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Robert wrote: What does it mean that the three mega-bankers have quit?

That their pension funds are so enormous that even their most extravagant desires will never ever be unaffordable.

And they want out before the next crash! (Which must be very close indeed as otherwise the three men would not have retired would they?)

Next Mervyn King, please!!!!

This comment was removed because the moderators found it broke the house rules. Explain.

America going down the pan = the poodle will follow

"Only liquidation of the biggest banks can enable a recovery, period!! "

jim willie

Re: Mr Green of HSBC Are we really expected to believe he'll propose dismantling the gravy train/effective cartel that is retail banking? Don't hold your breath, anyone.....

Did these people actually do something?
Did they have any responsibilities?
Were they accountable?
If the proverbial hit the fan did they stand up and sort it out?

No thought not.
They wont be missed.

But no doubt others will be quick to take their places.

Perhaps they will retire and write their memoirs on the crash and Gordon Brown.

Now those books would certainly be worth buying.

Banks are simply utlities and should stick to what their good at.

The mistake of New Labour was to listen to their views on policy and regulation. Bit like asking those in jail for advice on criminal law reform.

That they are fed up with being bashed on the main Beeb Blogs by the Quebecois and his friends?

'What does it mean that the three mega-bankers have quit?'

It means the same thing as when the rats leave the ship

I think you answered your own question, Robert:
"It tells you that banks are past the moment of acutest crisis and face a new challenge - which is how to persuade the government and its banking commission that they don't need to be broken up in order to make the banking system safe."
Of course regular (mom & pop) banks need to be split off from Investment banks; I've said this many times.
Mom & pop banks don't need as much capitalization, they don't take risks, they don't gamble and they are highly unlikely to go under.
Investment banks need more cpaitalization, they take plenty of risk, they gamble, and are far more likely to go under.
There needs to be totally seperate ways of handling these banks because they operate in totally different ways - one safe, one not safe.
Customers need to know when they through the door of a bank is the bank
- mom & pop or
- investment.
If it is investment the financial institutuion must determine the level of risk that the customer can accept and it will be illegal for the bank to deviate above the customer's signed risk level. Also because the bank is investment (sometimes risky), no bail-out would ever apply. Investment banks take the risk; they do the bankruptcy.

It means...business as usual.

'Of course regular (mom & pop) banks need to be split off from Investment banks; I've said this many times.
Mom & pop banks don't need as much capitalization, they don't take risks, they don't gamble and they are highly unlikely to go under.'

This is clearly nonsense. What were Northern Rock, Bradford and Bigley, and Halifax if they weren't regular banks. Just in case you aren't sure, these weren't investment banks. They were regular (Mom and Pop) banks with disastrous funding models (ie they started to depend on the wholesale markets to support their lending because they couldn't attract enough deposits). And the Icelandic banks were the same. They didn't do any investment banking just ignored normal rules of liquidity.

And HSBC didn't go under, didn't need financial support from the government, made profits throughout the period and continued to pay dividends to its shareholders (mainly the pension funds that support people's retirement). It continued every year to pay corporation tax on its profits to the Uk government. I don't understand the diatribe against Stephen Green. Exactly what did he do wrong? Or is this just pure envy of a successful bank chairman - who, incidentally, requested the HSBC board never to pay him any bonus and according to accounts tithes a significant portion of his income to the church. Of course he is comfortably off. Is nobody allowed to be?

In the case of two of these (assuming No. 12 is well informed) under a proper statutory based governance supervision they would go straight to jail and not collect their £200 when they pass 'go'.

I don't know so much about John Varley, but Eric Daniels would have retired with a better reputation if his chairman (Sir Victor Blank) hadn't been persuaded by Gordon Brown to buy HBOS in a rush. So a very soundly run bank (Lloyds) became a basket case overnight because it acquired another of the 'Mom and Pop' banks that Bluesberry likes so much with liabilities it hadn't properly investigated or understood. I don't know how much of this Daniels was personally responsible for, but he could have saved himself some embarrassment later if he had said at the time words to the effect of 'I'm sorry Victor, we haven't completed due diligence to my satisfaction, if you press ahead I'm going'. He could then have come back as a widely respected common-sense banker and adviser to somebody or other with his reputation intact.

But I don't think it was his idea to buy HBOS. And until the disastrous Blank/Brown HBOS deal he had run a very successful and profitable bank with high levels of customer service. Now his eyes might have widened at the thought of that vast account base, and it could still be that in five years time LloydsHBOS dominates the high street - its market share really is vast. But I don't think Sir Brian Pitman would have done it and I bet in the early hours of some mornings Eric Daniels wishes he hadn't. But Lloyds too wasn't a casualty of any 'casino bank'. It was the casualty of a prime minister trying to keep the UK financial sector afloat and a bank chairman who said yes, before he knew exactly what he was saying yes to.

It means they're getting away scott-free. More than likely to rear their ugly heads somewhere else, wreck a few more lives and make a pot full of cash for themselves.

