BEWARE! THE BANKS ARE OUT TO GET YOU!

[Stanley]

I suppose it's better than the Post Office sale where under-priced shares were snapped up by insiders and sold on for a quick profit.
See THIS for a report on the $2.5billion fine on Deutsche Bank's London trading arm for LIBOR manipulation. I wonder how this compares to the advantage they gained.....
The first consequences of Cameron's pension changes become apparent this morning. Since the policy was first mooted the value of annuities on offer has dropped 6%.... (LINK)
HSBC are expecting a rough ride at today's AGM. Shareholders are not pleased with the news on tax or the remuneration packages. I can't say that the news saddens me....

[Tripps]

"Tripps wrote: Why should the bank share sell off have a discount? That means the rest of us are subsidising it..."

Not guilty - I think Stanley said that. I agree with a discount - why else would anyone buy the shares which are already being traded, unless they were a 'bargain'?

[Stanley]

Quite right I said it.... It still sounds like a bribe to the better off to me....
So HSBC are once again threatening to leave London.... Highly doubtful that they will relinquish the advantages of trading from London regardless of where their 'HQ' is domiciled. Who cares anyway? I have never subscribed to this campaign to make London attractive to well heeled bankers and oligarchs. Take a look at the high end London property market..... Not much sign of any slackening there!

[Stanley]

I listened with interest yesterday to two experienced observers of the London banking scene discussing the HSBC veiled threat to move their HQ abroad. I'm happy to say that they share my analysis and doubt if any sensible management would want Chinese supervision in Hong Kong which seems to be the favourite choice. They also doubted whether HSBC would ever move their trading activities from London. I am quite certain that they are 'crying wolf' and this threat is becoming a bit threadbare....

[Tizer]

`Steve Hilton: 'Pay bankers the same as civil servants'' (BBC)
The bosses of large banks should be paid no more than people at the top of the civil service, David Cameron's former director of strategy has said. Steve Hilton said any companies that would require a state bailout should they "go wrong" should be considered part of the public sector. Mr Hilton said such a move would be a "powerful incentive" for reform. Top civil servants receive £100,000 to £200,000 a year compared to multi-million pound salaries for bank bosses. Mr Hilton told the BBC's business editor Kamal Ahmed that capping pay at banks who rely on the implicit backstop of state funding should they fail - which he says the largest banks do - would mean "they might decide to split themselves up or we could do that forcibly. "The goal here is to create a much more secure financial system where you don't have these giant companies that pose a threat to the whole economy." LINK

[plaques]

Just when i was getting used to the idea it was all the Labour party's fault that we had a world wide financial meltdown someone pops up and says it was the banks themselves that caused it. This can't be right, can it?

[Stanley]

P! You're being naughty again! Don't forget that some folks don't understand irony.... You have as a good a road map as anyone because like me you are reading Joseph's book 'The Great Divide', possibly the clearest and most authoritative account of how it happened. I like Hilton's idea, there is a lot of logical thinking behind his suggestion. The fly in the ointment is of course the imperfections in the political process which would be necessary to enforce any such policy. There is no evidence to suggest that politicians have any appetite for bank regulation of any sort and you and I don't need to rehearse the reasons yet again.
Of course one of the reasons why I like Stiglitz so much is that he is confirming everything I have ever said about the way our economy is run. Dangerous stuff! Could it be that by a different route I stumbled on the truth all those years ago when I puzzled about why the economic cake was sliced the way it is? Thanks for alerting me to the new book. It's brilliant and fascinating. The war of private interest against public good and guess who's winning at the moment......

[Tizer]

One of the reasons why so many large private businesses now get away with giving mega-scale salaries and bonuses to themselves and their other executives is that the bulk of the shares are held by pension funds and the like which are themselves run by people with mega-scale salaries and close links with the businesses. It would help if we shifted shareholding back to private individuals. Perhaps have a rule stating that X% or more of the shareholding in any company must come from private shareholders? Perhaps find a way to put more shares in the hands of those ordinary folk? All this backed up by making it easier and cheaper for them to buy and sell shares and for them to express their views to the board of directors and at annual meetings.

