To be published as HC 672




Treasury Committee

UK Financial Investments

Tuesday 23 October 2012

Robin Budenberg and Jim O’Neil

Evidence heard in Public Questions 1 - 94



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Oral Evidence

Taken before the Treasury Committee

on Tuesday 23 October 2012

Members present:

Mr Andrew Tyrie (Chair)

Mark Garnier

Mr Andrew Love

Mr Pat McFadden

Mr George Mudie

Jesse Norman

Teresa Pearce

Mr David Ruffley

John Thurso


Examination of Witnesses

Witnesses: Robin Budenberg, Chairman, UK Financial Investments Limited, and Jim O’Neil, Chief Executive, UK Financial Investments Limited, gave evidence.

Q1 Chair: Thank you very much for coming in this morning, both of you. Can I begin by asking you, Mr Budenberg, whether you have spoken to RBS about the breakdown of the Santander deal?

Robin Budenberg: Can I ask Mr O’Neil to answer that question, because he is responsible, as Chief Executive, for the commercial operations.

Chair: Yes.

Jim O’Neil: We have spoken to RBS. We were informed of the breakdown the evening before by Stephen Hester. This is a topic that we had engaged with, and asked management periodic questions on the progress of this transaction over time.

Chair: I do apologise. The acoustics in this room are not particularly good, even though I have quite good ears.

Jim O’Neil: I need to speak more into the microphone.

Robin Budenberg: Should I move this in?

Chair: Yes. I do apologise. Do start again.

Jim O’Neil: Can you hear me better now?

Chair: Yes, that is a little bit better.

Jim O’Neil: Yes, we have had discussions with RBS on the Rainbow Santander transaction, not just since it broke down, but we have had periodic discussions over time to monitor the progress of that transaction. As far as the nature of your question, why did it break down, we have heard the same things that have been in the press, in the sense that it is a transaction that had been taking place over time, and there were clearly quite a few IT issues in making that transaction happen. While those did not seem insurmountable and both parties were clearly putting forth a lot of costs, time and effort to make it happen, Santander ultimately decided not to pursue it any longer, and we were informed by RBS the night before it was announced.

Q2 Chair: What kind of sanction do you think the firm is going to face from the EU, and what discussions have you had about that?

Jim O’Neil: First of all, as I say, we are not the EU experts, and the EU discussions are very much a Treasury-led discussion in terms of the dynamics with the European Commission on sanctions. That is Treasury’s responsibility to have those discussions with the European Commission. From our perspective as shareholder, what we are focused on is whether RBS is proceeding as quickly as possible on whatever plan B would be as it relates to other buyers. Our discussions with them indicate that they intend to move ahead as quickly as possible with other buyers. Ultimately, whether there are any EC sanctions depends on whether there is some type of request ultimately to adjust the original state aid agreement.

Q3 Chair: Just to be clear in response to that question, are you saying that the Treasury is taking the lead in the negotiations with the Commission, not RBS, so RBS is not finding itself summoned to explain itself to the EU at this stage?

Jim O’Neil: Again, we are not the lead on European Commission matters, but my understanding is that the state aid agreement is an agreement between HMT and the EC that relates to RBS as well as the other state aid intervention measures. It is HMT’s responsibility to do that. Whether RBS, as part of that, goes to Brussels at some occasion I don’t know, but it is HMT’s responsibility to lead those discussions.

Q4 Chair: That would be true whether or not the Government had a stake in those firms?

Jim O’Neil: State aid is the Government, yes. It is not directly to the bank; it is through the Government. That is my understanding, by the way.

Robin Budenberg: Clearly, HMT will discuss with RBS in detail every step of the way, if you like, because it would be difficult for Treasury to make representations to the EC without that sort of input from RBS.

Q5 Chair: Can I ask you whether you share-maybe I will come back to you, Mr Budenberg, you can always pass the buck if you feel like it-the view of some market participants, who have told us that political interference in the running of Lloyds, and particularly RBS, has the potential to affect the share price?

Robin Budenberg: It certainly has the potential to affect the share price. My own view, I think supported by most market participants, is that UKFI has a particular role and is seen to play that role in the most effective way possible, but there are inevitably situations-we discussed one of them last time around Stephen Hester’s bonus-where public concern about banks that have Government shareholdings in them makes it difficult in terms of the commercial operation of the banks.

Q6 Chair: RBS obviously has a particular issue, bearing in mind its majority stake. Have you taken steps to make sure you are aware of all contacts between RBS and the Government?

Robin Budenberg: There are areas of contact between RBS and Government that are not necessarily relevant from a shareholder perspective, but where it comes to issues where the shareholder rights or obligations are involved, I would hope that we are aware. I cannot guarantee that it is everything, but I certainly don’t feel that there have been situations where we have been excluded.

Q7 Chair: It would be helpful if we could have clarity on what you think the areas are, in some detail, that you should be consulted and some evidence of what steps you have taken to make sure that you are aware of them, at least those contacts in those areas. Maybe it would be helpful if you could draw up a list of the areas where you think Government contact should be taking place about which you should not be made aware, or you do not need to be made aware.

Robin Budenberg: Yes.

Q8 John Thurso: Mr Budenberg, what value does UKFI add for the Government or the taxpayer, as owner?

Robin Budenberg: Going back to the Chairman’s earlier point, I certainly think that market participants see the role that UKFI plays as very helpful. One of our roles is to make sure that disagreements do not arise between Government and the banks, and that applies to all banks, but it is particularly the case where the banks have Government shareholdings. One of the things that we do is explain both to the banks and to the Government what the position of the other is, to make sure that those disagreements are less likely to arise. That is in the commercial best interests of the banks. I think market participants see that and feel comfortable that we do play that role, recognising that if at any stage the banks are asked to do something that is fundamentally not in their commercial best interests, then it is our role, supported by our board, to make sure that the banks know that we are going to stand up for them and prevent that from happening.

Q9 John Thurso: So you are a kind of intermediary between public policy on one hand and share price and balance sheet on the other hand?

Robin Budenberg: Our main role is to act as a commercial shareholder and to operate in the way that we consider to be in the commercial best interests of the banks, but as I said, a part of the role, given that it is important and in the commercial best interests of the banks that they have good relationships with Government, is that we are able to act as some buffer there, yes.

