What did Rishi Sunak do during 2008 financial crash? Labour says PM has questions to answer over bank collapse

Rishi Sunak has questions to answer over the collapse of a bank during the 2008 financial crash, Labour has said.

This is an attack that was first launched by Keir Starmer in January at PMQs, and is expected to be deployed at the ITV leaders’ debate tonight. The Labour leader told the Commons: “In 2008 I was the director of public prosecutions putting terrorists and murderers in jail. He was making millions betting the misery of working people during the financial crisis.”

This was related to a story in the Times in February 2020, about Sunak’s work at the hedge fund TCI. The newspaper reported it “launched an activist campaign against the Dutch bank ABN Amro in 2007, resulting in its sale to the Royal Bank of Scotland”, the British bank at the centre of the 2008 crash. Sunak and other partners made a reported £100 million.

Now Labour has released a video called “The Big Short”, which mocks up a scene from the movie which told the story of the financial crisis. Comedian Jon Richardson replaced Margot Robbie in the bath, and claimed that the ABN purchase was called “the worst deal in British corporate history”.

The Conservatives have said that the “video is a deeply sinister and misleading piece of Labour Party propaganda that reveals their anti-business colours”. So what happened? Here’s everything you need to know.

What did Rishi Sunak do during the financial crisis?

Before Rishi Sunak got into politics he worked for a hedge fund called TCI, which had a reputation for aggressive shareholder activism. TCI would take over small stakes of companies, and then get shareholders to push for changes in management decisions.

It did this in the case of Dutch bank ABN Amro in 2007. Both the Times and the Guardian have reported that Sunak was part of a small team at TCI, who launched an activist takeover of ABN Amro. They pushed for the bank to be sold to Royal Bank of Scotland for £50 billion, which was described as “an extremely risky deal” by the Financial Services Authority.

ABN Amro held a lot of sub-prime mortgages, which are leant at high interest to borrowers who have credit risks. The amount of sub-prime mortgages held in the US and UK led to the financial crash in 2008, as tens of thousands of people defaulted.

This led to RBS being bailed out by the taxpayer for £45 billion, and the FSA said “the acquisition undoubtedly contributed significantly to RBS’s vulnerability”. In 2009, Sunak’s boss at TCI Chris Hohn told a sub-committee of MPs that the hedge fund had also bet on banks collapsing, which is known as shorting, but claimed it was "relatively minor".

The Prime Minister became a multi-millionaire from his time as a partner at TCI. The Times reported that the £93.2 million profits from the bank sale were shared amongst 19 partners, including Sunak. There is no suggestion that TCI or Sunak broke the rules with the sale of ABN Amro.

What has Labour said?

One day ago, Labour released a video called the Big Short, which was likely in anticipation of the first TV debate tonight (4 June). A narrator says: “Do you know what Rishi Sunak did before he got into politics? Well you’re not supposed to. He would love you to forget about how he made his millions before he became an MP.”

On the campaign trail, Starmer told reporters: “It is relevant in this election for the electorate, for the voters to know what did the two candidates for Prime Minister do before they came into politics. I was working for the Crown Prosecution Service, trying to protect those who live in the UK and Northern Ireland.

He said: “Rishi Sunak was making money betting against the country in the financial crisis, I think that’s for him to answer.”

Labour frontbencher Darren Jones has now written to the PM, saying “you have not yet fully answered questions about your actions around the 2008 banking crisis”. Jones claimed the Prime Minister “profited from those dealings, walked away with millions and moved to California while the British people suffered the fall out of the crash”. He included 10 questions, which he says Sunak has to answer.

What have the Conservatives said?

A Conservative spokesperson told NationalWorld: “This is not correct. This video is a deeply sinister and misleading piece of Labour Party propaganda that reveals their anti-business colours.

“It exposes the risk that Labour would end up just imposing punitive tax rises on business that will damage our economy, making people less financially secure as they always do."

Ralph Blackburn is NationalWorld’s politics editor based in Westminster, where he gets special access to Parliament, MPs and government briefings. If you liked this article you can follow Ralph on X (Twitter) here and sign up to his free weekly newsletter Politics Uncovered, which brings you the latest analysis and gossip from Westminster every Sunday morning.