Policy Research in Macroeconomics

My long, slow, personal bail-in

By Jeremy Smith

Once upon a time, say 1995, I had a nice little nest egg of around £1300.00 safely deposited in a modest interest-earning account with a kindly old Building Society named Halifax.

Halifax then felt that being a kindly little Building Society meant that nasty muscly banks could come along and kick financial sand in its face all the time, mocking it for not being trendy and blingy.  So it trained up – and lo after a lot of training it became a bank, and acted like a bank, kicking financial sand in the faces of as many others as it could. I voted against this, but it seemed I was in a small minority as others thought they could make lots of lovely stuff out of becoming a bank. My nest egg nightmare was about to begin.

Meanwhile, my savings account got turned into some shares which I was assured had the same value, and all accompanied by indecipherable documents explaining to small savers like me. I paid not too much attention, and for several years received something called dividends instead of interest on my deposit as in the old days, which amounted to £62.50 or £84 per year or something similar. Halifax bank mysteriously became known as HBOS and some no doubt highly capable gentlemen from the Bank of Scotland took my bank in hand and helped it along somehow.

From time to time I received more indecipherable letters from important people on behalf of the Halifax Bank, or was it HBOS, which seemed to involve my holding of shares being diluted in some way that I did not really understand.  And frankly I had no idea how to sell of my shares or what they were worth so I left them there.  The main point of being a bank is to make things unintelligible for your customers – for foolishly, that was how I still saw myself.

Then I learnt from the newspapers that the Bank of Scotland, or was it Halifax or was it HBOS, had not conducted their affairs in an overly-prudent manner and frankly needed another even more kindly bank to take things over and sort things out. I had begun to realise – notably from an absence of any payments of dividends as well as a general zeitgeist sense that the financial world had imploded – that there was little or no sense in selling my shares, for they appeared to have a good deal of what you  might call negative equity.  Roughly £1300 worth of negative equity, in fact.

So as we read of the total injustice being meted out (unless the public outcry overturns it tomorrow) to small savers in Cyprus, which the twitter world is calling theft, not without a degree of accuracy, spare a little thought  (as I have done today) for me – victim of a systemic con, a theft, a series of acts of financial oppression repression and suppression.  The greedy people who demutualised Halifax, who got special Acts of Parliament passed (like HBOS Group Reorganisation Act 2006) to enable them to make more money out of losing me mine, and others theirs, had finally succeeded in cleaning me out completely.

It took me a long time to really understand what had happened as my little asset was serially, seamlessly stripped. Today I finally know what happened to me. It has a name. I can hold my head high again.  I have helped save the financial system from meltdown. I have enhanced competitiveness. Yes, I was bailed in.

3 Responses

  1. Frances, You could say (I would say) that I was asleep on the job as a depositor-become share-holder…but I think I was far from alone in being mugged in this process. So I thought it worth recording in (I hope) a mildly comical way what happened to small savers in this country, and how. But as Neil points out, many really suffered from the Halifax heist. I just felt (feel) a bit sore on being parted from what I thought was a safe little asset!

  2. What an awful story. When this sort of thing happens in Spain, or Cyprus, we express our outrage and congratulate ourselves that we live in the civilised UK where such things don’t happen. Your story reminds us that we, too, are vulnerable.

  3. I live in Halifax.
    Around here the Halifax Building Society has God-like status. Many of my neighbours worked there. Pretty much everybody is related to somebody who works there or has worked there. It is, or was, the core of the town.

    It was not just nest eggs that went in this calamity. It was entire life savings and pensions.

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