Jim O’Neil: One thing I might just add to that is in our stewardship role of engaging with the banks on all the key issues related to the banks, as a commercial shareholder, we have a different form of commercial, technical and market expertise that does not exist anywhere else in the Treasury, at least today. Maybe you could mimic it in the Treasury in some other form, but that is certainly a role that we play.

Q10 John Thurso: There was a rumour going around not so long ago that UKFI would be abolished and that Treasury would just take it in-house. First of all, can you deny that that is a rumour?

Robin Budenberg: We are not aware of that rumour-

John Thurso: You are aware of the rumour?

Robin Budenberg: Sorry, we are certainly not aware of anything behind the rumour.

Q11 John Thurso: Yes, all right; you have to be careful what you say.

If you ceased to exist, what would be the single biggest problem or lack that would be caused?

Robin Budenberg: The biggest question mark would be in the minds of other investors. Obviously at some stage the Government have to find a whole range of new investors. It would be a matter of whether they would feel that the banks are going to be run based on their commercial best interests.

Q12 John Thurso: In giving evidence to the Public Accounts Committee, Sir Nicholas Macpherson said of you that you, "Have a clear remit, but they are also people of the world who are willing to take the odd instruction consistent with their remit". What on earth did he mean by that?

Robin Budenberg: What, the men of the world bit? I am not sure I would agree with his word "instruction". I think the context that he was talking about was the sale of Northern Rock where we did include, as part of that process, a potential for purchasers to put forward proposals in relation to the Northern Rock Foundation, which is not purely commercial. We made it clear to potential buyers that we would judge value excluding anything to do with the Northern Rock Foundation, but I think that from a policy perspective, the Treasury felt that it was important that people were able to put their best foot forward in terms of the Northern Rock Foundation. That is an example of where we accommodate things that don’t go against the value mandate but are helpful from a policy perspective.

Q13 John Thurso: Mr O’Neil, you spoke earlier of stewardship. You have in the Kay report a concept of stewardship, actively promoted by the Business Secretary, that might well be at odds with a more financial or Treasury-promoted understanding of stewardship. When you use the word "stewardship" which side of that divide are you talking about?

Jim O’Neil: I don’t know what side of the divide it is, but what it means to us is active engagement with the board and management on the critical topics as shareholder, which in our mind would certainly include the strategy of the group, the strategy and operations of individual businesses. For a bank, they are capital, liquidity, funding, conduct-that is increasingly important-and governance not only of the board but also within the institution itself. We have those discussions not only with the board and senior management, but with others within the institution as appropriate. We do that on a regular basis.

Q14 John Thurso: If I turn to your objectives, as set out in the report and accounts, I want just to focus on your engagement with Lloyds and RBS, because it is a different issue to some of the other issues you face. It says, "Over the past year the focus of our engagement with both Lloyds and RBS has been on ensuring that the shape and pace of balance sheet restructuring is appropriate to secure sustainable shareholder value in the evolving market and regulatory environment". In your statement of objectives, you have the first three that relate to that, which are also very much along those lines, i.e. entirely to do with value.

There is a very clear and obvious public policy set of remits. I will give you a very straightforward example. The only banks that appear able or feel able broadly to give two fingers to the basic bank account holder and access to ATMs are the two banks owned by the Government. All the other banks that are still in the private sector don’t yet feel able to do that. What engagement do you have on issues like that, or do you regard that as outside your remit?

Jim O’Neil: You talk about our engagement, and particularly the safety and soundness regime of the bank, which you alluded to in that statement, has been paramount to ensure that these banks are safe and sound as the market has evolved.

More broadly on conduct, competition and treating your customers fairly, those are critical issues for banks and have been well publicised, including the cultural and other issues that have come about. We do engage with our banks and ask them questions about what they are doing along those lines. I would like to think we do this, as it is in the interests of the taxpayer as shareholder as well as these broader policies.

Q15 John Thurso: But what was your view? What did you say to them about their decision to take away that basic banking offer?

Jim O’Neil: We did have a discussion on that particular point. I think broadly-

Q16 John Thurso: What points did you have a discussion on that fall into this area that I am talking about?

Jim O’Neil: There is a very wide range, that all come back to the points I just made.

John Thurso: Can you give me an example?

Jim O’Neil: I think PPI, a variety of treating customer fairly points have been made.

Q17 John Thurso: That is a bit of a no-brainer. They have all decided to cough up on that. Can you give me one where there is a difference?

Jim O’Neil: There are so many in the public domain, anti-money laundering-

Chair: We don’t mind if you give one that is not in the public domain.

Jim O’Neil: The broader issue is culture in banks and change, which is paramount, and it is in the interests of shareholders as well, but to go into specific points, recently there has been-what is next on the horizon in terms of some of these issues-some talk in the press of interest-only mortgages, for example. We ask them, "How do you feel about this issue?" and they articulate that they believe that they have been fair to their customers and articulate why. That would be an example of an issue like that.

Q18 John Thurso: What I am driving at is presumably your role is not simply to ask them a question and then be satisfied, irrespective of the answer. The asking of the question must lead to a judgment by you.

Jim O’Neil: Yes.

Q19 John Thurso: Have you ever decided that what they are saying is not something you are happy with? What do you do about that?

Jim O’Neil: A very specific part of our mandate is not to interfere in the day-to-day operating matters of the bank. The issues you are pointing to are critical issues for shareholders, because these banks must have competitive, sustainable customer propositions, and what has happened in the banking industry in recent times has certainly accentuated that. We do ask those questions about what they are doing.

I would point to a different issue, the investment bank that we talked a lot about the last time we were here, of our perspective versus their perspective is we attempt to have a dialogue very far in advance, so there is not necessarily a UKFI position or a board or management position, but we have had sufficient dialogue over time that we are comfortable that the bank is moving in the right direction.

Q20 John Thurso: Forgive me, Chairman, I am probably overstepping my time, but what I am really driving at is when there are areas of clear public policy concern, the sort of things that arrive in our postbag that we put pressure on Ministers about-and the basic bank account is a very, very obvious one-in a non-state-owned bank one might get hold of a senior executive and rattle him a bit and say, "Look, you can’t do this. Look at the damage you are doing. My constituents are suffering". He might go away and think, "Gosh, I’d better pay attention", probably not to me, but to some people. There appears to be a problem in regard to the state-owned institutions, in that they are almost under the protection of that ownership, and therefore can take commercial decisions that they would not take if they were not under state ownership and because of the intermediary-your position-that is not coming through. That is where I am trying to find out whether you can or should be arm’s length, or whether that is something that should not be in your remit and should be in the Treasury’s.

