Earlier this year, BP raised $5bn in new loans to bolster its capital position following the Gulf oil spill. Various banks were involved, including BNP Paribas, Standard Chartered, SocGen and RBS. Lloyds was not.
But last night a Lloyds banker told me that his bank had come very close to getting in on the act too. Apparently the option made it all the way up to Eric Daniels, the chief exec (right), before being rejected.
At the time Lloyds’ decision seemed prudent. While the loan was in the early stages of discussion, the well remain unplugged, and even after it was plugged, the liabilities could have been unlimited.
But this same banker told me he thought his bosses had got it wrong. He said Llyods should have realised that once the well was sealed the attention of the US government would shift and so the appetite to make BP pay more than they could afford would wane. He added that he thought BP’s credit rating would soon be upgraded.
If he is right, Lloyds missed out on the chance not only to capture an excellent money-making opportunity, but also to curry favour with its owners in the UK government by helping protect a British business.
Bear in mind though that by the time the deal was sealed, BP’s situation already looked more secure, and the banks were charged a relatively modest 200-300bps over Libor. Perhaps Lloyds won’t be too gutted to have missed that one.