[Stanley]

Remember the days when the big mortgage providers and many insurance companies were run on a mutual basis? The clients were the 'owners'. No leaching out of profits or mega salaries. Deregulation cured that 'market imperfection'.
You've all heard about THIS in the latest news about big banks being fined for manipulating the FOREX market. The thing that amazes me is that these groups of traders were in full flow even as the LIBOR scandal was being exposed and addressed. I heard an industry expert saying last night that there would be no slackening of these practices so long as trader's income was boosted by huge bonuses on how much they 'earned' in commissions for the firm they worked for. Makes Hilton's proposals look even more attractive..... (And yes, Stiglitz says the same thing....)
As I have said before, things will only improve when the miscreants know that if they are found out they will be bankrupted and gaoled. At the moment they know that even if found guilty they walk away with squillions and their freedom.
06:45. Just heard a comment on the radio which is absolutely true, not often you can say that.... It was that the Quaker founders of Barclay's Bank must be rotating in their graves. We forget now that most of the major banks were founded by Quakers who, by reason of their beliefs, were prohibited from entering university, the law and many other professions. However, there were no restrictions on banking so many of them entered that field and applied their religious principles of moderation, honesty and complete transparency to their new trade. They were trusted and that's why most of them succeeded. Perhaps it's time we went back to those far off days....

[Bruff]

I find it increasingly difficult to remain calm in the face of the seemingly never-ending catalogue of financial wrong doing. The whole thing is simply rank; the industry reeks to high heaven. Yet our legislature is packed to the rafters with those who swam in or around this fetid swamp. I look at the Goldman’s bloke who has just been elevated to the Lords and so the Treasury for example and quite apart from that ‘democratic’ insult I wonder, just what rancid skeletons lurk in your backyard? I simply cannot take seriously anything he, or anyone like him, could possibly say. An ‘industry’ and people wholly without merit.

Richard Broughton

[Tizer]

And Paypal is at it too...
PayPal penalised for 'deceptive' practices BBC, 20 May 2015
The online payment service PayPal has agreed to pay $25m (£16.1m) of fines and compensation in the US after being accused of deceiving its customers. A government watchdog denounced the company for adding new members to a credit-card-like scheme without making them aware of the fact. It also said PayPal had mishandled bill disputes, among other offences. The eBay-owned company has offered to settle the case, without admitting wrongdoing. A judge needs to approve the agreement for it to become legally binding. LINK

It seems that large companies now consider it OK to carry out fraud on a day to day basis and to ignore regulations and law. Another area where this is happening is the airline industry. The airline companies have been told by the regulators (EU Regulation 261/2004) that they must pay compensation to passengers whose flight has been delayed unless it is "caused by an extraordinary circumstance", such as bad weather or crew strikes. They must pay out for delays due to technical faults and yet some of them are blatantly refusing to do so when passengers seek compensation.

[Stanley]

I share both of your views, especially Richard's. Anyone who reads Private Eye knows that the upper echelons of our political system is riddled with poachers turned gamekeepers in everything from financial regulation to the Private Finance Initiative. Before anyone poo poos the PE articles remember that if untrue they would be libellous and yet PE isn't taken to court.... Go figure!
I'm reading Stiglitz at the moment and he supports our views. The problem is of course that big finance and business supports the system with political contributions. It is a rotten system and the legislators have no reason to want to alter it. This is where the Supreme Court should step in but how independent are they? In the US the Supreme Court gave the nod to unlimited contributions and perpetuated the problem.
Then there is the seemingly intractable problem of the 'revolving door'..... It is now a standard component of the retirement plan for anyone who has been in a position of power or influence. The phrase Augean Stable springs to mind..... Who is going to divert the river and clean it out?

[Stanley]

Apart from the ongoing trial of the FOREX trader, there are other consequences as well. (LINK) Is it worth it?

[Stanley]

See THIS for market opinion that the government is preparing to sell our stake in RBS. One wonders who would want to buy it and at what price as in addition to the ongoing problems with regulators another one looms up as the FBI and the Swiss Police investigate FIFA and money laundering. (LINK). Various banks have been named as conduits for the disputed 'development grants' and are being investigated also. RBS is one of them....

[Stanley]

See THIS for yet another fine on a bank, this time Lloyd's for their mishandling repayments of PPI. Partly state owned it means that either the taxpayer suffers or the customers, a sort of state welfare for the bank and it's shareholders. One of these days someone might do a bit of totting up and arrive at an estimate of how much the 'too big to fail' banks have cost us. It will be eye-watering.....