Robin Budenberg: I don’t think I agree. Lloyds and RBS-obviously, I am not saying that it is exactly the same for every issue that they cover-are on the whole very aware of the fact that the Government has a significant investment in them and has operated to support them. They are very responsive to those sorts of issues. I can’t say categorically that on each one they are the most responsive, but my sense is that they focus very hard on that.

Q21 Chair: Your job is to flag up any case or risk where shareholder value could be prejudiced by Government interference, is it not?

Robin Budenberg: It is not any shareholder value, because banks do make a lot of decisions that are not necessarily entirely in line with shareholder value, because they want to create the sort of operating environment that gives them the goodwill that is important for the bank’s commercial best interests.

Chair: That is long-term shareholder value.

Robin Budenberg: Exactly.

Jim O’Neil: That is long-term, yes.

Robin Budenberg: There are things that all banks do, and I would like to think that our banks-

Q22 Chair: Okay, so I go back to my question. Your job is to flag up instances where long-term shareholder value might be prejudiced by any form of Government interference.

Robin Budenberg: Yes.

Chair: Have there been any?

Robin Budenberg: We have not come to a point where we have said to our board, "We believe that the policy objectives of the Government are creating something that has a fundamental issue for shareholder value".

Q23 Chair: That was a carefully worded reply. Do you have areas where you became concerned that might happen, and then it did not?

Robin Budenberg: Inevitably we do, and that is the process of discussion that we have and remuneration is one that has always been very high in the public arena.

Q24 Chair: What action are you going to take when you find one?

Robin Budenberg: We will discuss it with our board. If we and the board feel that the bank’s commercial interests are going to be fundamentally prejudiced, we would stand up and say to the bank, "We are on your side. We don’t expect you to do this. We think it is against shareholders’ best interests, and we will tell Treasury that".

Q25 Chair: Subject to commercial confidentiality, this Committee will want to know of any such incidents at an early stage, and I would be grateful if you would keep me informed as early as possible of any such episode. It goes to the heart of the first question that Mr Thurso asked you, because if you are not performing that role and you are not seen to be performing that role, one has to ask oneself what value you are adding. Obviously, nobody leaps forward at a meeting like this and says, "You are not adding very much value" but I just posit the thought, when you are writing your memoirs, Mr Budenberg, whether you might reflect on exactly how much value UKFI did add.

Robin Budenberg: I believe that, as you said earlier, market participants see a great deal of value in UKFI, but that is for others to judge.

Chair: I asked Mr Budenberg to answer all those questions, but I am now going to let Mr O’Neil in.

Jim O’Neil: Our job is to ensure these banks are operated commercially. There have been a variety of actions by Government that have reduced value in banks generally. Some of these regulation reforms that have been good for society and the public, and long term for the safety and soundness of banks, may not have been positive for shareholder value. We gave some input in the Vickers report on the shareholder value implications of our stakes, so there have been actions that have reduced shareholder value. Our job is, in part, to speak up if we saw that shareholder value particularly impacting the RBS and Lloyds versus other banks in the sector. It might be impacted because their business model might be uniquely affected, but not just because they are state-owned banks.

Q26 Chair: But there have not been any yet?

Jim O’Neil: We have not identified any that have happened uniquely to them.

Chair: You are looking for them?

Jim O’Neil: Shareholder value is at the heart of everything we do.

Chair: That is why I asked you this question about what contacts you are having.

Robin Budenberg: It is our entire role.

Q27 Teresa Pearce: UKFI was set up in 2008, so it is four years ago. In that time, you have had three chief executives and four chairmen. Why?

Robin Budenberg: Continuity is important. I started in December 2009 as Chief Executive, and it then made sense from an economic point of view for me to assume the role of Chairman when Sir David Cooksey left. In terms of continuity, there was a period with John Kingman before me, and then me, and I feel that creates the continuity. I would also say that our board has been almost unchanged over that period. That creates another great sense of continuity in the organisation. It does not feel in the organisation as if there has been the sort of change that you suggest. Indeed, it is probably my move from one role to the other that adds to the statistics that you have just talked about.

Q28 Teresa Pearce: I do not think I was suggesting change. I think they are actual changes. I understand what you say about the continuity within people at the top, but do you not agree that it would have been preferable had there been the same people in post from the beginning? Obviously that would not be you now, so you wouldn’t think that would be preferable, but it must have had an affect on the ability of the organisation to do its job.

Robin Budenberg: Again, quite a number of those changes were changes in chairmen in the first few months of the organisation’s existence.

Q29 Teresa Pearce: So you are saying it has bedded down now, and you don’t foresee the same amount of instability?

Robin Budenberg: I am sure there will be change, and change is good, because sometimes you get into a way of doing things that a fresh pair of eyes would think differently about. It doesn’t feel to me, having been here for three-quarters of the organisation’s length, that it is an organisation that has been fundamentally changing during that period. There will be change, and I think change is good.

Teresa Pearce: Mr O’Neil, do you agree?

Jim O’Neil: I would say that in the two years I have been at UKFI there has been very little change other than the chairman, but as Mr Budenberg took that role on, there has been quite a bit of consistency other than that.

Q30 Teresa Pearce: UKFI has just 12 members of staff. Do you think that is enough?

Jim O’Neil: It is a small number of people, given the role of UKFI and the mandate. We are very aware that in Government generally it is necessary to operate with a lean staff. We do not believe that we have a staff shortage, but people are fully engaged in their jobs, but we are very aware of the broader Government reduction in staff, and we have done so accordingly as well.

Robin Budenberg: We felt that after the sale of Northern Rock, and now that the mortgage portfolios of Bradford & Bingley and Northern Rock are together in UKAR, that has released some element of the time pressure of our role, because obviously in the previous three years a lot of work had been focused on reorganising that structure and selling Northern Rock. Also, if we are honest, we would have been expecting to have been making more disposals by now, and that is clearly not something that is immediately on the horizon. Again, we have probably shrunk a bit, and it may be that we will expand at some stage, but right now it feels like the right sort of number.

Q31 Teresa Pearce: So you have shrunk a bit. What are the limits on what you can do now, compared with what you would like to do if you were larger?

Jim O’Neil: The feet on the ground issue is do we have enough resources to be on top of what is going on in the banks. While it is lean, we do have those resources. As Mr Budenberg alluded to, if we moved into active disposal mode we probably might be a little bit short of staff and we might have to look at additional resources, although even if something came up in the very near term, I do think we would have the resources to address that, but we would have to look at the trade-offs.

