Ifm volume 2 17 03 2014

IFM Independent Financial Magazine Issue 02 / 17 MARCH 2014

Front cover#02

Tokyo

Contents UK Capital Markets

LIBOR and and bank rates, benchmarks that govern the world economy The uncertainty of British recovery and the UK banks ASPAC - Asia-Pacific

Fiscal Kyūdō master hits target again EMEA - Europe, Middle East, Africa

East Africa’s Oil & Gas Boom Business

6 9

The Rise of Fashion E-Commerce

4

Trader’s corner Finance In Sport

The Financial woes of The Rangers Football Club PLC, 2010-2012 (Part 1)

8

12

7

Editors View

Before we kick off our global market tour and unique insights, I thought to bring to your attention the most crucial aspect of life: Positivity. It sounds cliché but few of us think it. The ‘can do’ mindset is a powerful weapon that enables you to achieve, quite frankly anything you decide.

7am, turn the alarm off, get out of bed and tell yourself, ‘today is going to be amazing’. I’ll guarantee it will be. At this point, you probably think I’m a bit weird and have slightly lost the plot, but I do that every morning and I’ve done ok for myself. People will tell you, the key to succeed is a great memory for exams, or a ‘no fear’ attitude for presentations.

But if you notice, both of those qualities stem from a positive attitude. The great thing is, it’s in your hands. So start now.

Who knew life could be condensed to a word.

Enjoy the issue!

IMPORTANT IFM magazine publishes information and ideas which are of interest to investors and students. It does not provide advice in relation to investments or any other financial matters. Comments published in IFM magazine must not be relied upon by readers when they make their investment decisions. Investors/Students who require advice should consult a properly qualified independent adviser. IFM magazine, its members do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions.

Members of staff of IFM magazine may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it will be disclosed. In keeping with the existing practice, reporters who intend to write about any securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor agrees that the reporter can write about the interest, it should be disclosed to readers at the end of the story. Holdings by third parties including families, trusts, self-select pension funds, self select ISAs and PEPs and nominee accounts are included in such interests.

Editor Pete McCarthy

Co-Editor Alan Konopka

Designer Sarah Aoki

ASPAC - Asia-Pacific

EMEA & UK Capital Markets

Creative Director

Jeremy Kempke

Pilara Monkgogi Moshebashebi

Kristopher Connelly

EMEA Jeremy Cottingham Business

Finance in Sport

UK Capital Markets Mohieddine Kaddouri

Trader’s Corner

FINANCIAL INDICATORS 17/03/2014

Indices Price: 6,527.89 1,841.13 1,284.32 9,056.41 14,290.89 2,009.85

Change: -0.40% 0.28% -0.70% 0.43% -0.26% 0.28%

Commodities

Price:

Change:

Gold 100 oz.

Silver 5000oz.

Copper Brent Crude WTI Crude

$1,388.60 $21.4 $3.01 $108.35 $99.08

0.70% 0.00% 0.00% 0.14% 0.19%

Rate:

Change:

$ $ ¥ £

0.6011 0.7190 0.0099 1.1959

0.07% 0.06% -0.11% 0.01%

Bonds

Yields:

10Y 10Y 10Y 10Y 10Y

2.67% 2.66% 0.63% 1.55% 7.22%

FTSE 100 S&P 500 Eurofirst 300 DAX Nikkei 225 Shanghai

Currencies £ € $ €

per per per per

UK Gov US Gov Japan Bund Greece

INDEPENDENT FINANCIAL MAGAZINE VOL.2

UK Capital Markets

LIBOR and and bank rates, benchmarks that govern the world economy

By Pilara Monkgogi Moshebashebi

T

o most individuals interest rates and financial markets are works of the devil, makes their stomach turn and changes their face red, blue then purple. To a majority of people anything expressed quantitatively except their monthly income is enough to cause trauma and incurable migraines. But these key interest rates (LIBOR and bank rates) have governed economic activity for the best part of the twenty first century. All in all what is the LIBOR and bank rate and most importantly how does it affect the average person like me and anyone reading this article.