Government paid average 73.6 p per share..Lloyds now at 77p + ...taxpayers already have an on paper profit, particularly with all the escape payments they received, for some short term support.

All those that demanded their pound of flesh might soon getting rather more than they were asking for.

Another article about banks, another rash of entirely ill-informed and unhelpful comments. Neither Barclays nor HSBC needed a bailout, something Varley and Green should be praised for. Since they were both in charge of universal banks, which by and large did better than more specialised financial institutions in the crisis, it seems strange to advocate that they should be broken up.

Daniels should have gone years ago, he trashed Lloyds at the behest of Gordon Brown, and, as he admitted, with insufficient due diligence, he walks off with Millions and many hundreds of small shareholders lost 2/3rds or more of whatever they had.

Reading the previous blog on Tax led me to wonder ,

Why, if Ignorance is bliss, are Socialists so unhappy?

And the old boys shuffle carries on. Out with the old, in with the new old. Old old onto new things, government, new board. They're like football managers.

This dance is getting boring.

@ PHStenning.

I believe it has been pointed out before that these institutions would no longer exist if the government had not intervened whether it be with record low interest rates, deposit guarantees and bail-outs for the others. They were so intertwined they would have gone with them.

Oh what a tangled web we weave when we aim to decieve.

@16 wholistens
I take your point about the shares "we" own but is that the full picture?
Don't "we" also have other potential liabilities in relation to the loan books that sit on the balance sheet? All those dodgy mortgage packages based on disreputable deals in Detroit etc.
There are also the insurance deals "we" have offered Lloyds et al against their past speculative banking practices.
I'm no expert in the field - just posing the question.
I'm not convinced we are yet in profit by a long chalk.

Three bank bigwigs quit at the same time?
They must know something the rest of us don't.
The next 12 months or so will reveal all.
Pension pot reforms/taxes(for those still at work)?, and Bank reforms/taxes?

Watch this space.

@18 If capitalism is so great why are the most succesful nations the largest consumers of anti-depressants?


Ignorance must be bliss. Hopelessness is depressing.

16. At 10:39pm on 20 Sep 2010, wholistens wrote:

"Government paid average 73.6 p per share..Lloyds now at 77p + ...taxpayers already have an on paper profit, particularly with all the escape payments they received, for some short term support."

Twelve months and it finally broke through, I'm no financial whizz but what return is that as a percentage? Is it keeping up with inflation (real or imagined) figures?

What interest rate did the government borrow the money at to buy those shares? What rate are they paying to service the interest on that debt they took on? It's not looking like a pound of flesh to me. More like a carcass picked over by the vultures already.

Of course, that profit's only good for today on paper. I think there is a lot of the brown stuff still out there for the banks, why else would the rats be fleeing to the safety of the cabinet and pensions?

I'll wager we see a loss. No doubt the government will kindly announce beforehand they are selling so they can make sure to get the lowest price possible. Bit like Brown did with the nations housekeeping money, (gold).

Who is replacing this bloke? Will he be like Hester at RBS? Just another banker interested in growing the bank to boost his bonus not helping to grow the UK economy.

The real problem is of course that there is no way of preventing this. Who controls the state owned banks? Is there any recourse for taxpayers to get at them? No of course not. We're all minions and don't count.

9. At 7:39pm on 20 Sep 2010, BobRocket wrote:
'What does it mean that the three mega-bankers have quit?'

It means the same thing as when the rats leave the ship

So now we have to worry about the plague!

There is load of cack talked about the deficit. Between 1997 and 2007 the Labour administration ran budget deficits at the same size or smaller than the previous Tory administrations. History has been rewritten since the election by the coalition who assume the public have short memories and the media will help maintain the story.

Before 2007/8 there was no widespread panic from the media or economic commentators about structural deficits. The UK was within Eurozone deficit limits. The Tories weren't even particualrly banging on about public sector debt or shrinking the state and in 2005 the public were perfectly happy with the level of debt- returning Labour with a very reasonable majority.

The Banking crises came and this was an issue that Labour do have responsibility for - as do the Tories who didnt mention a peep about it before it struck. No Tory cries about better bank regulation, house price boom etc

Neither have the Coalition done anything at all to address the underlying causes of the 2008 recession since being in power. Neither will they, given their ideology and backers.

Mr Peston, the Gov'nor of the Bank of England, IFS etc all put very similar estimates on the cost of the crises at about the same level - £1 Trillion. This is your Budget deficit. Not the Labour spending on the public sector, 1997 - 2010. But the bail out costs of failed Banking institutions, 2008 -2010.

Clegg and Cameron are not proposing to tax the people who caused the deficit, the same people who can best afford to pay for fixing it (can you say "Bonuses are Back"?). This would also be the mechanims least likely to casue the double dip and 1930's/1980's style gloom and unrest we can look forward to it.

No instead, taxpayers pay for it with VAT increases, people on welfare with lower benefits including pensioners, public sector workers with job cuts, pay freezes and about a million other tortures, all of us with lower quality public servies. More deaths due to NHS cuts. Poorer education for children from cuts to schools.

