BEWARE! THE BANKS ARE OUT TO GET YOU!

[Stanley]

I'm going to have to do some reading of the small print today. Pearl Assurance Limited are combining with Phoenix Life and forming a new company, Phoenix Life Assurance. I need to reassure myself that this doesn't mean any change to my annuity. Bummer! I have better things to do!

[Tardis]

So it was a dodge to avoid the regulator

Lloyds is having to stump up the £1 billion in surety for the co-op to take over the branches.

It stinks

[cloghopper]

Just been watching the 2 episodes of 'Bank on Dave' that I downloaded from UKNova. A very interesting chap, with some good ideas about banking. Even more interesting was the fact that his business is in Burnley. I've only been back there a total of maybe 4/5 times in the last 50 years; and I was quite upset to see just how depressed an area it has become. I was put of visiting several years ago, when I saw to what extent the countryside that had been the farm where I grew up had been urbanised - unrecognisable!
cheers,
cloggy

[Wendyf]

I've enjoyed watching it too Cloggy, he is quite a character! He may be from Burnley but Fishwick's minibus & van business is in Colne, though that isn't mentioned in the programme. It would be nice if he makes a success of his banking system. I just checked and there is a website at Burnley Savings & Loans.

[Tripps]

This lad is certainly 'bouncing weight' but why lend him money ? I can get 3.5% from the Coop for i year deposits, or 4% for 3 years. with full FSA protection. Why take an enormous extra risk for very little extra reward? Stay well clear would be my view.

[cloghopper]

Yes, but are the traditional banks any sounder? What wasn't mentioned was what interest was being charged on the loans. Whatever, I was always brought up 'neither a borrower nor a lender be'.
cheers,
cloggy

[Stanley]

Exactly the question Jon Snow asked in Dispatches last night. "Can you trust your bank". Amazingly 41% of people surveyed said yes! All I can say is that they must be asleep. Jon put the question to Lord Myners and other elevated persons and none of them said yes, they gave qualified answers like "I trust them to do what I want them to do". My attitude is that I only allow them to do bog standard things with my money like hold it, receive deposits, pay out on debits and administer my direct debits. Lord Myners made it quite clear that he regards the shift of Big Bang which allowed the banks to operate casino banking was the trigger for the transformation from service providers for clients to sales organisations for 'other services'. There was also a very clear explanation of the importance of LIBOR and the ongoing investigations. Hester of RBS said that he didn't know what the impact on them would be beyond the fact that it was going to be nasty and significant. Both agreed that the bank's reputations were in tatters.

[Stanley]

Have a look at these two links: LINK, LINK.
Rats and sinking ships comes to mind. How did our banking system sink this low? Greed and incompetence at all levels of governance including the government.

[Whyperion]

At one time Banks had ways of avoiding corporation tax by the means of structuring loans out and the ways repayments fell due , particulary for asset financing for trading (manufacturing ) companies. The treasury noticed this some time ago ( I think under a previous tory chancellor ) , and those ways of delaying if not eliminating tax due were removed. I think this had an effect of Banks looking for more short term profits and financing for take overs rather than re-building underlying company assets.

[Tardis]

That was why so many companies could form themselves as a subsidiary of an offshore agent.

The home company would then 'lend' the money to the shell, so that this 'loan' would have to be repaid first before any tax became due on profits, thereby ensuring profits could be offshored and largely exempt of taxation in the operating country.

You are only allowed to claim tax relief on 'interest' not 'capital' so many companies never intended to repay capital and structured themselves accordingly.

[Whyperion]

I thought tax was based on where the effective control and decision making occured - OK we all fly to Jersey for the board meeting ? and where the income arose. Cannot recall if interest payments to overseas companies were restricted with some kind of witholding tax on the payment made or a market rate rather than any contract rate was used.

[Stanley]

See this LINK for news of the latest investigation into 'commissions' (bribes) paid by Barclays to get the loan which meant they escaped having to be bailed out by the government during the credit crunch of 2008. Better still, read all about it, LIBOR and the non-executive directors in Private Eye this week. (In the City)

[Whyperion]

There is always a large service charge to be paid to get (cheap fixed rate mortgage loan ) , often this is set at about the same amount you might save on having a variable rate loan for the first two years. Are the BoE just miffed that they did not get the loan application premium ?

[Tardis]

yes, the HO is off shored so all decisions are made outside UK tax durisdiction, the money is then 'lent' across the international boundary and the UK company is able to claim UK tax relief on the interest payable on the loan, but also the loan itself goes into the P&L to reduce the profit that accrues tax.

