Innovative Vaccine Investment now available in ISAs

Retail investors are to be offered an opportunity to invest in a new Vaccine Investment ISA that aims to raise £50 million to vaccinate children in the world’s poorest countries.

The ISA is the Government’s primary vehicle for tax advantaged saving outside pensions and has proven extremely popular, with over 18 million people (1 in 3 adults) now holding an ISA. The Government has been keen to build on this success and in the 2008 Pre-Budget Report announced that it was extending the qualifying investments for ISAs to securities issued by Multilateral Development Institutions. This enables retail investors to support the work of these institutions in helping developing countries to reduce poverty and provide healthcare, education, water and important services to their citizens.

Under this new scheme, retail investors will be able to earn a competitive return on their investments in a tax-efficient manner, thereby enabling the International Finance Facility for Immunisation (IFFIm) to raise funds to be used by the GAVI Alliance, a public private partnership, to support vaccination programmes in more than 70 developing countries.

IFFIm has raised $1.6 billion to support GAVI immunisation programmes since 2006. This has been facilitated by IFFIm’s triple-A rating, in turn due to the support of major governments, led by the UK, who have pledged to contribute money over 20 years. The proceeds of these pledges are used to repay the initial investments, plus the fixed return. The World Bank acts as IFFIm’s Treasury Manager and manages its finances.

The Financial Secretary to the Treasury, Stephen Timms, said:

"I am delighted the extension of ISAs to cover securities issued by Multilateral Development Institutions, such as IFFIm, has borne fruit so soon. I congratulate GAVI, HSBC, IFFIm and the World Bank for developing this opportunity for personal investors to benefit from the tax advantages of ISAs and simultaneously to fund child vaccination in developing countries against life-threatening diseases such as polio, diphtheria, hepatitis and measles."

International Development Secretary, Douglas Alexander, said:

"The economic downturn could push millions of people into extreme poverty and cause the deaths of up to 2.8 million children. Innovative initiatives like this are vital if we are to prevent this financial crisis from becoming a human crisis. That is why Gordon Brown is leading a new Taskforce on Innovative International Financing for Health Systems, to help save the lives of many millions more"

Asset Protection Scheme - agreement with Lloyds

The Government is today announcing an agreement in principle with Lloyds Banking Group (Lloyds) to participate in the Asset Protection Scheme. The Government is also agreeing to convert its preference shares in Lloyds to ordinary shares. As set out in the announcement last week, the Asset Protection Scheme aims to remove uncertainty about the value of banks' past investments and this package of measures will allow Lloyds to increase its lending to the UK real economy.

Under the agreement Lloyds will place £260bn of assets into the Asset Protection Scheme, focusing on those assets where there is the greatest degree of uncertainty about their future performance. Lloyds will pay a participation fee of £15.6bn to the Treasury in capital, more details of which are set out in the term sheet accompanying the Lloyds press release issued today. The agreement will mean that in the event of a loss, Lloyds will bear a first loss amount after existing impairments of up to £25bn. In return Lloyds will make additional lending commitments totalling £3bn of mortgage lending and £11bn of business lending over the next 12 months. A similar lending commitment has been made in respect of the subsequent 12 months but this will be reviewed to ensure it reflects economic circumstances at that time.

In addition to the requirements on remuneration imposed as part of the recapitalisation last October, Lloyds has agreed to review its existing remuneration policy and implement a policy consistent with the detailed principles set out in the Financial Services Authority’s (FSA) Code of Practice on Remuneration Policies. The Government, in consultation with UK Financial Investments (UKFI), has also today agreed that on implementation of the Asset Protection Scheme for Lloyds it will replace the Treasury’s £4 billion of preference shares in Lloyds with new ordinary shares, with the aim of supporting stability in the financial system; ensuring continued protection for ordinary savers, depositors, businesses and borrowers; and safeguarding the interests of the taxpayer.

