Fee bonanza for Treasury APS advisers
INVESTMENT banking and legal advisers have picked up £26.5m for their work advising the government on its Asset Protection Scheme (APS), according to data released by the Treasury under the Freedom of Information Act.
Bankers from investment banks Citigroup, Credit Suisse and asset manager BlackRock have been working with the Treasury’s Financial Stability Unit in return for fees to their employers.
Legal advisers from Slaughter & May have also been working on the APS, as have accounting firms Ernst & Young, KPMG and PricewaterhouseCoopers, the Treasury said, although it did not provide a breakdown of which companies were paid what.
However, the Treasury said earlier in the year that it had paid Credit Suisse £9.6m and Citi £1.9m in the first six months of 2009 for their work on the APS.
The department said yesterday that the fees could be recouped from Lloyds Banking Group and Royal Bank of Scotland, the two part-nationalised banks who will rely heavily on the scheme.
The two banks agreed earlier this year to insure about £585bn of risky assets through the scheme, which sees the government share losses on those assets.
However, Lloyds, led by chief executive Eric Daniels, has since seen its loan loss rate slow and is mulling over a share placing to raise enough capital to reduce its participation.
If Lloyds can raise around £6bn via selected institutional investors, as board members believe it can, the bank could cut its use of the APS in half.
Under the current arrangement, Lloyds would pay £15.6bn in ‘B’ shares to the government to insure £260bn worth of assets, taking the government’s stake from 42 per cent to around 60 per cent.