There can hardly have been a single citizen in London who was surprised by the latest financial failure at the old Battersea power station. We have become used to a succession of ever-more grandiose schemes being announced with great fanfare, wonderful vision, and no money. Quite why we like this absurd pile of old bricks is hard to say – were something similar to be proposed on site today, it would be howled down. Instead, the building is Grade 2 listed.

The nasty surprise was yet another lending disaster. The current owners had procured a valuation of  their paper dreams at a curiously-precise £498 million, assuming planning permission were to be granted. Perhaps reassured by this fantasy figure, the banks have lent a total of £325 million. Which banks? Oh dear, I was hoping you wouldn’t ask. One is the Bust Bank of Ireland, aka the National Asset Management Agency which has taken over some of the worst loans from that country’s collapsed banks.

The other is Lloyds Banking, effectively controlled by the UK taxpayer (if only we could exercise it) where long-term shareholders have lost 90% of their money. The two banks are now proposing to take control of the Battersea site. This may or may not be a sensible move, but what on earth did the bankers think they were doing in the first place? A £325 million loan, on a building site with no prospect of income and a monstrous liability in the middle? Even at the top of the boom, this was crackers. No wonder the banks are bust.

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