The new ordinary shares will be issued at a price of 38.4 pence per share. The preference shares will be replaced at 101 per cent of their issue price, together with accrued dividend. Existing shareholders will be given the opportunity to purchase the ordinary shares pro-rata to their existing shareholdings. The Treasury will take up its pro-rata share of the open offer and so maintain its minimum voting share at 43.5 per cent. The Treasury will also subscribe for any additional shares not taken up by existing shareholders.

This action will make available additional core tier 1 capital to the bank to strengthen its resources, enable it to absorb expected losses; and ensure the bank is able to meet its additional lending commitments.

If Lloyds shareholders do not purchase any of the new ordinary shares, the Government’s holding of ordinary shares in Lloyds will increase to 65 per cent as a result of the replacement of the preference shares. This, together with the shares issued in relation to the participation fee, will provide the opportunity for taxpayers to share in the long-term recovery of the bank.

However Lloyds will continue to be owned by private sector investors as well as by the Government. As the Government has made clear, private ownership and financing of British banks provides important commercial incentives. The Asset Protection Scheme helps to maintain these incentives and ensure that there will be an active market into which, over time, investments made by the Government can be sold, so that the Government can exit as soon as possible.

Today’s announcement follows an agreement in principle with the Royal Bank of Scotland announced on 26 February.

The Government will accept applications to the scheme from other eligible institutions until 31st March. A key principle for engaging in discussions with the Government about the scheme is agreement to full and timely disclosure of all information across an institution’s balance sheet that the Treasury requires.

Changes to the Financial Services Authority Board

The appointment of Hugh Stevenson as the chairman of the FSA’s committee of non-executive directors (NEDCo) was announced today.


The Financial Services Secretary, Lord Myners said:


“I am very pleased to announce Hugh Stevenson’s appointment as chairman of the committee of non-executive directors. He brings a wealth of experience to the role and as a non-executive director at the FSA since 2004 will provide valuable continuity to the position.”


Lord Turner, chairman of the FSA, said:


"I am delighted that Hugh Stevenson will be appointed as chairman of the committee of non-executive directors. Hugh has been a valuable member of the Board and will bring an extensive understanding of the FSA and our work to this new role."


Hugh Stevenson will step down from the role when he retires from the Board in May 2010. The Treasury and the FSA also announced today that the Board of the FSA will be strengthened through the appointment of two new non-executive directors. The process to recruit them will commence shortly.

Bradford & Bingley plc Compensation Scheme: applications invited for appointment as independent valuer

The Treasury is inviting applications for the position of independent valuer to assess any compensation that may be payable to former holders of the shares in Bradford & Bingley plc that were transferred to the Treasury in September last year (and others affected by the transfer).

Further details on how to apply can be found at www.hm-treasury.gov.uk/valuer

The closing date for applications is 07 April 2009. Shortlisted applicants will be invited to present to a selection panel in May 2009.

Notes for Editors

1. The Treasury is appointing an independent valuer, through a competitive process, to assess any compensation that may be payable to those affected by the transfer of Bradford & Bingley plc to the Treasury in September 2008 (specified in Part 2 of the Bradford & Bingley plc Compensation Scheme Order 2008 (S.I. 2008/3249)).
2. A detailed brief for potential applicants is available at www.hm-treasury.gov.uk/valuer
3. The appointment will be made by HM Treasury Ministers on the recommendation of a panel comprising Michael Izza (Chief Executive of the Institute of Chartered Accountants of England and Wales), Anthony Fry (Senior Managing Director, Evercore Partnership), the Hon Christopher Gardner QC and Louise Tulett (Director of Finance, Procurement and Operations, HM Treasury). Mr Izza will chair the panel. This is the same panel that recommended the appointment of the independent valuer for the purposes of the Northern Rock plc Compensation Scheme.
4. A list of people who held shares immediately prior to the transfer is being maintained. They can update their contact details by following the instructions on: www.bbg.co.uk/bbg/ir/shareservices/shareholding .

Following the appointment process, the valuer is expected to set out the basis on which he or she is going to conduct the valuation exercise and rules of procedure in relation to the assessment. No further action is required at this stage by those who held Bradford & Bingley shares at the time of the transfer.