§ Mr. Skinnerasked the Chancellor of the Exchequer (1) whether he will make a statement on the recent Johnson Matthey gold bullion dealers collapse; and what arrangements the Bank of England has made to rescue it;
(2) why he authorised the rescue of Johnson Matthey.
§ Mr. LawsonI understand from the governor of the Bank of England that it became evident over the period immediately preceding the bank's acquisition of Johnson Matthey Bankers on 1 October 1984 that JMB was experiencing very serious problems with the commercial lending side of its business. As the failure of JMB would have caused severe problems for the other members of the London gold market, the bank organised the rescue package which was announced on 1 October.
The main features of this package were that the parent company, Johnson Matthey plc, injected an additional £50 million capital into JMB; the Bank of England acquired JMB for the nominal sum of £1; a number of City institutions are providing indemnities for the event that JMB's losses may exceed the capital and reserves now available to JMB, with the Bank of England itself providing a small contribution to that indemnity; and a consortium of banks agreed to supply a loan facility of £250 million to support Johnson Matthey plc should that prove necessary.
I understand that discussions involving some shareholders in Johnson Matthey plc as to the means by which further capital may be injected into that company are not yet concluded. Any proposals affecting the share capital of that company would have to be approved by shareholders before they could be implemented.
The Bank of England did not require my authority in order to carry out these operations.
§ Mr. Skinnerasked the Chancellor of the Exchequer if he is satisfied that all investors of Johnson Matthey were invited to the crisis meeting on 30 September at which the governor of the Bank of England was present.
§ Mr. LawsonOn 30 September the sole shareholder in Johnson Matthey Bankers was the then parent company, Johnson Matthey plc. Johnson Matthey plc was represented at the meeting which I believe the hon. Member has in mind. It was neither necessary nor practical for all shareholders in Johnson Matthey plc to be invited to that meeting.