What is the LIBOR and bank rate?

Bank rate-this is perhaps the most talked of, published and regulated interest rate around the world. This is the cost of borrowing incurred by commercial banks for lending from the central bank. This securitized lending rate (collateralized borrowing) would normally set a benchmark for interests rates, therefore affecting economic prosperity.

LIBOR rate (London Interbank Offered Rate)-LIBOR is a better version of the bank rate, not because of its sophistication but application to financial markets. This is the rate at which banks can borrow from one another in the inter-money market, calculated daily by the international exchange benchmark

administration from estimates submitted by 16 international banks. Participating banks submit rates for 10 currencies and 15 length loans ranging from overnight to 12 months, reflecting their estimated cost of borrowing from the banks-credit market. Significance of this rate has come to overshadow the role played by the bank rate in financial markets.

THE QUESTION IS WHY? Why is Libor rate higher than bank rate?

Bank and Libor rates are quite similar but diverge at one key point, ‘security’.

Because central banks are willing to borrow commercial banks at lower rates they require collateral for the higher risk they are taking, in terms of 10 year federal notes and treasuries. Borrowing from other commercial banks is based on one key principle that governs fiat money, ‘trust’. Banks lend to one another based on credit worthiness. As such require higher interest rates for the risk they are willing to take. Borrowing from commercial banks removes assets from banks balance sheets and replaces them with cash while borrowing from commercial banks just expands assets in commercial banks (thought it dents the total balance sheet with liabilities). The point is banks prefer to borrow from one another at fair rates before knocking at central banks.

Why is Libor important to financial markets?

LIBOR plays the centre piece in world derivatives markets. At this point most individuals stop reading and turn their attention to something else. But do not despair; it’s actually easier than you think. Most derivatives including interest rate swaps, financial contracts and loans use the LIBOR as the benchmark interest rate. Most of these instruments are used to speculate in markets by large financial institutions. Traders in these institutions place bets on markets (example of this would be the euro dollar futures contracts). More like flipping a coin and betting on the outcome, either heads or tails. LIBOR also provides an important indication of the health of the financial system. LIBOR rates are usually high during times of low liquidity and difficult economic conditions. In addition it is an important indicator of expectation about overnight interest rates. Because derivatives play such an important role in a modern credit economy and in profitability of banks the LIBOR has evolved to a position of unequal power in financial markets. Put it this way, banks determine world finance and the LIBOR plays a critical part in their profitability. u

INDEPENDENT FINANCIAL MAGAZINE VOL.2

UK Capital Markets

uWhy is labour important to consumers?

This interest rate sets the bench mark for banks interests’ rates. That is it sets rates for interest paid on variable rate mortgages, student loans, credit card and so on. LIBOR is one of the key determinants of net interest margins (difference between the interest paid by banks on savers accounts and what they receive from borrowed funds) which determines commercial banks profitability. Key point is if banks borrow at say 2% in the inter-market they will charge borrowers more than their cost of borrowing to generate profit. High LIBOR rates are anything but good for consumers as it raises the cost of borrowing from commercial banks, however low LIBOR rates ease the burden of debt payment for consumers.

Especially those customers whose interest payments are tied to the LIBOR. LIBOR and savers Investors in Mutual and Pension funds are one group of people who were affected by LIBOR fixing scandals during and after the global recession. A decreased Libor rate means that banks can issue bonds at low LIBOR rates and take advantage of cheap borrowing.

This reduces interest payments received

by Pension funds, Mutual funds and other investors. In addition savers in commercial banks would have to accept low interest payments from their savings accounts. Increased LIBOR rates have the opposite effects.

Recent developments with the LIBOR rate Aftermath of the ‘LIBOR scandal’ involving a number of high street banks regarding their unethical market

behaviour has led to the British Bankers Association (BBA) being stripped of its LIBOR administration duties. As of 1st February LIBOR administration will be handled by ICE Benchmark Administration Ltd. This new body is thought to revive the shredded reputation of the LIBOR rate and introduce transparency into LIBOR calculation.

