Pandora's Box

Gordon Brown and Alistair Darling have discovered that by taking shares in Britain's bust banks, they have opened something akin to a Pandora's Box.The row over Fred "The Shred" Goodwin's (ex CEO of the Royal Bank of Scotland) £650K per annum pension, that his fellow directors generously awarded him for his "services" to the bank has ratcheted up a notch.Despite pleas from Lord Myners to Sir Fred to give it up, Sir Fred is unmoved and has noted that Lord Myners was aware of the deal and authorised it. Lord Myners is having none of this, and counterclaimed...

Read More

RBS Breaks a Record

Congratulations to the Royal Bank of Scotland (RBS) for posting the largest loss in British corporate history (£24.1BN in 2008). Given the appalling state of its finances, RBS is to receive a further £25BN capital injection from the overworked British taxpayer, and will place £325BN of toxic "assets" in the government insurance programme.Clearly RBS is following the old banking maxim that if you owe a small amount, the lender has you by the balls; whereas if you owe a large amount, you have the lender by the balls.Needless to say the dire situation...

Read More

Protectionism Warning

A Belgian committee on financial regulation, chaired by Alexandre Lamfalussy (who designed the EU's current system of cross-border supervision), has warned that the European wide bailouts of banks could lead to the rise of protectionism and undermine the EU.The committee has issued a report that recommends the creation of an EU wide supervisory scheme for banks and financial bodies. Were this scheme to be implemented, what would be the role of the Bank of England and FSA wrt supervisi...

Read More

The Return of The Rock

Northern Rock is to return to the mortgage market, by offering loans of up to 90% of value.The nationalised bank has been given Treasury approval for the £14BN mortgage scheme.There is a degree of irony here, as Gordon Brown has decreed that 100% mortgages are to be legislated out of existence.Indeed Northern Rock compounded the irony when it announced that, despite losses of £1.4BN in 2008, it would still be paying bonuses to senior executives, so that they don't leave.I thought Brown didn't approve of such paymen...

Read More

Gordon Brown - World Policeman

The truth is finally dawning on people that Gordon Brown has more than a little responsibility for the financial mess that we now find ourselves in, eg:- The failure of his tripartite regulatory system to control the banks.- The waste of public sector resources in good years on consultants, IT systems and other "initiatives" that have all failed.- The massive increase in the size of the public sector, for precious little "real world return".- The dithering over Northern Rock and the financially ruinous HBOS Lloyds merger/bailout.- The £2Trillion...

Read More

Roll The Presses!

The Times reports that the Bank of England will write to the Chancellor asking permission to start printing money (quantitative easing), in order to buy up government and other securities.The Bank, having almost exhausted its interest rate arsenal, is hoping that this will ease the credit drought.All well and good, but this should have been done quite some time a...

Read More

RPI Falls

The Retail Price Index (RPI) fell to an annual rate of 0.1% in January, giving rise to fears of deflation.Despite the fall, the cost of living as experienced by those who inhabit the real world (as opposed to the statisticians' virtual reality), feels uncomfortably high. Power and gas prices have risen significantly over the last year, as have food prices. This year's council tax rises will also be inflation busting, averaging around 4%-5%.Low "inflation" or not, the actual cost of living remains ruinously high for many families at the mome...

Read More

Lloyds Shares Continue To Fall

Shares in Lloyds Banking Group fell further this morning (to around 54p) as investors digested the shock news released by Lloyds in the middle of Friday that their newly acquired bank, HBOS, lost £10BN.The size of the loss and timing of the announcement was unexpected, and has raised fears that Lloyds will require a sizeable injection of capital from the government, ie nationalisation (the government already has a 43% stake in it).It seems that HBOS continued to lend/invest in property deals long after other banks had stopped doing so. The person...

Read More

Fred The Shred's £200M Blow Job

Sir Fred Goodwin, Royal Bank of Scotland's former chief executive, blew £200M when he hired top sports stars on "reckless" contracts to entertain clients, as part of a £200M sponsorship binge, just a few weeks before he was kicked out of the ba...

