Archive for the Banking Category

Speak for England, Margaret!

Posted in Banking, business, Politics with tags , , , on March 12, 2015 by Tom Leatherbarrow

Public Accounts Committee chair Margaret HodgeMargaret Hodge has been accused of being rude. She was. Margaret Hodge has been accused of being bullying. Possibly. Margaret Hodge has been accused of losing her rag. Definitely, and I envy her.

In an age of carefully choreographed media appearances, this week’s grilling of HSBC bosses at the Public Accounts Committee translated into a tour-de-force performance by its chair, the Labour MP for Dagenham.

If you haven’t seen Rona Fairhead, chair of the audit committee at HSBC, squirm when asked why she hadn’t quite grasped the fact that the bank’s Swiss business might, just might, possibly, potentially, be used for tax evasion, you can watch it here.

As Simon Jenkins comments in today’s Guardian, even a child knows that Switzerland is a tax haven. Apparently this little fact had escaped Rona.

Why do I envy Margaret Hodge? Because I recently closed down two HSBC accounts. I’d had enough of the money laundering, manipulation of LIBOR, playing around in the North American Mezzanine Credit Default Swap market, bonuses – I could go on but you get the point.

I marched into my local branch in Bromsgrove intent on giving the stuffed shirt who runs the place a piece of my mind when he, surely, would  ask me why I was deserting the sinking ship?

Only he didn’t ask. He directed me to a chair and then went off to check whether I had any money in either of the accounts or whether my salary was paid into them. I know this because I got out of my chair and looked over his shoulder.

When he found out that my salary was paid into another bank, he didn’t bother asking. He just turned on his heels leaving me with a colleague to cut up my cards.

So, I never got my Margaret Hodge moment and to add insult to injury a week later I got an automatically generated postcard from Head Office which said “It’s sad to say goodbye”.

No it wasn’t and well done Margaret.

Oborne makes a stand for journalistic integrity

Posted in Banking, Media with tags , on February 18, 2015 by Tom Leatherbarrow

Peter Oborne

What do you do if you are a journalist and your editor refuses to cover a story because it has commercial implications for the paper?

In Peter Oborne’s case you resign and you have to applaud him for it. If you’ve missed it, Oborne, Chief Political Commentator for the Daily Telegraph, resigned yesterday because of his paper’s lamentable coverage of the HSBC tax evasion story.

Launching a broadside against the editors of the Telegraph, Oborne claims that the Telegraph’s pitiful coverage, which amounted to a small column at the bottom of page 2, was due to the fact that HSBC is a major advertiser.

It’s difficult not to agree with him. I noticed last week that the Telegraph had hardly touched the story despite it being front page news for the Guardian, which broke the story, and blanket coverage across the BBC, Channel 4 News and Sky. Even The Times picked it up!

I originally thought that this was political partisanship, the Telegraph being right-leaning and the story being an embarrassment to David Cameron who appointed Stephen Green, former CEO of HSBC and an ordained minister with the Church of England, who once wrote a book about ethical banking (you can’t write comedy like this), as a Trade Minister in his government.

I was wrong. According to Oborne, advertising revenue was behind the decision and on Channel 4 News last night hinted that other stories involving HSBC, presumably the laundering of drug money, a story which broke in 2012 and the bank’s involvement in the manipulation of the London Interbank Borrowed Rate, or LIBOR, the benchmark global interest rate.

These are serious allegations for the Telegraph and the paper has hit back hard calling Oborne’s accusations “astonishing” and “sinister”.

But there are two wider issues here. Firstly, in an age of plummeting circulation rates, newspapers are increasing reliant on corporate advertising spend to keep going. Inevitably that leads to compromises and it takes a strong editor to stand up to newspaper owners when it comes to money.

Which brings me to the Barclay Brothers, owners of the Telegraph. One can’t help but wonder whether the fact that the brothers are wealthy tax exiles in the offshore tax haven of Guernsey played a role in this story effectively being spiked.

Certainly it would be in their interest to sweep this little issue under the carpet as quickly as possible, both from a personal and professional point of view. What was it that Leona Hemsley, one of the world’s great tax avoiders said, “Only the little people pay taxes”?

So the banks won’t lend, is it time to nationalise?

Posted in Banking, business with tags , , , on March 5, 2013 by Tom Leatherbarrow

Bank lendingYesterday’s figures from the Bank of England about UK bank lending to business are shocking.

In the final quarter of 2012, despite a new government scheme, called the Funding for Lending Scheme which has given them £14 billion to encourage loans, our banks have actually managed to lend less than before.

In other words, the scheme had the opposite effect to what was intended and British business remains starved of investment cash.