New clause of LIBOR administration published in the Wheatley report state that participating banks base their LIBOR submissions on actual transactional data and not estimates.

This is truly a transformational feature in LIBOR calculation and will at least in theory help the regulating body in its mission of restoring reputation to this key interest rate.

Future LIBOR and bank rates The current bank rate (22-02-1014) is at 0.5% while the British Pound Sterling LIBOR is at 0.89250% (12 months). Markets expect the bank rate to increase some time during the 2nd quarter of 2015 resulting in a subsequent increase in LIBOR rates. An increase in both the LIBOR and bank rates would reduce markets liquidity, resulting in an increased cost of borrowing. Thus any debt instrument (mortgages, interest rate swaps, etc…) with a variable interest rate would increase payments from the borrower. However implications of increasing interest rates have broader effects than consumers and financial markets.

In conclusion the Libor and bank rates are two economic factors that govern world financial markets but one seems to have an outstretched arm in its circle influence. Ironically it is this rate that the general public knows every little of.

INDEPENDENT FINANCIAL MAGAZINE VOL.2

UK Capital Markets

The uncertainty of British recovery and the UK banks.

By Alan Konopka

O

n March 18th George Osborne gave a budget speech in which he warned that British recovery, although rather optimistic is “not yet secured”. Britain’s growth is one of the fastest amongst countries in the G8. There are however signs that this recovery might not sustain any longer.

UK recovery is fueled mostly by the record low interest rates (0.5%) and inflow of cheap money into the system (QE). Effect of this process was seen in early 2008 and 2009 when sterling depreciated causing prices of the imports more expensive. This, as you might expect lead to decrease in capital expenditure by the firms and hence less investment in technology and other assets.

Together with stagnating wages and high unemployment, firms preferred to employ more workers rather than invest in “expensive” machinery. As good as it seems in terms of unemployment decreasing, it brings only a temporarily solution to the economy. Without investment in new capital there will be no economic growth.

Ultra low interest rates in Britain were caused by the banking crisis of 2008. The fact that rates still remain extremely low means that the recovery has not fully wiped out the scars left by the crisis.

Those scars are visible the most amongst British banks. There was no month that

would go without an announcement of PPI compensation provision increases, LIBOR manipulation scandal or accounting practices used by the banks to hide losses?

Does it mean that all British banks are still unwell?

Well, although there is no shiny start amongst them, some are managing a tough recovery better than others. The financial crisis left number of banks with enormous losses that thanks to various accounting treatments could be offset against future earnings as those started arriving. In addition to that QE in both US and UK sent asset prices soaring what in effect reversed some of the losses.

Although PPI provisions have been rising recently this is not the only thing that should worry investors. Since the financial crisis banks have written off around £240 billion in loans that turned bad. The average figure within the industry is 15% of all loans that had to be written off. Some of the banks managed to offset those losses with earnings but others drag this weight with them hidden somewhere in accounts.

Also valuations of the UK banks vary significantly. Multiples of price to earnings show Lloyds trading at 12.5 times of prospective earnings while HSBC has a prospective PE of 10.3.

Lloyds might have higher expectations

from the investors in regards to the future and all that might be already included in current price. Price-to-book ratios show Lloyds trading at 1.5 times of its book value. Compare it with 0.7 times of the book value for Barclays and 1.05 for HSBC. That presents slightly different picture.

Especially when adding that during a recession banks tend to trade at priceto-book ratio below 1 due to some of the losses, not capitalized yet are being priced by the market.

Does it mean that Lloyds has no losses in their accounts anymore or it is simply overpricing hype caused by the carveout process of TSB Bank and postponed dividends starting in second half of 2014?

On the other hand we have Barclays that went through many negative announcements recently that caused its share price to slide 15% over the last year.