Mr Dainels and oher Bank bosses, you will not be missed. You know you are failures.The Tories we expect this from too but Nick Clegg you are a disgrace and you should regret what you are doing to your dying days. Especially the dishonesty of the economic arguments you are making to the public because politically you need to keep the coalition together.

PHStenning you really need to get a grip of the facts Barclays didn't get any UK government help, they went cap in hand to the Saudi' and didn't exactly get the deal of the century. If the saudis had turned them down, they probably would have had to be bailed out by the tax payer. Personally I would be delighted if they went to the wall. Their attitude to to solid investment in business is apalling. They are another of the fast buck spiv banks that need serious regulation.

no-one is going to take an axe to the banks. Maybe they should have done but the moment when they could have done is past.

As it is, the gravy train has been put back on the rails and everyone's trying to stoke up the engine.

The question is whether with government spending (roughly half the economy) likely to fall by about 20%: consumer borrowing likely to decline: and banks reducing their exposure and/or raising their capital base, is there any prospect of us building up a head of steam?

If the idea is that the private sector is going to ride to the rescue by investing in production and then exporting - someone, soon, will have to say when and how this is going to come about. Its not enough to wish it!

You can't say that these people were not democratic. They borrowed money to handle their debts and commitments and then they borrowed more to cover that borrowing. So it was only right that they chould let people get new credit cards so that they could pay off their existing credit cards which they were uisng to pay their mortgages.

If you got away with it your were praised for handling risk well, if you didn't get away with it you were labelled incompetent. Rather a fine line for these over paid talented people, whose success or failure were in reality in the hands of a few other over paid and talented people.

Weren't we lucky to have these people around? I think Paddy Power should become a bank CEO - handles risk a lot better.

Just read this excellent discussion this morning
Slessac you make really good points regarding Northern Rock, B&B etc... incidentally, it's nice that Adam Applegarth hasn't shown up in any government cabinet position. Your points on Green & HSBC are spot on.

I think you're being a bit kind on Eric Daniels. Yes Lloyds was quite conservative and moderately well run up to 2007/2008, though this is in part a legacy to the organisation's history and not all down to Eric Daniels. The facts are however, as CEO, he had a duty to the bank and it's owners and that involved telling Sor Victor and the Brown government that there was no deal to be done without proper due diligence and a clear mandate once the mess had been sorted out. On this he failed, and thousands directly and indirectly suffered an erosion of their paper wealth (whatever that happens to mean) as a result.
Varley retires with a reputation perhaps more intact than it deserves as well. He was locked into the ego race with Sir Fred Goodwin for ABN and was showing no signs of dropping out. Due diligence was underway with all parties and Barclays would have followed up on the deal if it weren't for Sir Fred's hubris and a ridiculously inflated offer. Barclays and Varley were lucky in that there was someone out there more reckless and ambitious than they were. This did not mean that they were set fair to ride out the storm however. As is pointed out above, they did indeed go cap in hand to the Middle East and sold off a sizeable chunk of that former byword for British prudential financial management to the middle east on rather poor terms.

To answer Robert's question, however, 11 Jericoa nailed it with simplicity. What does it mean? Business as usual

9. At 7:39pm on 20 Sep 2010, BobRocket wrote:
'What does it mean that the three mega-bankers have quit?'
'It means the same thing as when the rats leave the ship'

Or perhaps because of:

Year 2008 – 2009
Gov’t debt = £617bn (excl financial sector intervention)
Gov’t debt = £707bn (incl financial sector intervention)

Year 2009 – 20010
Gov’t debt = £777bn (excl financial sector intervention)
Gov’t debt = £1004bn (incl financial sector intervention)

In all the Daniels bashing that will no doubt appear posters should reflect on what would have happened had Lloyds Bank not taken over HBOS. The consequences for the UK economy and its banking sector would have been much worse than what actually occurred as we now emerge from that crisis. Daniels did the decent thing in taking over HBOS, albeit because it will ultimately benefit Lloyds Bank and its suffering shareholders. So Robert Peston should consider the counterfactual of HBOS not being bailed out by Lloyds Bank.

What does it all mean Basil ?

It means that they know what's coming their way and I don't mean regulation by the Zombies

Well he presided over a real curate's egg. I've always found Lloyds to be an efficient and approachable bank with reasonable if not earth shattering personal accounts. Most of this is down to the branch staff who seem to me to be well trained, motivated and generally pleasant.

The trouble is, one of the candidates for Mr Daniel's job is one of Sir Fred's right hand men at RBS.

Let's persuade Lloyds to go back to being the high street bank it's got a knack for.