Chief culprits are, incredibly, the state-owned banks, namely RBS and Lloyds HBOS.  Lloyds, which is 40%-owned by the taxpayer, cut back its lending by more than £3bn during the last quarter of 2012.  RBS reduced lending by £1.6bn.

Where has the money gone?  To rebuild bank balance sheets decimated over four years ago at the height of the financial crisis is the answer.

We have now had the sight of two successive Chancellors of the Exchequer (Darling and Osborne) and a Business Secretary (Cable) imploring our banks to lend to business.  All appeals fall on deaf ears.

What is the answer?  As Lord Lawson of Blaby, former Conservative Chancellor of the Exchequer, said recently in an article in the FT, the way forward would appear to be to turn RBS into a national business bank of the type that has been running in Germany for years.

Should we be worried about bankers voting with their feet and going abroad chasing their bonuses which would be lost with nationalisation?  Not according to Lord Lawson.  “These are not particularly impressive individuals,” he said of young bankers in the City.  ”They’re all of them easily replaced, particularly in today’s labour market.”

Amen to that!

This feels like a BIG moment!

Posted in Banking with tags , , , , on July 2, 2012 by Tom Leatherbarrow

Sometimes watershed moments in politics only become clear with hindsight. The implications of the defeat of Barbara Castle’s In Place of Strife legislation for example, which was designed to bring the trade unions into line at the end of the 1960s, only became clear when the unions lost all control in the 1970s. The rest is history.

Sometimes however, watershed moments are more easily discernible and I think the Barclays scandal is one of them. The ironies with this story just keep piling up on top of each other. Investment bankers, the ultimate free marketeers, were going around rigging the market. Marcus Agius, Group Chairman of Barclays and Honorary Chairman of the British Bankers Association which sets LIBOR, sat atop an organisation which was screwing over his own trade association and its members.

Where do we go from here? I’m not sure I agree with calls for another public inquiry into the banking culture in the UK. What are we going to learn that we don’t know already? That the investment banking system is corrupt?

My view is that this is a big moment for the politicians. We have had Commissions, Inquiries, Reviews, appearances before Select Committees and much finger pointing but little has actually been put onto the statute books. If I was in Cameron’s position, I would do the following:

1: Implement the Vicker’s Commission Report with a deadline of 2015 brought forward from 2019. The Government cannot afford to kick this into the long grass a moment longer.

2: Implement a UK version of the Volcker Rule which prohibits proprietary trading by the banks on their own account. The banks have to get back to serving their clients and customers not just making money for themselves.

3: Beef up the Financial Services Authority (or the Financial Conduct Authority in its new guise) with enough budget and people to launch investigations into financial malpractice. Then do the same with the Serious Fraud Office.

4: Set up another Commission or recall Vickers and ask him to look into the economic implications of a forced separation (not just a firewall) between retail and investment banking along the lines of Glass Steagall.

Finally, if I was PM, I would pull the CEOs and Chairmen of all UK-listed banks into 10 Downing Street and say the following: “We are doing this. If any one of you so much as threaten to pull your head offices out of the UK (in my opinion a hollow threat!) I will personally front a campaign to encourage the British public to close down all their current accounts, savings accounts, ISAs and other financial products and transfer them to mutuals.”

All of this will go against the PM’s instincts. His late father was a stockbroker, but even he would now surely realise that, to paraphrase Philip Augar, gentlemanly capitalism has died a death. Now is the time for action.

If Cameron wants a Thatcher Moment he should go after the bankers!

Posted in Banking, business with tags , , , on June 28, 2012 by Tom Leatherbarrow

A few months ago the Government saw great opportunity in the proposed tanker driver strike.  The word from Tory Central Office (we know this because it was all over the newspapers) was that the Government saw the dispute as a potential ‘Thatcher Moment’ when the Government rallied the general public around a foe that threatened the economic prosperity of the country and defeated it, just as the Lady had with the miners.  Francis Maude was duly sent out with the advice that we should all stock up on petrol by filling jerry cans, just as the Thatcher Government had stockpiled coal.  We all know how it ended.

My feeling at the time was that the Government was fighting an old battle.  Much has changed since the long summer days of 1984.  The Public & Commercial Services Union went on strike over outsourcing of jobs on Monday, did you notice?  I suspect not because three separate tranches of legislation, the Prior Act, the Tebbit Act and the Trades Union Act of 1984 have brought the unions into line, democratised them and left them needing to listen to their members before the shout goes up “everybody out.”  If they step out of line the penalties can be ferocious, as the miners found out.

So where should the Government look if it wants a ‘Thatcher Moment’?  News comes this morning of another powerful pressure group who threaten the economic prosperity of the country. In fact this pressure group has already been bailed out once by the public to the tune of hundreds of billions.