Barclays however, unlike Lloyds or RBS pays stable dividends with yield of 2.7% rising steadily year on year.

It seems that the overall recovery does not reflect itself so well in banking industry. Therefore George Osborne, the Chancellor of the Exchequer should consider this in his budget on Wednesday.

Maybe extension of the Funding for Lending and Help to buy schemes will be main measures to fight stagnating economy. Only time will show.

INDEPENDENT FINANCIAL MAGAZINE VOL.2

EMEA - Europe, Middle East, Africa

East Africa’s Oil & Gas Boom

By Jeremy Kempke

I

n 1990 the approximate number of cars driving on Chinese roads totalled 5.5M, comparing that with the approximate 110M in 2013 only slightly lets us estimate the global growth for energy demand. As we are all aware, the most common source of energy used at the moment is crude oil. The International Energy Agency (IEA) forecasted the 2014 global oil demand to rise to 92M b/d, steadily growing at around 1.5% p.a.

So your country is facing rapidly increasing crude demand, major crude exporters are experiencing political instabilities and oil reserves are becoming uneconomic to explore, what do you do? The obvious answer is to either diversify (nuclear energy, coal, shale gas, renewables etc.) or quite frankly look for more oil. Fortunately for global demand, recent years have indicated a booming oil & gas industry located on the east coast of Africa. Exemplifying this, more than 50 wells were completed in the region during 2012, delivering nearly 50% of conventional oil & gas resources found worldwide that year. In particular Kenya, Uganda, Tanzania and Mozambique have observed major interest from global energy companies, including Total, British Gas or Tullow Oil. Companies are growing fat of their East African adventures. Tullow Oil has grown substantially after a string of promising discoveries, including Lake Albert’s 2bn barrel prospect (Uganda). Or Africa Oil, a previously little known Canadian oil company, now valued at around $2bn following an on-shore discovery at one of its Kenyan licenses (Market Cap prior to findings approx. $250m).

What does this mean for Africa? It is quite simple isn’t it – growth.

Recent found oil & gas resources alongside increasing demand should result in major export projects. One can observe that East Africa’s geographical position further supports its growth.

In particular coastal countries suggest strong growth prospects due to direct sea links with Asia. As an example, plans to build natural gas terminals in Mozambique could mean exports to begin as early as 2018.

However, is Africa’s legal system well equipped for the ongoing flood of money? One would certainly doubt that the African oil adventure would go along smoothly and without any “incentive actions”. Similarly, with respect to the legislative system, in 2011 Heritage Oil, Tullow Oil and the Ugandan government entered a three-way legal dispute over (one would have thought simple matter) $435m of capital gains tax. Are African laws thorough enough to deal with experienced oil giants? Adding to that, lacking infrastructure to support projects of such scale is one of many other concerning issues (Mozambique government is estimating total costs of $50bn towards infrastructure in order to allow efficient exports). Even with solid legislation and sufficient infrastructure in place it is dangerous for an economy to heavily rely on oil & gas exports. Crude price volatility, currency appreciation or simply the finite nature of natural resources could set up various pitfalls along the way.

Despite several constraints on the East African Oil & Gas Boom, the opportunity this provides the area with is immense and certainly creates a beneficial factor in Africa’s bright future.

INDEPENDENT FINANCIAL MAGAZINE VOL.2 ASPAC - Asia-Pacific

Fiscal Kyūdō master hits target again

By Pete McCarthy

N

o, it’s not Fed taper talk but the Bank of Japan (BoJ).

Shinzo Abe’s policies have been a revelation for the nation. Whether you take the stock market or inflation rates as examples of Japanese growth, the Xfactor is returning, confidence. So much so that the word ‘taper’ is entering the vocabulary.

Around 60-70tnJPY is purchased every month, which has resulted in dismal returns for the JGB market (60bps for the benchmark 10yr). Whether those returns are worth the risk is questionable, given the sizeable gross debt levels.