32 Anthoncon - is it not conceivable that those exposed to a failing HBOS could have been supported directly by the government at less cost than propping up the financial sector as a whole. They could have had any lost funds replaced to bank elsewhere and mortgages could have been supported through myriad funding solutions, public or private. HBOS could have then gone to the wall and it's Executives punished publicly for sleeping at the wheel (at best) or reckless endangerment and incompetence which is more likely. Whether or not this would involve custodial sentences I have no idea, but at least they would have been visibly admonished to a more satisfatory level.
The HBOS shareholders would all have taken the loss of course, which includes many a hard-working individual directly or indirectly through pension plans, but that's just how it is. That is capitalism. People lose out - if this is unacceptable, then the system is unacceptable. Pulbic stepping in to take on private liabilities when the masters of the universe invariably fail punishes all, except ironically those incompetents fast-tracked from retail (or other) backgrounds who part caused/ part allowed to be caused the mess.
As for Lloyds shareholders reaping the benefits ultimately - once things stabilise (which they will, albeit temporarily) the EU will wade in and force a break-up so as to allow their own stumbling institutions better chance to compete.
Capitalism... nothing like it

35 ejswede - HMG did not prop up the whole UK financial system. HSBC, Standard Chartered and Barclays had no HMG monies, only Northern Rock, RBS and Lloyds/HBOS did. HMG sought successfully to contain the damage. HBOS shareholders did take a substantial loss.

Capitalism is still the best economic system. And the EU will not wade in as you put it as they have already laid down the steps that RBD and LLoyds must take.

Your post suggests that you do not understand the global financial system. Like it or not, there is no alternative.

> Their successors - even Bob Diamond at Barclays - are less
> associated than them with a particular modus operandi. So
> arguably their departure makes it easier for ministers, in a
> psychological sense, to take the cleaver to the vast sprawling
> businesses which are their legacy.

It is positive to see these mega-losers shuffling off, one by one.
But they are taking plenty of loot with them. Their slates will not be
clean until they are also humble and impoverished, as well as retired.

Then they they can be re-admitted to decent society - they'll even
thank us in the long run!

Some in roads are being made on challenging fractional reserve banking with Douglas Carswell MP :-



And here Jim Willie reports on Chinese and Arab billionaires demanding their physical gold from the LBMA - a fractional gold market run by banks :-





Either of these could be a major game changer in starting a snow ball rolling . I dont think it will be business as usual if the above cant be contained. Also and more likely - there is so far they can go with derivatives before they basically blow themselves up again. So I think rats jumping ship is where we're at.

36. Anthoncon - HMG did indeed support the entire UK financial system. Leaving aside Brown's claims that they (implicitly him, as is his wont) 'saved the world', the guarantee given to all banks is that the HMG will step in to guarantee savings (to a level) and the BOE will always make funds necessary to repair balance sheets as lender of last resort. Whether an organisation took funds directly or not is irrelevant, facts are that most took out the insurance on offer at the time, and taxes are being used across the board now to repair balance sheets, and to cover the interest payments of such lending into the future.
HMG took a role in preserving the performance and stability of the entire market and HSBC and other equally 'prudent' banks all benefitted, much as they benefitted for years from articifial interest rate structures and are benefitting now from the discrepency between central bank lending rates and those they 'offer' (force) on the very consumers who have saved them.
On whether or not I understand global financial systems I have to hold my hands up. I don't think I do. I don't think any but a tiny majority do, and they only understand it from the perspective of the control over the system which it affords them. Whether or not there is no alternative, I sincerely hope that there is. This cannot be the apex of human economic and social interaction. It's flaws are as evident now as they ever were. That it has not been replaced is a sign that the game is rigged, not that we have achieved success, or indeed an acceptable scenario
I thank you for the debate though and long may it continue. Without it we really have no alternative

@ 32. At 08:33am on 21 Sep 2010, Anthoncon wrote:

> In all the Daniels bashing that will no doubt appear posters should
> reflect on what would have happened had Lloyds Bank not taken over HBOS.

Daniels has already had quite enough praise from sociopathic-bankers and their fan clubs, without you adding to it.

Both Lloyds and HBOS played their parts in the orgy of greed that preceded the credit crunch, and they both have a large debt to us - the taxpayers who saved their grubby little businesses from oblivion.

Like Merv says - the bankers caused this mess, so now they should shut up and take what's coming to them - the axe.

37. At 09:26am on 21 Sep 2010, Jacques Cartier wrote:
Then they they can be re-admitted to decent society - they'll even
thank us in the long run!

I am afraid Brother Jacques that it will not be possible to reprogam them. They will need to remain isolated so they do not infect others.
That is the only way.

Sorry if this has been said earlier.

Just a simple point - the mom & pop banks mentioned - were actually old style building societies originally. During this period they operated quite sucessfully on a local/regional basis - as per their original intentions/memorandum - when their investors where effectively their shareholders - paid via interest.. It was only deregulation, the need for greed and to make vast profits to pay "new" shareholders, that in the end lead to their downfall.

Too bad that Daniels near biggest distruction of shareholder value will not be mirrored in the distruction of Mr Daniels personal pension pot.

My sincere wish is that the next rider of this gravy train is paid substantially less in salary and delivers considerably more in terms of shareholder value.

