Archive for August, 2009

What next for the banks?

Posted in Banking on August 25, 2009 by Tom Leatherbarrow

The positive financial news from the banking sector which has come out over the last few weeks (Barclays 8% rise in first half profits, Goldman Sachs making record amounts of dosh) certainly seems to suggest that the sector is beginning to get back on its feet. It is certainly going to take a little longer for the worst cases to record performances like that, but it is clear that we can now begin to focus on the medium to long term futures of our failed banks rather than worrying about whether they are going to announce another £20 billion or so in asset writedowns.

In fact, my back of a fag packet calculations would suggest that, at current market prices, the Government is set to make a tidy profit on its shareholdings in Lloyds (43%) and RBS (98%). The question now is: how and when does the Government sell its shareholdings? The answers are ‘very carefully’ and ‘not yet’. Certainly pumping that amount of stock into the market in one go is out of the question so we are probably going to see a drip, drip of placings with institutional investors in the secondary market over the next 3-5 years.

You can’t help but wonder though whether a more equitable arrangement would be for those that saved the banks to truly benefit from the upside, namely you and me. What about a return to the privatisations of the mid-80s and an invitation for us all to fill our boots like we did with the British Telecom and British Gas? We could even have a “Don’t tell Sid” TV advertising campaign updated for the new millennium.

It would certainly make for a very populist policy for any political party to take into the next election campaign and would seem to sit very well with the Conservative Party’s publicly expressed aim of breaking the link between retail and investment banking.

Oh and there’s another very good reason to go truly public and have oiks like me at their AGMs – the banks would hate it!

Rupert Changes His Mind

Posted in Media on August 10, 2009 by Tom Leatherbarrow

A $3.4bn loss is enough to make anyone think again and that is exactly what Rupert Murdoch is in the process of doing. After once declaring that the subscription model for online news does not work, last week he declared himself confident that his company could produce “significant revenues from the sale of digital delivery of newspaper content” and that “we intend to charge for all our news websites.”

Radical thinking or panicked knee jerk reaction? Only time will tell, but we have been down this path before with the New York Times and they were forced to pull back more than two two years ago (although the Paper of Record is reportedly looking at the subscription model in another format again).

Those, like me, who remain fascinated by the future shape of journalism and the print media in the digital age might find some enlightenment in this week’s Time Magazine which was delivered to me via snail mail on Saturday morning (I remain a luddite at heart). It contains an excellent article by James Poniewozik which can be found online HERE.

Definitely worth a read.