Finance Update March 2009 - Olswang

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General Finance increased its stake in the Lloyds Banking Group to 75% ownership after converting preferred shares into ordinary stock. In return for its controlling share, government funds will be used to insure £260bn pounds of the company's assets. Towards the end of February, financial markets around the world fell as concerns about the recession increased, the FTSE 100 fell to below 4,000 on 20 February, down 7.1% in one week and the Dow Jones fell to a twelve year low, finally settling at a six year low by the end of the week. Stock markets around the world fell again at the start of March, as AIG announced losses of £44bn, the largest quarterly loss in corporate history. Olswang © 2008 | www.olswang.com 5
General Finance General Finance Cases Bank charges The case of Abbey National plc & 7 Ors v Office of Fair Trading [2009] EWCA Civ 116 followed the cases decided last year and earlier this year between these parties (summaries of these decisions can be found in the May 2008 Finance Update, the October 2008 Finance Update and the February 2009 Finance Update). Facts: The banks appealed against the decision that the Office of Fair Trading (OFT) was entitled to assess the fairness of certain bank charges (see the May 2008 Finance Update). Decision: It was held that the relevant terms were not protected from the assessment of fairness under the Unfair Terms in Consumer Contracts Regulations 1999, Regulation 6(2)(b). Therefore the appeal was dismissed. Comment: The banks may still apply for permission to appeal this decision to the House of Lords. If not, this decision means that the OFT could rule that the charges are unfair once it has had time to examine the relevant terms and conditions in detail. It is expected to reach a final decision in relation to this later this year. Shareholder Compensation In the case of R (on the application of (1) SRM Global Master Fund LP (2) RAB Special Situations (Master) Fund Ltd (3) Dennis Grainger & Ors) (Claimants) v Treasury Commissioners (Defendant) & Legal & General Investment Management Ltd (Interested Party) [2009] EWHC 227 it was held that the legislation in relation to the amount of compensation to be paid to the former shareholders of Northern Rock, on its nationalisation last year, did not contravene the European Convention on Human Rights. Therefore, the application would be dismissed. Olswang © 2008 | www.olswang.com 6
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Finance Update March 2009 - Olswang

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