[Stanley]

As usual Martin Lewis alerted me to yet another problem in the financial world on Saturday. See THIS for evidence that the problems with the new pension rules are throwing up problems that nobody envisaged, the dreaded rule of Unintended Consequences. One of the conditions of converting what would have been an annuity funded by a pension pot is that the claimant must show that they have ;taken advice'. When the scheme was first announced the government said that they would make 'face to face' guidance freely available but when they realised the cost of this promise they soon resiled from this and instead they only give general guidance which does not qualify under the rules. The alternative is to pay a professional adviser but with a small pot this isn't economic. Then there is the case of those who don't want the advice, just the money. The consequence is that cases are arising where clients are approaching advisers not for the full advice nut the cheaper alternative of a boilerplate document (at a low price) to give them the qualification. The honest advisers are refusing but the suspicion is that less scrupulous advisers are acceding to these requests, making a quick buck and leaving the client to do what may be against their best interests. Another problem is that the government is refusing to absolve advisers from blame should the advice lead to a future loss. The net effect is that good advice is getting more expensive in the short term and bad advice potentially disastrous in the long run. As many forecast, this is becoming a mess and could be seen in the future as an enormous mistake.
How glad I am that when I converted my small pt to a pension I knew nothing , blindly took what was offered by Pearl and unwittingly made by far the better choice! There is a Providence that looks after drunken men and idiots....

[Stanley]

See THIS for a BBC report on the news that HSBC is to cut 8000 jobs in the UK as it scales back some of its activities and possibly closes branches. A far cry from the days when our High Streets were served well by fully staffed branches of the main banks. It all started when the local bank manager lost his powers to manage. I can remember a time when you went in, sat down with him (it was always a man!), and arranged your affairs on the spot. He knew you, made his assessments and acted on that information. All long gone now of course, today the best you can expect is an 'adviser' at the other end of a phone line who's main preoccupation is to sell you expensive products. At worst you are at the mercy of a computer programme....
The HSBC announcement is evidence that this retreat from High Street banking, and even, by implication, from the UK, is ongoing. This is not a loss making business, so what on earth is going on?

[Tizer]

The HSBC announcement is evidence that this retreat from High Street banking, and even, by implication, from the UK, is ongoing. This is not a loss making business, so what on earth is going on?

This is what's going on and it doesn't seem to be recognised yet by our venerable news media. Remember that HSBC is the Hong Kong and Shanghai Banking Corporation. It finds itself in a similar position to the tobacco industry - it has been selling toxic products in the UK which has finally attracted the attention of the regulators who have fined the company. HSBC therefore takes the same route as the tobacco barons, namely concentrate on selling your toxic products in those parts of the world where the regulations are weaker or non-existent.

[Bruff]

They are being pressured to improve the returns by their shareholders. These aren’t too clever as HSBC seemed keen on selling toxic products as Tizer mentions. They also seemed to be the go-to bank of choice for any self respecting Mexican drug baron keen to launder their money. And you couldn’t really blame the Mexican drug baron for seeing the bank as an ideal launderer as after all, HSBC were up to their grubby armpits in LIBOR fixing.

It’d be nice to think the HSBC would look to the top to clear out the stink, but that’s not the way things work these days.

Richard Broughton

[Tizer]

Deutsche Bank has put some of its staff in Russia on `forced leave' while an investigation is made on how they were helping people move money out of the country illegally. It comes to something when it's the Russians who are upset about criminal activity in a German bank!

[Stanley]

It all seems so clear when you two explain it but the fact remains that bog standard high street banking in a relatively wealthy jurisdiction like the UK must be a large and profitable business. It seems to me that the root problem is that the rate of return for honest old fashioned banking pales into insignificance when compared to the other activities....

[PanBiker]

I heard on the news this morning that they may revive the Midland brand, they must think that less tainted.

[Tizer]

We were loyal customers of the Midland from early days until the mid 1990s when we set up our own business and they let us down badly. That's when we shifted to Nationwide and have found them the best ever since.

[Stanley]

I don'/t think they are interested in loyalty. They've made it quite clear that the 'high street role' in UK is now seen as a minor part of their business. They are concentrating on engaging and investing in two areas, China and India. The Hong Kong and Shanghai label is OK there....



We had a Midland Bank in Newtown, lovely building. Now a bookies..... The shape of things to come.
See THIS for a report of Mark Carney's speech to the City of London banquet yesterday, He is promising much stronger action against falling ethical standards in financial institutions including raising the sentences for the miscreants. I don't buy it. From what he said the eight year sentences were already available but I don't remember any flood of prosecutions.... I don't think the bankers went away quaking in their boots.....

[Stanley]

See THIS for more confirmation that the changes to access to pension pots are having unintended consequences. There is a yawning gap between Osborne's rhetoric and the grim reality of the worst elements of the financial services taking the opportunity to rip applicants off. Many commentators warned that this would happen but were ignored. It could be a disaster for many savers.....