Q32 Teresa Pearce: Just to go back to Mr Budenberg, good practice in corporate governance is normally that a chief executive should not become chairman. Obviously, you have deviated from that principle. Do you think that weakens one of your key aims; that is, to improve corporate governance within the banks?

Robin Budenberg: We obviously thought very hard before we took that decision, but corporate governance does make it clear that it is not necessarily appropriate for all sizes of organisation. Clearly, we have a very small organisation. Also, if boards think it is the right thing to do, then as long as they explain it, that can be perfectly appropriate governance. We felt, when Sir David retired, that this was the most efficient way in which we could keep a significant amount of expertise and continuity in a way that reduced costs and made sense. We talked to both chairmen of RBS and Lloyds about it, and they felt quite comfortable with that.

Q33 Teresa Pearce: In the accounts, in footnote 2 of the annual report, it says that Michael Kirkwood, who is a non-executive director, "Absented himself from five board meetings during the year because of conflicts of interest". Is he able to fulfil his role if he has to absent himself from that many board meetings?

Robin Budenberg: It was a specific issue-the sale of Northern Rock-where Michael Kirkwood is involved in a firm that advised one of the participants in that. He was absolutely kept separate from any of that advisory firm’s operations in relation to that, but we felt that it would be best if we asked him to absent himself from the board meetings that considered that.

Q34 Teresa Pearce: So is it your view that that particular conflict of interest is over now, and will not continue?

Robin Budenberg: Yes.

Q35 Teresa Pearce: Was his remuneration affected by his inability to fully attend board meetings?

Robin Budenberg: No, it wasn’t.

Q36 Mr Mudie: On strategy, last week you and the FSA were reported as telling RBS executives that selling Citizens Bank and shrinking the global banking market business would be viewed positively. I see Robin is indicating it is news to him, but the FSA seem to have put it in writing, and the report seems to be backed up by insiders confirming both approaches. Do you agree you have made that approach and voiced those sentiments?

Jim O’Neil: As we discussed following Mr Thurso’s question, we engage with the bank management and board on strategy regularly, and we do that in various different ways. As was reported, we have recently written a letter to the board asking strategic questions. This is not something unusual, asking strategic questions.

Q37 Mr Mudie: No, but are you confirming that this is part of the strategic discussions, to sell the American bank and to-

Jim O’Neil: I would confirm first that we have written a letter. Secondly, I would confirm that among the strategic issues we discussed with management are the US operations or the investment bank, which we discussed with this Committee the last time we were here. We view it as part of our mandate to have an ongoing dialogue and to ask the board the questions.

Let me take a step back for a second. There was a strategy initiated in 2009. That strategy has been implemented very well, particularly on the safety and soundness regime. Earlier this year, after lots of dialogue with us, they made an announcement on downscaling the size of the investment bank, and we view it as part of our ongoing role to continue to ask strategic questions in a market where everything to do with banks is continuing to evolve and change. It is a topic that we regularly revisit, let us put that way.

Q38 Mr Mudie: It is following John Thurso’s questions. I would have thought that it is passing beyond a question for you to say to RBS that selling that American bank and downsizing your global business would be-what were the words?-viewed positively. That is not asking a question of it. That is a sort of in coded language giving an instruction.

Jim O’Neil: I would have to go back, but I don’t think we used the words "viewed positively".

Mr Mudie: What were the words then?

Jim O’Neil: I think it was, "What are the trade-offs as you value them from a shareholder perspective of looking at various issues?", including the ones that you mentioned.

Mr Mudie: Yes, but what were the words? That is maybe the result, but what were the words you used?

Jim O’Neil: We certainly did not have the-

Q39 Mr Mudie: I suppose you could supply us with a letter, could you not? Would there be some difficulty?

Jim O’Neil: There are obviously a lot of commercially sensitive things in a letter like that.

Mr Mudie: You can black them out.

Jim O’Neil: What we could do is-

Mr Mudie: We are much used to correspondence with stuff blacked out.

Jim O’Neil: Mr Mudie, we have some kind of framework where we can show you the letter, but we would just like to be particularly sensitive about the commercial matter.

Q40 Mr Mudie: Did you discuss it with the FSA?

Jim O’Neil: We did not discuss-

Q41 Mr Mudie: So both your approaches, with exactly the same stuff, came independently. What a meeting of minds.

Jim O’Neil: We come at it from a shareholders’ perspective. The FSA obviously comes from a regulatory perspective, but I think any analyst that you read who writes a report on RBS would point to some of these same issues. They are quite clear strategic points. We obviously come from a shareholder value, as someone who wants to sell a lot of stock in RBS over time. The regulator comes from a different perspective.

Q42 Mr Mudie: That is all accepted, but we are not discussing that. We are discussing your relationship in terms of RBS in terms of taking a sort of role. This is a positive role, interference in strategy. That is almost an instruction.

This is dated October. RBS had already made public there were moves to run down parts of their investment bank side. Is this an indication you and the FSA want to move beyond that?

Jim O’Neil: I can’t speak at all to the FSA. What I would say about us in terms of our view on the investment bank is that all investment banks are trying to deal with the additional costs of capital under Basel III and other regulatory reforms, which I know you-

Mr Mudie: Jim, is it yes or no?

Jim O’Neil: We are asking the questions of, "What do you think is the ultimate right size and shape of the investment bank?" Yes.

Q43 Mr Mudie: Do you have a view?

Jim O’Neil: I think generally investment banks will be smaller over time. The question "What is the shape, size and direction of travel?" is the question we are asking of the board and management.

Mr Mudie: Do you have a view?

Jim O’Neil: Of the ultimate shape? That is very difficult for me, because they are the ones managing the business.

Q44 Mr Mudie: No, you are UKFI. You have certainly been forthcoming in terms of, "Sell that American bank and shrink a bit on your investment side". That seems to indicate to me that you have a positive view on the shape of the investment bank and the size of it.

Jim O’Neil: I would say that we do have a positive view as to the investment bank shape and size. Ultimately, it should be smaller than it is today.

Q45 Mr Mudie: Should they have an investment bank arm?

Jim O’Neil: They have a very strong UK corporate franchise, and that is the backbone of their wholesale institutional business.