As for the customers of Lloyds they are left to pick up the mess in a world that in the UK at least means all High St banks are the same - mediocre institutions with a lot to be mediocre about.

26. At 01:25am on 21 Sep 2010, Payguy wrote:

Good post, I couldn't agree more. Just one thing though, you say they know they are failures.

Personally I think they are laughing their heads off at just how successful they were/are. I mean one is becoming a lord and will be sitting in the cabinet as trade minister. All will keep multi-million pensions (someone correct me if I'm wrong, this is a guess) Reward for failure or more jobs for the boys?

Something is very sick in our society.

39 ejswede - Most banks did not participate in the Asset Protection Scheme and RBS is the only bank still to do so. HMG have not had to compensate and holders of monies in British banks - only in Icelandic bank.

40 Jacques Cartier - to describe Lloyds and HBOS as "grubby little businesses" is perjorative and indicative of irrational bias. Lloyds (that now includes HBOS) is a major British retail bank.

As expected the ill-informed anti-bank bias dominates many comments. Yes the banks made mistakes. Yes HMG actions directly or indirectly benefited the banks. But there is no alternative to the banks being restored to good financial health. And as to taxpayer bail outs - will that be the case when HMG cashes in the RBS and Lloyd shares at the inevitable profit?

#12 - How on earth can Slessac claim HBOS and Northern Rock to be 'mom and pop' banks as if that were some sort of clinching argument? They were both reliant on colossal bets on the financial markets, buying and selling products they didn't understand - any more than the people who created the original products or the myriad of firms betting on the outcomes of the bets. They all made damn sure they turned their imaginary bets into real money as soon as they could though, by extending the money supply and leaving the downside of the bet - the imaginary money - with the sucker i.e. the taxpayer.

There is no free market where there is no free flow of information - Slessac and the other banking apologists might regard themselves as clear-eyed realists in a tough world but that just makes them suckers like the rest of us with the added problem of moral complicity with a vast fraud. Grovel to the stupefyingly rich if you wish but that's your money they've got the same as its mine. Its not the politics of envy - you're talking about corporations full of lawyers not the sort of hard working skilled worker Thatcher claimed to be talking about.

The problem isn't capitalism vs. other economic models - its industrial scale criminality and lies vs. the truth - and its all going to happen again sooner or later - very likely, very soon when the American public cracks under the debt that's been piled onto it. The taxpayers guarantee stopped the banks going under not smart footwork by one or two banking organisations. On that basis that we will pay they are making bigger not smaller bets knowing we will all have to pick up the tab at gunpoint again. I work in the private sector and have had plenty of experience of the sort of people who work in the City.

Maybe these are the last few days of the current dispensation and they're all trying to clean up and get out. Executive pay has gone berserk in the very recent past, its spread into the public sector where privatisation is all but a fait accompli right across the board - but there is no evidence these people know what they are doing AT ALL except how to shovel money down their own throats and close down their training/R&D/UK manufacturing capacity/non-executive pension schemes - to chisel out some more money to feed to the 'giant vampire squid'.

On the basis that these people are incompetent and have just failed in a way unparalleled in human history it is therefore entirely reasonable for posters on here to be angry when senior bankers walk out laden with gelt without a single care in the world and their path strewn with flowers by obsequious dunderheads who can only see the clanking pile of cash they hope to stick their own snouts into

It seems that the ´óÏó´«Ã½ is now sourcing its news from Brother Max.

/news/world-asia-pacific-11299646

Long may it continue.

Meanwhile another good day for Private Wealth as the delusion continues unabated.

/news/business-11380600

45. At 10:30am on 21 Sep 2010, Anthoncon wrote:
"will that be the case when HMG cashes in the RBS and Lloyd shares at the inevitable profit?"

What is inevitable about a stock market trade?

The value of your investment may go down as well as up.

45. At 10:30am on 21 Sep 2010, Anthoncon wrote:

As expected the ill-informed anti-bank bias dominates many comments. Yes the banks made mistakes. Yes HMG actions directly or indirectly benefited the banks. But there is no alternative to the banks being restored to good financial health. And as to taxpayer bail outs - will that be the case when HMG cashes in the RBS and Lloyd shares at the inevitable profit?

-- The banks cannot be restored to 'good health', the economy is a debt propelled one, which is completely unsustainable! Finite resources cannot be expected to 'fund' this!

True monetary reform is the only way to restore the banks to good financial health, not by continuing the current system. Banks are very much to blame as they are the ones who profit from the current system in the biggest way.

45. At 10:30am on 21 Sep 2010, Anthoncon wrote:

> 40 Jacques Cartier - to describe Lloyds and HBOS as "grubby little
> businesses" is perjorative and indicative of irrational bias.

Yes - they are grubby _big_ businesses (for the time being). Soon they will be grubby little businesses, when we take an axe to them.

> Lloyds (that now includes HBOS) is a major British retail bank.

Precisely. A failed retail bank run by fatcats and spivs.

> .. ill-informed anti-bank bias...