Once all those bits are taken out the 'profit' that is left within the UK tax region is liable for UK tax

[Stanley]

These weren't 'loan application premiums', they were straight bribes on an enormous scale.

[Stanley]

It's becoming clearer what happened on the NY stock exchange on Wednesday. Knight Capital were upgrading their computers and someone cocked-up. The machines started making millions of high frequency trades which led to the exchange stopping trading in some shares. Knight lost over $440million and at one point their shares fell by 75%. There has been much criticism of high frequency and automatic positional trading and this fiasco might strengthen the case. Who is in charge, the bankers or the algorithms?

[Tardis]

#irony

rejoice, for the massive losses at our nationalised bank RBS

[Stanley]

I see that even some Tories are calling for RBS to be fully owned by us. It was always the sensible thing to do because by doing that the bank could be re-structured with separation of casino and main street banking and I suspect the flood of customers transferring in would have been a real incentive for the other banks to change. As it is it's guerilla warfare in the lobbies.

[Tardis]

I believe that RBS has sold off the 'lucrative' profit making casino bit of the bank.

The Uk taxpayer is now left with the failed bit and a bit more, with returns of about .5% on customer deposits after costs

There is no way the Tories will nationalise RBS fully, because of the headlines when someone gets turned down for a loan, and the papers ask "what the chancellor will do about it?". Even Darling recognised that separation was essential.

It is just a shame that the whole ediface was not allowed to go bust, and a liquidator appointed to sell off what actually was profitable. Hence why Barclays picked up their little gem from the Lehman Bros fire sale. The debt would have been quantified in 2008

[Stanley]

UK Standard and Chartered Bank is in trouble with the US regulators who have accused them of laundering $250billion of Iranian funds to evade US sanctions on the regime. They are kicking and screaming of course but on previous experience the US regulators don't move until they have the evidence. S&C shares down 7 1/2% on early trading in Hong Kong.

[Tardis]

I find it somewhat disturbing that the US 'commands' control over a reserve currency that is used around the world. It can not control world trade, because that is not a free market and the whole ediface has serious overtones of massive colonialism

The only transaction that was done in the US was a simple currency conversion. The rest of the transaction was done in elsewhere once the currency was available for the deal. The majority also seems to be the EU buying oil from that region

What happened to that money once it was paid over?

[Tizer]

If you've heard the type of email being sent between Standard Chartered staff, it doesn't come as such a surprise they're in a pickle. Blatant disregard for regulations, the attitude that you're a `loser' if you follow regulations. If the US find SC helping Iran buy weapons and can put a stop to it then good luck to them, they're doing us all a favour.

Seeing Stanley's letter of complaint to the Co-op strikes a chord - The Times reports Co-op being in trouble with its bank customers for having replaced their free 0845 customer service phone line with a pay-per-minute 0847 line. It's 15p for the first minute then 5p each further minute. The Co-op pockets 4p of that 5p and a leaked email shows Co-op estimating how many millions of pounds extra it will make out of the change. The Co-op also gets some flak for showing `free legal advice' as one of the perks of taking up its paid-for bank account when this is available to anyone calling the Co-op helpline. Another problem - the Co-op in Northern Ireland was criticised by the government in June for showing a documentary film attacking `fracking' for shale gas.

[Tardis]

Yes, I understand the BoE, and the Treasury under Brown actually asked the banks why they told the US anything at all, since whatever the banks did with the money was absolutely nothing to do with the US, because it was a separate transaction to the one enabling the currency purchase.

You do have to wonder at that kind of mind set, but even more alarmed at the sinister overtones

[Stanley]

Tiz, I've seen some of the emails and you're right, they live in a different world divorced from reality.
Isn't it funny how the banks keep telling us that it's a global economy and what happens in the rest of the world influences us whether we like it or not. 'World cream Price' governs farm gate prices in UK: World oil price governs the price of domestic energy etc. But when it comes to their transactions global considerations don't exist, just the size of the bonus.

[Tardis]

Yes, and these bankers work within the frameworks, both regulatory and fiduciary that are set by statute by the government.

The current issues are simply ones of recovery from inaction about 10 years ago when some bright spark in the treasury decided to exclude asset prices from their calculations, thus rampant asset price inflation to the stage where people couldn't afford a house

That was then encapsulated by the failure to allow proper depreciation of that asset bubble, because it would have probably brought down every financial institution the world over. Every pension and benefit would have gone, and a lot of people would have become very hungry