Q46 Mr Mudie: What does that mean to us non-bankers, that it has a very strong corporate-

Jim O’Neil: Sorry. They have a very good relationship with corporations, the corporates, so it is a very strong franchise. They should clearly have investment banking activities as part of their strategy-at least they have articulated that, and we agree with that-on the back of those activities to provide services to those corporates that are in investment banking and not just traditional lending.

Q47 Mr Mudie: Both the Chancellor, who wants more focus on domestic spending, SMEs and mortgages and so on-but that is privately stated-and the Secretary of State for Industry have floated the idea of becoming the sort of business bank that people are now moving towards. There is a sort of conventional wisdom. That would suggest moving away from a strong-if any-investment bank, would it not? What is your role? If the Business Secretary has indicated that publicly and privately-and in many of his speeches-and George Osborne has referred to the need to get money into the domestic market, mortgages and small businesses, that seems to be a clear push in terms of strategy. Where is UKFI, because the bank seems to be wanting to conserve as much of its investment business, which is a different strategy. Where are you in this? Which side are you on?

Jim O’Neil: I will address your first question about the investment bank. They have a strategy to be in the investment banking business. I think they are asking themselves, we are asking them, there are other shareholders asking them, and anybody who has an investment bank is trying to grapple with the ultimate shape and size of that in the context of all the change going on and regulation in the market.

On the second point in terms of what our role is, we are not involved in these policy discussions or ideas per se. We are a source of commercial and technical expertise, so when Treasury ask us questions about various different topics we do input into that, but we are not a policy organisation.

Q48 Mark Garnier: Either of you could probably answer this. For the public record, can either of you tell us what the value or the break-even price for the Government is in terms of the investments in both RBS and Lloyds?

Jim O’Neil: It is somewhat of a technical question. How the Government looks at the break-even in terms of what the taxpayer paid, how it accounts for the cost of carry of the investments and how it accounts for the various fees the Government has received, in particular for the asset protection scheme, is a matter for Treasury and the accounts. I can comment on what the in price was in terms of price paid for the shares, but how they account for it is not-

Q49 Mark Garnier: Why don’t you do that?

Jim O’Neil: The average price paid for the shares was 73.6, and 502 now. That is the price paid for the shares.

Mark Garnier: Sorry, what was-

Jim O’Neil: Sorry, 73.6p for Lloyds and 502p now post the adjustment for RBS, but to answer your question is how the Government accounts for that in terms of-

Q50 Mark Garnier: No, I appreciate that. So there are lots of various bits and pieces, and there is the cost of funding of the loan and all this kind of stuff. Essentially, the reason I am asking these questions is because in your annual report you state that any transaction recommendations we make to Ministers in terms of selling these things off will be based on value, and not the cost of investment. The taxpayer is going to be very interested to hear if you are potentially recommending that the taxpayer takes a hit, irrespective of how you account for it. What is your view on that?

Jim O’Neil: As you said, our job is to identify value for money opportunities to sell these shares. Concurrent with that obviously is finding people who are going to buy them at the same time, so will there be demand for those shares? Most importantly, we make recommendations, or we would make recommendations, but it is the Chancellor’s ultimate decision as to whether to sell these shares or not. As we look at value for money and we look at what the intrinsic value of these shares is and what potential price would be achievable in some form of transaction, the average in price is not inherently part of that analysis. Is it a benchmark, or is it important at a point? It is.

Q51 Mark Garnier: It has to be an extraordinarily important point when any transaction does take place-

Jim O’Neil: Understood.

Mark Garnier: -because you are going to have the huge focus of the media and political focus coming in on this.

Jim O’Neil: We understand that.

Mark Garnier: If there is a massive loss, there will be outrage.

Jim O’Neil: The point is that ultimately it is Treasury and the Chancellor’s decision as to whether to sell these shares or not.

Q52 Mark Garnier: But you will be advising them. You are the guys are looking at this 24 hours a day, waking up at 3 o’clock in the morning-

Jim O’Neil: Acting as a stewardship on some of the topics we were just discussing and disposing of these shares is the core of our mandate, yes.

Q53 Mark Garnier: To what extent do you think the share price is going to recover back to the in costs over a period of time, and what sort of period of time do you think that will take?

Jim O’Neil: We have all seen the issues banks face in the last couple of years, particularly in recent months. The chief executives of both banks have articulated 2013 as ideally the last year of restructuring, i.e. after 2013 these look like more normal, ordinary course banks that have earnings on a path to dividends, hopefully clearly on a path to dividends, but ultimately paying dividends. It is very difficult to say when we will get to a level at which it will be the right time to sell, and as we have said to this Committee before, we do not think it is in the taxpayers’ interests to have a deadline or a time, because that can give the dynamic of being perceived as being a forced seller, which is not a good dynamic in the market.

There is a path to normalisation. The most important dynamics of your question are what is going to happen with the economy, when will regulation, both internationally and domestically, settle down; and when will the markets and topics like eurozone-which people are still worried about-settle down. Those are perhaps the most important points, to answer your question.

Q54 Mark Garnier: Much of the discussion that has been going on is about trade sales to other significant investors, or possibly an IPO of one description or another-some flotation-but what hasn’t been discussed very much is the potential of breaking the banks back up into their component parts. What discussions have you had about that?

Jim O’Neil: I will comment on breaking up the banks in terms of some of the issues, but in terms of our discussions, I can’t say we have had any specific, substantive discussions on that per se. As you can imagine, there is a whole lot of contingency planning going on, and we input in that in terms of the commercial and technical expertise. That is how we input on those discussions.

I am going to answer that more specifically in the context of our mandate and value. Breaking up banks, as we have seen in some of the divestitures that these banks have been forced to do from state aid, is an extraordinarily challenging thing to do, from a variety of different perspectives. There is a huge amount of IT and other execution risks as part of that, as well as just risk.

Q55 Mark Garnier: Yes, but a lot of the discussion is about selling off 300 branches here. What I am suggesting more is taking something like RBS and taking out the NatWest part of it, and selling NatWest off as a separate entity, which will then have its own IT system, and not only that, it will also improve competition in the marketplace.

Jim O’Neil: From my observation, even these internal reorganisations of banks are just extraordinarily time and IT intensive, and have a huge amount of risks associated with them. I understand the nature of your question, but I would make that point even more so with something as big as taking something of that size out of a major bank.

Robin Budenberg: Can I just add something? It took Lloyds three years to integrate HBOS, and I would imagine that unpicking that is probably more difficult than putting it together.