We expect apologies, not truculence. Merv King has done his bit, so get with the programme and cease defending these greedy, inefficient and self-obsessed organisations.

> the banks made mistakes. (taxpayers) benefited the banks.

We already know that - they pigged out on greed and would have gone broke expect for people like us. Now it's our turn have benefits, from them.That means hard work and low pay, until they've earned our respect.

> But there is no alternative to the banks being restored to
> good financial health.

What rot! If we restore them to "good financial health", they'll do the same thing again, and again. They need to be enslaved, as you well know.

> And as to taxpayer bail outs - will that be the case when HMG
> cashes in the RBS and Lloyd shares at the inevitable profit?

They havn't even started to pay for the trouble they've caused. The profit from cashing in won't even cover a corner of the gigantic deficient caused by fat cat bankers and their sycophantic followers in "The City".

I can see you have a lot to learn.

What the UK banking sector needs is more of the right kind of competition and a simpler solution to reorganising the UK banking sector would be to reorganise them of a regional basis and/or specialist basis i.e. North Eastern Industrial Bank and with specialist corporate bonds.

The Creation of new regional UK banks and as having investments largely in e.g. local infrastructure projects could be exciting and create a great deal of interest in UK investment by e.g. buying local football clubs etc and other businesses and selling shares in these clubs to the depositors on favourable rates and local public etc.

As to the 'golden skimming troughers' and their 'golden ladders and parachutes' ... A Very Good Riddance!

This is an amazing opportunity to get the banks restructured in a way that can underpin UK getting back on its feet and the lack of innovation on this from the banking sector itself and UK govt is, I think, most depressing.

Will Mr Cable have any useful ideas or is he still confused and thinking that he is now the UK govt immigration minsister?

#35 ejSwede said
Capitalism... nothing like it
===============
true, this is nothing like capitalism!

I remember dear Eric promising us small share holders that he would get the share price to £5. If I should lcve so long!

@46

On the basis that these people are incompetent and have just failed in a way unparalleled in human history it is therefore entirely reasonable for posters on here to be angry when senior bankers walk out laden with gelt without a single care in the world and their path strewn with flowers by obsequious dunderheads who can only see the clanking pile of cash they hope to stick their own snouts into...

well said

23. At 11:47pm on 20 Sep 2010, szjon wrote:
"Government paid average 73.6 p per share..Lloyds now at 77p + ...taxpayers already have an on paper profit, particularly with all the escape payments they received, for some short term support."

16. At 10:39pm on 20 Sep 2010, wholistens wrote:
"Twelve months and it finally broke through, I'm no financial whizz but what return is that as a percentage? Is it keeping up with inflation (real or imagined) figures?"

If you include the £2.5bn exit fee from the APS, the Treasury bought at 62p not 73p. So not such a bad return so far. However, the Treasury's main motive was not ROI but the stability of the financial system and the ability to influence lending practices. Still, there is plenty that could go wrong till the government can sell its shares.

The bonus culture meant, and still means, that these organisations take unjustified risks to keep up the volume of business.
Even building societies and simple banks take risks by borrowing from commercial lenders and the wholsale markets. That was why they were dragged into the crisis when the big banks got into trouble as credit dried up.
If the "simple" banks offered a reasonable rate of interest they would have funds from the public on a more stable basis to lend. Of course, profits would be lower and this would affect bonuses.
Bank bonuses are these days paid as part of normal salary. The government should rule out bonuses in the big banks - tax them out of existence. The banks would soon respond by splitting up and paying bonuses only for exceptional performance - that's what bonuses were supposed to be for.

Robert, Can you help me understand why there is such a need to cut costs (public finances) to reduce borrowing while our investment in the banks seems to be making us money (or at least a paper profit)?

What am I missing or is this just a self fulfilling prophesy - we've told the public we need to ,ake cuts so lets do it anyway?

Would it not save a lot of typing if the ´óÏó´«Ã½ could arrange for people to submit their posts once and specify which keywords e.g. bank, hedge fund would trigger their automatic submission?

55 wrote,

'Still, there is plenty that could go wrong till the government can sell its shares.'

Too true, So how will they counter this scenario? Will they LEND us the money to buy our own shares back?

It's almost too easy, I predicted at the start of the crash that 'If we were not in depression already, it wouldn't be long before we were' Where will the money come from to buy ALL these shares?

Radical changes to the fractional reserve model are required, pdq.

My bet is that the gig is up, the chinese aren't stupid.

Bob Matthews wrote:
> PHStenning you really need to get a grip of the facts Barclays didn't get any UK government help, they went cap in hand to the Saudi' and didn't exactly get the deal of the century.

The only fact I gave was that Barclays wasn't bailed out, and in this you are agreeing with me, so I'm not sure what you think I need to get a grip of. The money wasn't from Saudi but from Qatar and Abu Dhabi, so I would respectfully suggest it is you who should be getting your facts straight.