A risk- on attitude in Japan is an usual feeling, particularly when the last 20yrs has been darn right miserable, growth speaking. So what’s the effect of a taper?

For a starter, JGB yields would rise at the short or long end of the curve. One would presume all maturities would be affected as it’s not an ‘operation twist’ style move.

This risk- on mood has filtered down to the ‘no drama’ sovereign pension fund (GPIF). The shift in asset allocation for the GPIF has a few larger ramifications for the debt and equity space. The fund has reduced its bond holdings and loaded up on foreign and domestic equities.

Given the size of the fund and renewed optimism, could we see another shift from debt to equity? Granted, it won’t likely be a total capital flight out of JGBs, as we observed in the second quarter of 2013 but it’s definitely something to keep an eye on. Moreover, if the BoJ continues to receive positive data results, the offloading could be ramped as early as late 2014. A double negative for bondholders is on the horizon!

At least yields will rise for the ‘right’ reasons, as opposed to irrational behavior. But that’s scant consolation for the debt funds globally who are set to lose billions when the tighter policy emerges.

Perhaps the Nikkei is set for new heights?

Traditional thinking of the taper process is one of confidence, as the economy no longer needs financial support to

function sustainably. But the fall in bond prices will send shocks across to the ASEAN region. A single hint of a Fed taper hit emerging markets (EM) for six.

What if the 5yr JGB hits 1% from the current low of 19bps? I dread to think of the losses for the Philippine stock market and the general EM space.

One can draw similarities with the potential slowdown in the Chinese interbank market and the reduction in the price of copper, to the slowdown in the Japanese interbank market. Banks often use sovereign debt as collateral for short-term cash flow fixes. An upcoming sell- off in JGBs will reduce their value and quite possibly haircuts will be applied to many loans. Is an upcoming financial freeze on the cards?

Time will reveal the full affects of a Japanese taper.

But one thing is for sure, confidence is rising and Shinzo Abe’s third arrow has hit the spot.

INDEPENDENT FINANCIAL MAGAZINE VOL.2

Business

The Rise of Fashion E-Commerce

By Jeremy Cottingham

H

ow do fashion retailers tap top line growth? The answer is in e-commerce. The increasing popularity of online shopping has gradually put e-commerce to the forefront of the fashion industry making it an attractive approach to doing business. It is not surprising that the term e-Fashion is catching on.

Predominantly, Asos Plc can be seen heading up this trend and leading the UK in this sector. The online firm have boasted impressive growth since it established in 2000 and recorded stock returns over 100% in 2013. They now stand at a market value of £5.8bn, just 2bn below 130 year old M&S who are one of Britain’s biggest clothing retailers.

The latest company to show sign of similar growth is boohoo.com who floated this last week on the AIM exchange following a 70% rise in sales and EBITDA increasing by 188% last year.

The major advantages of online retailing appear to come from the fact that many more products can be made available to the ever growing tastes of consumers and the retailer can effectively manage for changes in fashion trends. This means lower wastage costs and the amount of discounted stock. Moreover, online retail significantly reduces the costs of holding and managing stock through retail

outlets – instead, the online retailer only requires warehouse space and efficient distribution and delivery systems. These however are coming at increasingly higher costs and online firms require extensive advertising activity – taken together these increase risks to investors.

But one of the sheer beauties of online retailing is the use of micro-sites meaning large fashion retailers have the ability to target select consumer groups. Jacamo for instance, launched in 2007, created solely to cater for the male shopper seeking quality clothes. This prime example is in fact a brand of N Brown Group plc who boast a huge portfolio of fashion brands targeting a range of customer profiles independently. With this kind of ‘power’ in the market it’s no wonder they have racked up an impressive 48% return over the past year.

The micro-sites are also a source of access to emerging markets. As we speak retailers are experimenting tapping into the India market. Recently UK-based brands Dorothy Perkins and Miss Selfridge are two of many deciding to follow this tactic through the likes of the online fashion retailer Jabong.com who will import and sell them through a micro-site. If that’s a success then this provides sublime growth potential for not only the online retailer but for your famous high street brands too.