Jim O’Neil: One of the questions is, "Why would you do that?" From us, you would look to that from a value perspective, so you do see some commentary of, "These banks trade for low book value, so why don’t we break them up and at least realise book value?" You can understand the logic of that question. From our perspective, we would say there are a lot of reasons why banks are trading below book value and our banks aren’t earning profits right now. There is a huge amount of uncertainty, which we just talked about, in the economy and regulation and the markets. There is a long list of reasons why these banks are trading at these levels, and would breaking them up really realise that value, even independent of all the execution risks that we just discussed? I think there would be real questions whether that would be achievable.

Q56 Chair: Breaking them up would increase competition. After all, they got a dispensation from competition in order to put themselves together in the beginning, so this extra value comes into consumer cost, doesn’t it?

Jim O’Neil: I am not a competition expert, but what I would say is a number of bodies, including the Vickers Commission and the European Commission, have looked at competition in the UK, and they did not recommend breaking up the banks along the lines of-

Chair: No, but they have all said that there is not enough.

Jim O’Neil: They have proposed various solutions to that, and we have seen very clearly with the EC the state aid solutions that were mandated. Again, we are not the competition authorities, but other authorities have made other recommendations.

Q57 Mr McFadden: Tell us about the Abu Dhabi story. There was a story that RBS was exploring a partial sale-a minority stake-to the Abu Dhabi sovereign wealth fund earlier this year. Was that story true? Did you have any contacts with the Abu Dhabi sovereign wealth fund?

Jim O’Neil: As part of our mandate, our job is to interact with a wide range of investors, both on what they think of RBS and also on the topic of would they would be willing to buy our shares at some point. It is very difficult for us to comment on conversations with specific investors because, from a commercial perspective, if investors felt that any conversation they had with us had to be disclosed in the public domain, we don’t think that is necessarily in the interests of the taxpayer, trying to have these dialogues with investors.

What I will say though is we do have dialogues on occasion with investors about their interest in buying our shares. We would not characterise any of those dialogues at the level that they would be a formal proposal for our shares. There have been on occasion people expressing an indication of interest for shares, but I would not say that any of those discussions had advanced to being called a proposal.

Mr McFadden: I am going to take that as a yes.

Jim O’Neil: I am sorry. It is very difficult for us to comment on dialogues with specific investors, because we feel that, if we had to relay those publicly, then it would discourage investors from having a dialogue on the shares.

Q58 Mr McFadden: But I am afraid there is a public interest. This was a story-just following on from all the questions that Mr Garnier has just asked you-about the sale of a stake in a bank the public owns. I am afraid that I want to ask you, did you have discussions with the Abu Dhabi sovereign wealth fund and, if so, why didn’t the deal go ahead? There is a public interest in this.

Jim O’Neil: We have not had any formal proposals from investors on our shares. We speak to a variety of investors that have expressed an interest, but we have not had any formal proposals. If I could expand, I think the most likely first type of sale of these transactions, as I said before, is some type of market transaction. We do not rule anything out, and it is our obligation to listen to people who have an interest in our shares.

Q59 Mr McFadden: Just following on from that, would it be under consideration, instead of a one-step return to the private sector, to take a minority stake and sell it to a single investor? Is that a likely first step in the process of returning the bank to the private sector?

Jim O’Neil: I wouldn’t say it is a likely first step. I would say most likely it is some type of market transaction, but we do not rule anything out as being value for money.

Q60 Mr McFadden: Sorry, explain the difference between selling a stake to an institutional investor and a market transaction.

Jim O’Neil: Sorry. A minority investment, in my definition, that means that a single investor buys X%. What I mean by a market transaction is those shares are offered to a broader group of investors-it might be institutions, or it might be a very broad offering and include a large chunk of retail. That doesn’t mean a type of investor that you have identified might participate in that alongside other investors, but again, we can’t rule anything out that would be value for money for the taxpayer. Where we sit now, it is inherently more difficult to negotiate one-on-one with one investor in terms of at least a market transaction has the benefit of a price on the market, and you are distributing it broadly.

Q61 Mr McFadden: Could it be, in your view as advising the Government, value for money for the taxpayer to sell such an initial stake beneath these entry prices you told us about a minute or two ago of 73.6p for Lloyds Banking Group and 502p-or 50p, as it was before they revamped the rate-for RBS?

Jim O’Neil: I think you have asked this question before, so I will say we can see circumstances where it would make sense to start the disposal programme that represents good value for money in that transaction that might be below that level, but if that represented good value for money in the assessment of what it meant for the entire disposal programme, we could see circumstances where we would recommend it.

Mr McFadden: I am also going to take that as a yes. Thank you.

Jim O’Neil: Yes, it is. Sorry, I didn’t mean to be evasive.

Q62 Chair: Just on Pat McFadden’s first question, I understand and respect the point that you are making about investor confidentiality, but where an investor, after an interval of a year or so, said or intimated that they would have no objection to this being made public, it seems that the confidentiality concern would fall, wouldn’t it?

Jim O’Neil: Certainly if the investor said there was no issue of confidentiality, I would agree with that. What I would say though, in the life of these stakes, I am not so sure a year is a particularly long time, because these discussions will go on for years, I think.

Q63 Chair: Perhaps, given the level of public interest, it might be helpful if you consult major potential investors to see whether they have enduring concerns. They may not. Would you undertake to do that?

Jim O’Neil: We will.

Chair: Thank you.

Q64 Mr Love: You mentioned earlier on in one of your answers that there was an expectation that disposals would have happened by now. How much pressure are you under in relation to disposals, Mr Budenberg?

Robin Budenberg: We are not under significant pressure in that regard. Things have changed so fundamentally for banks since that time that, to begin with, I do not think that there is the level of demand that would be required currently to effect a transaction that would be successful.

Q65 Mr Love: Before I come on to responding to that answer, let me just ask you, are RBS and Lloyds ready for disposal? They have entered into an enormous programme of divestments, getting their balance sheets into order. What is the official position of UKFI in relation to where both those banks are at the present time?

Jim O’Neil: I will come back on what this means for disposals, but on where these banks are at the present time, we would say that the safety and soundness regime of both these banks has progressed substantially and according to plan. Both management teams have accelerated their ability to deal with the non-core assets in a way that exceeded their plans. That has proceeded very well. The rebuilding of profitability and earnings has taken longer than expected. Both banks’ CEOs have articulated that they hope and believe that 2013 will be the last year of major restructuring, and over the course of that year they can begin looking like a more normalised bank. One of the key proxies for the health of a bank is its ability to pay a dividend. It does not necessarily mean the actual payment of a dividend, but a path to dividends is a very important milestone in assessing the question that you have asked.