"Well, it tells you that banks are past the moment of acutest crisis and face a new challenge - which is how to persuade the government and its banking commission (whose detailed work plan is to be published on Friday) that they don't need to be broken up in order to make the banking system safe."
I believe "interested" members of the public will be invited to give their views on the issue. Where and when do I sign up? I'm sure many of us would like to have the opportunity to share our thoughts more widely.

@37. At 09:26am on 21 Sep 2010, Jacques Cartier wrote:
"Then they they can be re-admitted to decent society - they'll even thank us in the long run!"
But then we'd have the problem of trying to find them something they're actually capable of doing.

@ 60. At 12:40pm on 21 Sep 2010, PHStenning wrote:

> The only fact I gave was that Barclays wasn't bailed out

They were bailed out alright - by Arabs!

@ 23. At 11:47pm on 20 Sep 2010, szjon

If anyone can sell 41% (Lloyds) or 70+% (RBS) of their shares in a massive company without depressing todays price by under 30% in this market I'll be absolutely amazed. The paper profits are all well and good when marked to market but is there anyone out there who wants or can afford such chunks of such risky companies without compromising portfolio diversity in this climate?

You'll find that if they do sell them at a loss the spin will be "We believe selling our share at a discount (read 'loss') provides the market with an enhanced opportunity to increase jobs and create 'value' for the economy by not using up so much of their capital".

# 58 - you should go on Dragons' Den with that idea!

@ 23. At 11:47pm on 20 Sep 2010, szjon

If anyone can sell 41% (Lloyds) or 70+% (RBS) of their shares in a massive company without depressing todays price by under 30% in this market I'll be absolutely amazed. The paper profits are all well and good when marked to market but is there anyone out there who wants or can afford such chunks of such risky companies without compromising portfolio diversity in this climate?
=================
I think that you will find that they will realise that and sell them a few at a time

50 Jacques Cartier - such a populist rant from you. There is no alternative in a capitalist system to have business (and mortgage) funding via a healthy banking sector. Even Vince Cable is backtracking on his "bash the banks" rhetoric. Your anti-bank posts suggests that you've read too much of the Guardian, or God forbid, listened to the ´óÏó´«Ã½ who regrettably are less than even-handed than they might be, however, prestigious the ´óÏó´«Ã½ might be!

@64 Hugh janus.

You sound like Peter Mandleson, (not a reference to your username) that is some quality spin.

Who's betting we will be informed of this around the same time as some unrelated major news event?

@66

Like Brown did with the gold? I think you credit politicians with way too much common sense.

@ 66. At 2:19pm on 21 Sep 2010, AnotherEngineer

I do realise they won't just dump them one morning but doing it gradually will take decades and doing it any quicker will still have a large impact as the market is likely to believe there is more and sustained selling to come as they will want to reduce their holding to zero. Remember Barings announcing they had to sell all Leeson's unauthorised purchases? The bottom dropped out of the market. It can be bad enough when an important shareholder wants out to invest elsewhere or if they believe the price is near a top. The gov are gonna need to be selling into some major strength to clear its books successfully. That strength just isn't there for the foreseeable future.

68. At 2:49pm on 21 Sep 2010, szjon

I almost convinced myself it was a good idea after typing it!

(Co-incidentally, there is another chap on here by the same name. Perhaps our parents were equally cruel? He's been around a bit longer I've discovered tho.)

68. At 2:49pm on 21 Sep 2010, szjon wrote:

Who's betting we will be informed of this around the same time as some unrelated major news event?

----------------------------------------------------------

...or they'll do it as a last ditch attempt to curb inflation by smashing asset prices! This will also be announced as 'a good thing for britain'.

Robert

Having thought about this "megabank" question a lot, I've come to the conclusion that it's a red herring.

All that really matters is that fractional reserve banking should be abolished. Then, and provided that deposit accounts are matched £ for £ by liquid reserves on the balance-sheet, it doesn'r matter in the slightest how big or "mega" a bank is. Deposit accounts would be a money warehousing and transfer operation and would be impregnably ring-fenced (and the bank would be entitled to charge a fee for it). But a "mega-bank" which also ran an investment-banking business could quite properly seek to sell its investment products to its depositors, who would be a quasi "captive market". Maybe it would waive the depositor's fee as an incentive. I see no conflict of interests there (given sensible regulatory safeguards).

39. At 09:30am on 21 Sep 2010, ejSwede wrote:

"Whether or not there is no alternative, I sincerely hope that there is. This cannot be the apex of human economic and social interaction. It's flaws are as evident now as they ever were".

But you show no sign of ever having wondered whether fractional reserve banking - without which this mess could not have happened - should not be abolished.

Curious.

Jacques Cartier wrote:
[Barclays] were bailed out alright - by Arabs!

Do people who put this argument forward genuinely not realise the difference between the funding that Barclays took from Middle East sovereign wealth funds and the government bailouts of other banks? The sovereign funds invested in Barclays because they considered it good value, they could have put their money absolutely anywhere else. The government bailed out the other banks because it had no choice. In taking on external investment in return for equity Barclays was only doing what almost every large commercial enterprise in history has done. Since by going down this route Barclays avoided taking direct UK taxpayer support it's hard to see why people are so keen to criticise.