Ultimately this trend has caused traditional fashion retailers to suffer. The physical store still plays a vital role in the general business model but times are changing, we’re entering a new era. The purely online companies are paving the way in this industry showing the massive opportunities for growth and have the potential to tap new markets.

However, the popularity of this method of retail is expanding into the mainstream industry. The likes of ASDA and Tesco have been quick to jump on this band wagon. ASDA has used its George.com online retail division to push into 24 new locations including Luxembourg and Spain. This poses several questions, how long will new online retailers experience this extensive growth? And, how should investors respond, should we look to investing now or have we missed an opportunity?

INDEPENDENT FINANCIAL MAGAZINE VOL.2

Trader’s corner

Trader’s Corner

By Mohieddine Kaddouri

T

he potent combination of the continuing crisis in the Ukraine, more speculation on the Fed tapering program and more weak data out of China has certainly created the perfect recipe for a rout in risky assets. In my opinion everyone seems to have factored in China’s apparent slowdown after the January PMI data which wiped out 2 months’ worth of gains across equity markets in the space of about 10 days.

February’s PMI figure did not inspire as much of a sell off. It seems however that the market simply doesn’t know how to price a problem like the Ukraine in.

Asian markets seem to have been hit the hardest by this conflict. The once mighty Nikkei has been spooked into diving to the 14200 level, at least 1900 points off December highs. The Eurozone and FTSE were also under pressure.

Germany’s Dax recorded the highest recorded loss since 2012 with 4% wiped off markets from its exposure to business in that region. Strangely, US indices are holding well above the last lows from last year’s sell off. The Russian market has been one of the worst, down over 27% so far this year. Mr. Putin however does not seem to be in the least deterred by this fact in his decision making. Nobody knows for sure which way the market is going right now, but everybody seems to be certain that the 2013 bulls are not as sure of themselves anymore.

In terms of strategy, I am personally hesitant to take positions on equities at the moment, long or short. Warprofiteering strategies seem to be holding up with traders sticking to common sense and fleeing European equities to seek the safe havens for now. Before everyone starts to declare that the end is nigh, it must be remembered that although the Equities have across the world have shed a worrying amount of points, economic releases for certain countries such as the UK and Germany should not account for the recent losses. Am I the only one who sees just how much value there is right now in the Dax? 4% in a week just screams oversold to me, given that data has been quite encouraging for Germany.

German Dax is still up over 51% vs.

43.5% for the S&P 500 since its June 2012 lows. However, the Dax is down 11% since the late-February compared to the 2.5% shed by the all-time record hitting S&P 500. This is to be expected however due to the former index’s exposure to the Crimea regional conflict.

The fact that the Dax has dropped below both the December 2013 and February 2014 gives me cause for some concern on the technical analysis aspect. Current formation seems to indicate a double top from December highs but a rejection of the pattern could see it power through its highs and through to the 10000 highs level. A continuation of the sell-off could target the next major supporting trend line of 8500 which could signal a downtrend.

Watch out for: Market Bulls certainly have had cause to be worried lately, and while there were no signs of panic-selling in major markets such as the US and the UK, this could be part of a top-building formation and could give ground for a longer and deeper correction. If the market is able to rally strongly from lower levels, it would allow for another test of the highs. Deescalation in the Ukraine could certainly give markets a signal to carry on powering through their previous highs.

On the commodities front, while safe havens are having the time of their life at the moment, it is important to note that Natural Gas has not been affected by this conflict. This is surprising given that the major European gas taps are controlled through that region, however it can simply be stated that commodity seasonal price patterns are in play and demand for natural gas at the moment is not high enough to warrant a panic in supply speculation. This is not to say however that any escalation won’t cause for a change in sentiment. u

INDEPENDENT FINANCIAL MAGAZINE Trader’s corner

uHeading into the week, the US will be a big focus for traders. US economic data was mixed last week. While retail sales data on Thursday was better than street estimates, initial consumer sentiment for March from the University of Michigan came in at 79.9. As well as the all-important FOMC meeting, there will be new data on manufacturing and the housing market.