That being said, in terms of your question as it relates to the disposals, if some investor is willing to pay, in advance of all these things being achieved, a price that represents value for money for the taxpayer, we have to think about that, whether that is an individual investor or the market that is willing to pay that. While I think it will most likely take some time for all of those things to develop, we are mindful of value for money opportunities in the interim period if someone, or the market, is willing to pay that.

Q66 Mr Love: All of that is predicated on the idea that there would be a normal share sale, an IPO. You have answered questions earlier on about restructuring. What discussions have you had with both RBS and Lloyds about the possibility of restructuring their organisations to make them more attractive from the shareholder value perspective that you come from?

Jim O’Neil: That question goes to the heart of Mr Mudie’s question earlier, and we do ask strategic questions of both banks. RBS has a much broader scale of businesses and a much broader geographic spread of operations, and those are at the heart of a lot of those questions. Lloyds is a more focused bank, so it is probably less about scoping in terms of strategy but about operations-what they do-but we do regularly speak with the board of management on those topics.

Q67 Mr Love: Do you see your role as simply to stand up for shareholder value? You mentioned earlier on in a response to a question that you could see circumstances where a share sale at the present time might enhance value subsequently. Do you see any other objectives outside shareholder value that could enhance shareholder value in the longer term as you enter into the sales process?

Jim O’Neil: If what you are asking is do we challenge management on their plans and whether they are constructive with the development of shareholder value and putting these banks in a position where the taxpayer can start selling shares, the answer to that is yes.

Q68 Mr Love: Let me come back to the point that the Chairman raised earlier on, and that is in relation to the proposed sale to Santander that collapsed. There are indications that there are other banks that may be interested. Setting aside for a moment all the costs that are entailed in separating that out, have there been any discussions about enhancing the value of whatever you would get from the sales process for those particular parts of the bank? Has there been any discussion about enlarging that to seek greater shareholder value?

Jim O’Neil: Is the nature of your question whether the shareholders, including the taxpayer, will get value from the sale of the Rainbow branches that were being sold to Santander? Sorry, I did not-

Q69 Mr Love: As I understand it, it is unlikely that the price that was struck with Santander will be matched by others. Therefore, I was wondering whether there had been any further discussion about how, perhaps through enlarging the sale, you could strike a better value for the shares.

Jim O’Neil: I am sorry; I did not understand your question. RBS is selling this for an EC remedy. They view these as very good businesses and if they were not being told to sell these as part of the EC remedy, they would not sell these, so I think they would see more value in holding on to these branches, rather than selling them. The answer is that we are not aware of any of that. The EC has a very specific parameter of what is supposed to be sold, so I am not aware of any discussions of changing that.

If I could address the one part of your question though in terms of the value, it is important to note-and I grant your observation that it seems unlikely that that original price might be obtained, given the market has changed so much-that RBS is holding on to this business for longer than had been anticipated, so they are getting the profits from this business in the meantime. That has to be accounted for in the value dynamic.

Q70 Jesse Norman: Mr O’Neil, how often do you speak to the senior management of RBS or Lloyds?

Jim O’Neil: Regularly. Over the course of a month, we probably have a chairmen’s conversation, or Mr Budenberg usually speaks with the chairmen and I usually speak to the management. We would meet with the chief executive, FD, probably someone from risk, and depending on what the agenda is, someone from an individual business unit, regular contact with treasurers about capital and funding and those kinds of discussions.

Q71 Jesse Norman: So weekly? You would have weekly conversations, would you?

Jim O’Neil: With somebody, yes. I would be surprised if we didn’t have with somebody from RBS or Lloyds.

Q72 Jesse Norman: That is interesting; thank you.

You are obviously an interested and active shareholder, but are you more in the nature of an institutional shareholder, you see yourself, or more in the nature of a venture capital type shareholder?

Jim O’Neil: In the spectrum of institutional and venture capital, we are probably somewhere in the middle. I suspect we are closer to the venture capital type shareholder, although since we are not on the board, I would say a venture capital shareholder is probably more typically on the board, so we are not. But we are very engaged, although as a public shareholder, we are very mindful of what information we get from the banks and that whatever information we receive is ultimately something that is either cured by time or eventually it is made public, so we are a bit aware of that.

Robin Budenberg: I would say we are more of an institutional shareholder, but inevitably, because we only have two banks or two companies that we have a shareholding in, our relationship and engagement with those two is much more intense and frequent than you would find in a normal institutional shareholder.

Q73 Jesse Norman: How much of an impediment is it not to have a board membership?

Robin Budenberg: If the banks are going to feel that they are being run as commercial entities with their own boards, I personally think it is appropriate that we do not have board membership. If we had board membership, we would be privy to a large number of things that would stop us acting as an institutional shareholder and make us much more an insider. In that regard, I think it would change the nature of our relationship with them. Our remit was to be set up as an institutional shareholder and, on the basis of that remit, I think it is not appropriate for us to be represented on the board.

Q74 Jesse Norman: Take Lloyds, for example. No, take RBS. Do you think the RBS board is doing a decent job?

Robin Budenberg: Yes, I do.

Q75 Jesse Norman: You wouldn’t like to take some of those guys out and put in some tougher, stronger people, who might be more in keeping with the venture capital focus we have been hearing about? It feels very like a public board at the moment, right, lots of people-great and good-not much necessary action.

Robin Budenberg: There is only one person on that board who has not been changed since the time that the Government made its intervention. It is a brand new board. It has a very well-respected chairman in Sir Philip Hampton. It has a range of people with individual expertise, and you can guarantee that Sir Philip will have looked around to find the best people that he felt made up a board that would work from a governance perspective.

Q76 Jesse Norman: Why did you defend RBS over the issue of remuneration for the chief executive?

Robin Budenberg: We had the discussions that we had in terms of establishing what we felt the appropriate level of remuneration was. What happened then was something that it was very difficult for anyone to control afterwards.

Q77 Chair: Can you say a bit more about that? What does that mean?

Robin Budenberg: We are really talking about Stephen Hester’s bonus for last year. It was clear that before the announcement of that there had been discussions with us, and that we had been content with the proposal that came forward. It was clear that it did have our support at that stage. It did have our support.