@ 67. At 2:43pm on 21 Sep 2010, Anthoncon wrote:

> There is no alternative ...

Don't make us laugh, Anthoncon! There is an infinite
number of alternatives, of course.

> you've read too much of the Guardian

It's better than The Sun, where you seem to get your facts!

re #12
Good post, introducing a note of reality. Thanks.

I would add some comments on the following though:

'This is clearly nonsense. What were Northern Rock, Bradford and Bigley, and Halifax if they weren't regular banks. Just in case you aren't sure, these weren't investment banks. They were regular (Mom and Pop) banks with disastrous funding models (ie they started to depend on the wholesale markets to support their lending because they couldn't attract enough deposits). And the Icelandic banks were the same. They didn't do any investment banking just ignored normal rules of liquidity.'
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There is some evidence that NR and, possibly, B&B had indulged in sub-prime lending. NR was basically feasible and solvent but suffered a run on deposits in its home territory due to the truth of, or rumours of, their sub-prime exposure.

I seem to recall it was broadcast when HBOS started to be hit by big share sales that there were rumours of massive sub-prime plus unsecured consumer lending by the bank. It was their potential bad debt position that created alarm. These rumours may not have been true but in the fevered atmosphere that existed at times in '08 & '09, rumour was enough to do the damage.

B&B had started to invest in financial trades as a way of boosting its profits and convincing everyone that they really weren't a building society and were a bank. (Jacques, mon ami mate, their board were bad 'bankers', they were truly guilty and I wouldn't quibble with you on that.) They were possibly bundling some of their own sub-primes in an attempt to spread the risk. [Which is technically the correct thing to do, but that's another story.] Arguably, it was the 'dodgy' CDOs that they bought (from the US?) that brought them down together with doubts about their capability to handle a string of home banking bad debts.

Which all goes to show, it was not just the banks and their supposedly inept maanagement who were at fault and the cause of the crisis. The 10% tax rate band cancellation was a factor. Oil price rises were a factor. Transport taxes were a factor. High gas and electricity prices were a factor. Rising food prices were a factor. Fear was a factor. People's incomes (the mass of the population - ie four-fifths of earners) were being squeezed, they had less to spend and the potential was there for default on unsecured and secured (mortgage) loans.

It is widely assumed that the Icelandic banking failure was the same as you posted. That's not completely correct. What happened in the mid-decade was that Iceland enjoyed an economic boom and had some successful entrepreneurs, mostly - but not exclusively - in the banking and retail sectors. The latter group started to invest overseas, especially in the UK. And especially in the UK High Street. They thought the boom would continue. They obtained finance from their banks who had offered high interest accounts to investors in Europe AND ESPECIALLY BRITAIN through internet banking.

So when people in the UK stopped spending, stopped saving and dipped into their savings in Iceland and elsewhere, who was in trouble? And twice or three times over!

@ 75. At 5:54pm on 21 Sep 2010, PHStenning wrote:

>> Jacques Cartier wrote:
>> [Barclays] were bailed out alright - by Arabs!

> The sovereign funds invested in Barclays because they considered it good
> value, they could have put their money absolutely anywhere else.

Don't be silly - we taxpayers bailed out the _other_ banks also because we considered they had good value - there is no difference whatsoever. We invested in the best way given the circumstances at the time, same as the Arabs. That's how capitalism works.

I shouldn't have to tell you this, but here goes - if the banks had had less value than the alternatives (e.g. putting our money somewhere else), that is what we would have done, automatically! There is always choice.

77. At 09:14am on 22 Sep 2010, Up2snuff wrote:

> (Jacques, mon ami mate, their board were bad 'bankers', they
> were truly guilty and I wouldn't quibble with you on that.)

You've made my day! I enjoy it when new converts cross over to the light side! And, if I'm right (which I know I am), then that is the culture of greed that has permeated The City and elsewhere.

The mega-losers may be nobodies now, but they have not yet suffered the personal loses that justice and common sense demands. Adair Turner wishes to move on from "demonising over-paid financial traders", but that is only possible once all the perps have been brought low.

re #79
Magnifique! Will you cross over to my side then, and admit that not all bankers are bad and that the causes of the credit crunch, recession and banking crisis were many and varied?

Do we have a concorde?

Oh dear corporate world is upset .....well yes private business provides employment , wealth etc etc ...but that does not excuse or condone the
" darker " sides and the aspects of running corporate world that often sit in the " non commital , holier than thou " space. I've never studied Marx but the stuff I see hear does kinda say it all- And WHY ? is that a bad thing. Let's keep old Vince in perspective here ..because like some others he has a morale fibre that many a CEO has long since lost sight of in order to salve the ££ and divident of the shareholder. And of course sadly now directly and indirectly we the tax payer are exactly that ...so balance let's try and get there without petty playground squabbles ..........if that's at all possible !!