AA - desperation from the owners

Having failed to float the company on the stock market, Acromas the private equity joint venture (funded by debt of course) has decided to rake in the cash to help solve its GBP6bn debt problem.

As the very wise, Ian Griffiths pointed out, in a recent Guardian report, Acromas had negative net assets and pre-tax losses of GBP300m in FYE January 2009, but the auditors still signed it off as a going concern. The investment bankers behind the flotation presumably took a dimmer view of the situation or had seen preliminary figures for FYE January 2010.

As for raking in cash, I don't mean that the owners of Saga and the AA are widening the services on offer, such as the AA's home repair and maintenance offering currently mooted, or Saga's attempts to woo the over-50 semi-silvers, or the insurance arm is fighting hard to gain market share, I mean that the AA is top of the moneysupermarket.com best buy savings accounts for internet only banking and the five year fixed rate bonds.

The Icelandic banks also shot to the top of the savings charts before going down, as they tried to suck in as much money as they could before the inevitable crash. So why has the AA has gone for the top spot just after its latest financial year end?

Admittedly deposits in the AA accounts are protected under the FSCS arrangement as the AA uses the Bank of Scotland as its cover. But then if you already have savings in BoS, Halifax or Birmingham Midshires, your GBP50k protection limit under one deposit taker might be quickly reached.

The Lloyds Banking Group (as the owner of BoS) must be quite happy for the AA to steal the show. Lloyds, given its market share and credit rating, does not need to raise money at these unusually high rates. While banks as a whole are still too heavily supported by purchased funds, Lloyds can easily address its need for deposits over time. One is left wondering if Lloyds is a major creditor of Acromas by any chance?

The AA must be hoping that the full-silver haired, retired Saga punters will put their money into the AA account, (they've been reining in their spending horns due to the low returns on their savings until now) and that Acromas survives. Perhaps the old folk now know that if a deposit rate is too good to be true then someone else will pick up the pieces.

As for the home maintenance plan, Centrica, the last real money owners of the AA, didn't seem to think that was synergy between car roadside rescue and British Gas bolier repairs. Perhaps they saw that cars were getting more reliable; we've certainly seen the number of AA patrolmen reduced since 2004.

Finally, as the urbane Mr Peston notes in his recent blog, the remaining 5,000 AA men are seeing their pension benefits come under pressure as the Acromas management target savings. We taxpayers and pension fund members should worry about the GBP190m deficit in the AA pension fund as we know who will pick up the tab for that when the Acromas cambelt breaks.