Q78 Jesse Norman: What then happened? The Government was worried about the public reaction?

Robin Budenberg: No, I think what happened was that there was a significant public reaction, and clearly we were involved in a misjudgment about what that reaction would be. I think Stephen Hester decided that the issue was becoming such a major public issue that it was doing damage to the bank, and therefore he volunteered to forgo his bonus.

Q79 Jesse Norman: Did RBS discuss or clear the terms of the Direct Line sale with you beforehand?

Robin Budenberg: Yes.

Jim O’Neil: It was one of the topics, like Rainbow, we just discussed that we regularly asked management about in terms of its progress. We did follow that.

Q80 Jesse Norman: It was obviously a vast value diminution. Why did you come to the conclusion that was a good deal?

Jim O’Neil: I would be interested in your comments on why you say "value diminution". It is an EC state divestiture. They were, "I think we would rather sell this". The choice was do you sell it through an IPO or do you try to pursue another route. We engaged with them on what they felt the best choice was. One of the advantages, if they believe in the business plan, is that by only selling part of it now, they believe that they will get the benefit of the upside going forward.

Q81 Jesse Norman: What about LIBOR? Have you been briefed on the LIBOR risk?

Jim O’Neil: On LIBOR, again we are not a regulator, but RBS had made us aware-

Q82 Jesse Norman: Yes, but you are a shareholder, right? It is an enormous risk.

Jim O’Neil: No, but I am saying that from the perspective that we come from, we couldn’t agree more that culture and conduct are huge risks for all banks, including RBS and Lloyds. It is something RBS had made us aware of over some period of time. Earlier this year, we were formally informed by RBS and then in our regular discussions with the FSA of an investigation. Our role, as shareholder, is to ensure that they are co-operating fully and taking appropriate action as they see it. We do periodically ask them about that. As shareholder, we are awaiting the results of the report. Our job as shareholder is to ensure that that is addressed appropriately by the board.

Q83 Jesse Norman: Have they discussed qualification or provision against it?

Jim O’Neil: No.

Q84 Jesse Norman: A final question. When we come on to value for money for taxpayers, which you have talked about, you have said that you think it is unlikely that the full value will be recovered. What kind of criteria will you use to make a judgment? Will it be the one you adopted with Direct Line, that is to say, "We essentially need to sell this business for other reasons, and therefore we will take the best offer" the best market bid, if you like, through various channels, or will it be, "We as UKFI are happy to sit here and take potentially high profits from its franchise over a period of years and we don’t really want to sell it"?

Jim O’Neil: I don’t think I ever said that the money would never be recovered. I think what I was saying is that the economy, regulation needs to settle down and the markets need to recover, so a lot needs to change for that to happen, so just to adjust that.

Jesse Norman: Sure.

Jim O’Neil: Please stop me if I am not answering your question correctly, but in terms of value for money, we look at the intrinsic value and make an assessment of where we think the banks are based on what we know today. One of the challenges is that there are so many uncertainties with banks, and it is hard for any shareholder to have a good view of why RBS trades at 0.5 times book, Barclays trades at 0.6 times book, or why Lloyds trades at 0.7 times book. There is no clear reason why they all trade at those levels, so it is very difficult to assess what value for money is. As these banks normalise and hopefully conditions settle down, that will be an easier assessment.

Q85 Jesse Norman: But if the Government decides to sell, will your job be to say, "No, we think it’s a bad idea to sell" or to say, "We will assess the correct value"?

Jim O’Neil: Our job is to assess and make value for money recommendations to the Government.

Q86 Chair: A moment ago you said, Mr Budenberg, you-that is UKFI-were involved in a misjudgment about the public reaction to the bonus. What that means, isn’t it, is that the RBS board and UKFI both made the same misjudgment about that reaction, just to be clear?

Robin Budenberg: Yes.

Q87 Chair: Before you came to make that judgment, which turned out to be a misjudgment, did you consult the Treasury?

Robin Budenberg: Yes. As we discussed at our last meeting, there was a dialogue with the Treasury.

Chair: You spoke to the Chancellor?

Robin Budenberg: Yes.

Q88 Chair: Did he speak to you afterwards, after the public reaction?

Robin Budenberg: Yes.

Q89 Chair: So he made the same misjudgment?

Robin Budenberg: I think it was the decision of the board of RBS to make the announcement it made, with our support.

Q90 Chair: Yes, but when you came to him to consult on what decision to take prior to this being made public-and you have just told me that you did-you did not say, "Oh, don’t do that. Do it over his dead body"?

Robin Budenberg: No.

Q91 Chair: So he was a party to the same misjudgment?

Robin Budenberg: It clearly was not an ideal outcome.

Chair: You are becoming more of a politician by the minute, Mr Budenberg.

Q92 Mr Ruffley: I just have one question. We have focused in our questions to you today on the return to the private sector. I just want to ask you, Mr Budenberg, you will be aware that there has been speculation that some senior Ministers in the coalition Government would like to perhaps turn RBS, or a large part of it, into a state bank. You have heard of those rumours in the press?

Robin Budenberg: Yes.

Q93 Mr Ruffley: Have you had any discussions at all, or any one of your colleagues at UKFI, with any Government ministers or their officials or advisors in relation to the rumours that we have both agreed are out there?

Robin Budenberg: As Mr O’Neil said earlier, there are areas where we do give technical views. As you would expect, the Treasury regularly reviews all its options-and this Committee would expect them to do that-in relation to the banks. We provide technical input into that to make sure that they take account of all the possible options, but we are not-

Q94 Mr Ruffley: I understand the sensitivity. Let me just rephrase it. Have you given any advice-the advice you have referred to just now-in the last three months on the question of state ownership, the state bank role?

Jim O’Neil: In terms of turning RBS into some kind of state SME bank?

Mr Ruffley: Yes.

Jim O’Neil: No, no advice. Again, as Mr Budenberg was saying, we often are asked technical questions about the banks. What Treasury likes to use for that is their policy matter and what they are working on, so we don’t necessarily see the output of that, but we are regularly asked for technical advice on banks. But have we been asked for advice on turning RBS into a state-owned bank for SME purposes? No.

Jesse Norman: Thank you. That is very helpful.

Chair: Thank you very much for coming to give evidence today. We appreciate it. I expect we will be seeing more of you in the future, because I don’t think your memoirs are yet going to tell us that you feel you should be wound up. Thank you for coming.

Prepared 30th October 2012