A small, fast growing bank with inexperienced management plagued by loan losses and fraud charges was rescued in 1984 by the Bank of England. Its status was that of an authorised bank and assumed to be competent not requiring close supervision by the Bank of England.
Johnson Matthey traces its origins to 1817, when Percival Norton Johnson, having trained in his father’s business of refining precious metals in particular gold, set up business as a gold assayer (analyst) in London. In 1851 a George Matthey joined the business and its name was changed to Johnson & Matthey. The following year the firm was appointed official assayer and refiner to the Bank of England.
In the 1960s Johnson Matthey formed a subsidiary in London, Johnson Matthey Bankers (JMB), which took its seat in the London Gold Fixing (the setting of the price of gold). In the early 1980s the bank expanded its activities outside the bullion business and started making high-risk loans. Bank assets more than doubled between 1980 and 1984, and loans became concentrated to a few borrowers. The quality of some of these loans turned out to be worse than expected and the size of the loans grew to exceed the level of the bank's capital.
Because JMB was one of five members of the London Gold Fixing, the Bank of England officials were worried that if it became insolvent confidence in the other bullion banks would be undermined, and panic could spread to the rest of the British banking system. To prevent a wider banking crisis and despite being burdened with losses, bad debts and alleged fraud the Bank of England organised a rescue package on the evening of 30 September 1984, purchasing JMB for £1. Critics of the rescue argued that the £100 million, or about $146 million, put into Johnson Matthey by the Bank of England was a misuse of public money and bailing out bankers. The Bank of England's reply to the criticism was that the rescue was necessary to maintain the stability of the British banking system
The Westpac Banking Corporation, Australia's largest bank, bought 90 percent of Johnson Matthey's assets, or about $1.3 billion worth, including its gold bullion, foreign-exchange and treasury operations. According to the bank of England the sale price was about $26 million more than the net value of the operations being taken over. The total value of the deal was not disclosed. However, the Bank of England kept the non-performing loans in the Johnson Matthey’s bad-debt portfolio the size of which was also not disclosed.
Acknowledgement:
https://www.wikiwand.com/en/Johnson_Matthey
http://banmarchive.org.uk/collections/mt/pdf/85_09_02d.pdf
https://www.nytimes.com/1986/04/11/business/rescued-bank-sold-by-britain.html
https://www.theyworkforyou.com/debates/?id=1985-07-17a.320.0