS panic is the most intensive ever undertaken by the regulator, with every bank and broker that traded the shares at the time (one of the most frequently traded stocks in London) ordered to hand over records of related phone and email correspondence.
This is a crass waste of time. The FSA would be better employed enforcing those bits of its fat rulebook that are actually enforceable - such as getting big listed companies, like HBOS, to make timely announcements when price sensitive information (like plans for a £4bn rights issue) leak.
Related links:
HBOS to raise up to £4bn from rights issue - FT story