Read More

Brown Panders To The Headlines

Gordon Brown, sensing that the public are a tad "vexed" with greedy bankers, has decided to opt for the short term political palliative (used by politicians who are on the skids) of pandering to the public blood lust.He appeared before the Commons Liaison Committee yesterday and said that banking bonuses should not be a "one way bet", adding that even though a bonus has been paid that where the recipient had been shown to have lost the company money that bonus could be reclaimed.No doubt, in the limited imagination of the headline grabbing politician,...

Read More

A Failure of Regulation

The Times reports that the Financial Services Authority (FSA) claims that it raised concerns about internal risk controls at HBOS in 2002.Yet nothing appears to have been done, why?Moreover, why was Sir James Crosby (who has now resigned from the FSA), CEO of HBOS between 2001 and 2006, appointed deputy chairman of the FSA by Gordon Bro...

Read More

A Collective Spanking

Sir Fred Goodwin and Sir Tom McKillop, the former chief executive and chairman of RBS, will apologise for destroying one of Britain's leading bank at a meeting of the Treasury Select Committee today. Also attending the trial by humiliation will be Andy Hornby and Lord Stevenson of Coddenham, the former chief executive and chairman of HBOS. Whilst all of this may make the politicians feel important as they are seen to flex their muscles in the headlines, the very pressing questions of what to do about bonus payments in the future, and how to avoid...

Read More

Barclays Uses Commonsense

Not all banks have their heads up their own backsides, when it comes to bonuses and the public perception of failure and greed.Barclays today announced a profit of £6.1BN (after £8.1BN of write downs), ahead of forecasts but 14% below last year. Barclays also announced that it would not be paying bonuses to its executive directors, and only pay bonuses to those below board level.A wise and sensitive political decision, all the more so because the government does not have a stake in Barclays. The Royal Bank of Scotland would be wise to take note...

Read More

Bank Of England Cuts Rates Again

The Bank of England cut rates again yesterday (from 1.5% to 1%), in another attempt to draw a red line under the recession and falling confidence.Not a moment too soon, judging by the report in the Times that notes that the number of businesses filing for administration (after adjustments for one multi operation failure) in the last quarter of 2008 was 1,289 (a rise of 124%).However, the Bank of England knows that the rate cuts are meaningless, if banks continue to provide the lifeline of loans and finance to struggling businesses and individuals....

Read More

Pigs At The Trough

The management of the Royal Bank of Scotland, bailed out by the taxpayer to the tune of £20BN, isn't going to allow anything as inconvenient as gross incompetence (it is expected to announce a loss of £7BN-£8BN for 2008) to get in the way of its bonus payments.The Times reports that RBS is planning to pay large bonuses to thousands of its City traders and senior bankers. Some of the payments are expected to reach tens of millions of pounds, with some bankers in line for six-figure payouts.It seems that the culture of arrogance is alive and well...

Read More

The Ring of "Strength"

The Times reports that the Icelandic company Baugur (which means "Ring of Strength") is about to fall into administration.Baugur owns/controls a number of UK retail companies including Iceland, Hamleys, House of Fraser, Goldsmiths, Mappin and Webb, Principles and Whistles.The move to administration has been brought about by the collapse of talks with Landsbanki, an Icelandic bank, over restructuring Baugur's £1BN debts. A classic example of the dangers expanding too fast using other people's mon...

Read More

FSA Asleep At The Wheel - As Per Usual

Yet again Britain's hapless Financial Services Authority (FSA) has been found to be asleep at the wheel.It transpires that way back in 2005, the FSA was warned by Tony Shearer (CEO of Singer & Friedlander Group) not to give the go-ahead for the Icelandic bank Kaupthing's acquisition of Singer & Friedlander.For why?In Shearer's view the management of Kaupthing were not "fit and proper" to control a British bank.Mr Shearer will repeat these allegations to the Treasury Select Committee tomorrow, and tell the committee that the FSA rushed through...

Read More

Back From The Dead

It would seem that the much lamented corpse of Woolworths may be about to rise from the grave, albeit in a reduced form.Shop Direct has bought the name, and intends to relaunch it online this summer. Needless to say, as Shop Direct already owns other brands (eg Littlewoods and Kays) and that Woolies will only be an online presence there will be little opportunity for many of the old staff to be rehired.Indeed, Shop Direct announced jobs cuts last we...

Read More