One suspects that Barclays £290 million fine levied by both the Financial Services Authority in London and the regulators in the United States for manipulation of interest rates is just the tip of the iceberg. If RBS, HSBC etal get sucked into this then the entire integrity of UK banking and LIBOR (London Interbank Offered Rate), which is used to fix mortgages amongst other financial instruments across the globe, will be called into question.

I could go over, once again, all the arguments for dealing with the bankers, including the ‘too big to fail’ argument, bonuses, lending to small businesses, the rebuilding of balance sheets with QE money, but why bother?  All you need to do is Google any of Mervyn King’s, the Governor of the Bank of England’s comments over the last few years to see how worried he still is.

I have no doubt that the bankers will want to position this as a victimless crime, but somebody, somewhere is always holding the dumb money.  If it is found that it is the general public, among others, who have been screwed over once again this story has the capacity to make the leap from the business pages to the front pages.

If Cameron wants a ‘Thatcher Moment’ which cuts through to Joe Public or Worcester Woman, this morning it is staring him right in the face!

Is the UK really anti-business?

Posted in Banking, business with tags , , , , on February 6, 2012 by Tom Leatherbarrow

The backlash against the backlash has truly begun. Fred, formerly Sir Fred, mustn’t be able to believe his luck as the great and good pile in to tell us all that it is terribly unfair. Even Alistair Darling who savaged him in his memoirs has come out for Sir Fred!

Most worrying though is the concern of a number of industry leaders who have voiced the opinion that the ‘stripping’ of Fred (apologies for that little mental image) could be perceived as anti-business. I think there are a number of points to make on this one.

Firstly, this story and the anti-business claims need to be seen in their party political context. The Government was bounced into this following Stephen Hester’s bonus fiasco. It needed a sacrificial lamb to give the voters some raw meat and try and claw back the initiative from Ed Miliband who is gaining some traction with the ‘fairness’ line of attack. Fred was the lamb and the anti-business claims are a natural follow-on to try and discredit the Opposition’s motives and convince voters that Labour is vacating the centre ground of politics.

Secondly, the City of London is not UK business. It is a part of UK business (admittedly quite a large part) but there are other parts of the economy beyond financial services. The national media’s almost exclusive obsession with the City and publicly quoted companies obscures the fact that there is business beyond the Square Mile.

Finally, the most vociferous voices I have heard on the subject of bank lending and bonuses have come from business, particularly SMEs who continue to struggle with raising bank finance.

So despite what you may read, the answer to the question is ‘no’ the UK is not anti-business, but if the great and the good continue with this line of attack it could become a self-fulfilling prophecy!

Coalition splits: fact or media strategy?

Posted in Banking, Politics, PR with tags , , , , , , , on January 30, 2012 by Tom Leatherbarrow

I listened to Shadow Chief Secretary to the Treasury, Rachel Reeves, speak at a lunchtime meeting at KPMG in Birmingham on Friday on the state of the British economy (she thinks George, as you would expect, needs a Plan B).

Anyway, amidst some interesting perspectives on the economy and the UK’s relationships with the rest of Europe, she made a very interesting point about the current travails of the Labour Party. “It is” she said “very difficult to get your case heard when all the media talks about is potential splits in the Coalition.”

This got me thinking, because there appears, at the moment, to be very little downside for the Coalition when a split story appears. Firstly, split stories highlight the separate identity of the Liberal Democrats. What’s more these stories play into the hands of the Tory leadership who are able to say to their more radical parliamentary colleagues “look, we’d like to be more radical but the LibDems won’t let us!”

Furthermore, the Westminster lobby loves a good story about rows and tantrum throwing, much more than a story about policy (yawn!). Finally, and most importantly, from a Coalition point of view, talk of potential splits drowns out what the Opposition has to say on any given issue. Why go looking for a contrarian view when a good row is served up to you on a plate!

So, I ask the question, are these splits factual or are they part of an overall media strategy? I’m beginning to err on the side of the latter. Last week the Deputy Prime Minister basked in good headlines for his championing of the abolition of the £10,000 tax band, which provoked much ‘analysis’ from Westminster commentators suggesting that the Chancellor would not be best pleased. By Friday, it turned out that the Treasury had approved the Deputy Prime Minister’s speech in advance.

I’ll let you decide for yourself!

PS: a quick take on Stephen Hester’s bonus. The big political issue here is not whether Stephen deserves it or whether he feels sufficiently incentivised by his £1.2 million base salary. No, the big issue is that the Prime Minister talked of ‘moral markets’ and giving power back to shareholders over remuneration whilst allowing Stephen to pocket a £963,000 bonus whilst in charge of a nationalised bank.  That is a credibility gap!