On Tuesday, we get the US Consumer Price Index. Wednesday will herald the FOMC announcement and this is to be followed by Federal Reserve Chair Janet Yellen’s first conference in her position.

Traders will be looking for any clues on the pace of tapering and while not much is expected to change in strategy, it is important to examine any contrast in stance by Ben Bernanke. On Thursday, jobless claims come out and we have the latest data from the Conference Board on their Leading Economic Indicators (LEI).

The chart from last month’s release shows that both the LEI and the Coincident Economic Index (CEI) are both in up trends. It is notable that they have been good indicators of a recession in the past and at present they show no indication that we are headed for another.

In this type of climate it is always important to take more time to reevaluate your positions and exposure to the slew of events affecting the markets for the coming weeks. Have a good week and stay out of trouble, traders!

Chart of the week: GO GOLD FOR 1400?!

INDEPENDENT FINANCIAL MAGAZINE VOL.2

Finance In Sport

The Financial woes of The Rangers Football Club PLC, 2010-2012 (Part 1)

By Kristopher Connelly

A

s stated in my last paper, Rangers was billed by HMRC for £49 million worth of tax and interest. But during this same period, Rangers had also accumulated a huge amount of debt.

Other than HMRC, Rangers’ other biggest creditor at this point was Lloyds TSB. After acquiring Bank of Scotland in 2008, Lloyds began aggressively pursuing companies and individuals for money back on loans HBOS had paid out. The owner of Rangers David Murray had taken out loans from HBOS time and time again for Rangers to use as working capital; accumulating to a massive debt of over £30 million.

Lloyds TSB were seeking the money from Rangers on the loans so vigorously that Lloyds TSB even put one of their employees on to the Rangers board. The Rangers manager in 2009 Walter Smith feared that Lloyds TSB were effectively running the club.

Over the course of the relationship between Rangers and Lloyds TSB, Rangers had decreased the debt owed to them significantly by 2011. But this wasn’t good enough for Lloyds and they wanted the money back sooner rather than later.

Sick of what was happening off the field and also worried that he would be blamed for what was to eventually going to happen; David Murray announced that he was putting his shareholding up for sale. This led to one man entering the door at Rangers who at the very mention of his name the fans resent to this day.

Pressurised by Lloyds TBS to sell the shares and avoid Rangers being put into administration, in the summer of 2011 David Murray sold his shareholding in The Rangers Football Club PLC to Craig Whyte.

The deal between David Murray and Craig Whyte included promises of funds to be used to pay off the debt to Lloyds TSB and also to invest into improving the squad. Right after the deal was complete the Lloyds debt was paid off and the club finally looked to be getting back on the right track, sadly this wouldn’t be the case.

I could go into everything that happened during Whyte’s period in charge. But there is so much that this individual done during his short period; I’m going to sum it up in this paragraph. The money used to pay the Lloyd’s debt was in the form of a new debt with Ticketus in which they would be repaid from season ticket sales, Craig Whyte sold assets in the club in

which the money disappeared and it is still a mystery to this day where it actually went, lastly Craig Whyte never paid any of the tax or VAT from revenue Rangers made which added fire to an already intense relationship between HMRC and Rangers.

On the night of Valentine’s Day in 2012, Craig Whyte made the shocking announcement that The Rangers Football Club PLC was to enter administration. A night for romance with peoples other half turned into that of sorrow for Rangers fans. Some were confused as to why this had happened since Whyte announced not long before that there was no way the club would go into such a position, others (including myself) thought it was inevitable due to the activities prior to administration but still surprised when scepticism about Rangers finances became reality.

The next paper will look into the administration process and eventual liquidation of The Rangers Football Club PLC.