The Naked Greed of Banks

Banks still seem to be operating with their heads in the sand.

"A customer borrowing £100 for 28 days without the consent of Santander would repay £200, for example.

That is the equivalent annualised percentage rate, or APR, of 819,100%.

Comparisons between banks and so-called payday lenders showed that the annualised percentage rate charged for borrowing £100 over 28 days varied from 969% to 819,100%.....

No payday loan lender charged an APR of more than 5,000% but two banks - Santander and Lloyds TSB - charged an equivalent APR of more than 300,000%. 

Santander told the BBC: "It's is confusing to compare payday loans with overdrafts on current accounts because an unauthorised overdraft charge is for unauthorised use of a current account while a payday loan is an agreed loan facility."

Barclays would charge a customer using a personal reserve - a pre-agreed emergency borrowing facility - £22 for every five consecutive working days they were in it. This means customers would pay £88 on top of the £100 capital after 28 days - an equivalent APR of 366,000%."

Source BBC

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QEII Launched Into Choppy Waters

Hot on the heels of yesterday's launch by the Bank of England of QEII (valued at £75BN),
Moody's cut its ratings on a number of British banks.

RBS was dropped by two notches from A2 to Aa3, Lloyds TSB dropped by one notch to A1 from Aa3, Santander UK, Co-operative Bank, Nationwide and seven other smaller British building societies were also dropped.

The rationale being that Moodys' is of the view that the British government may not support certain banks in the event that they face collapse.

Unsurprisingly, George Osborne stated that he has confidence in the viability of the UK's banks.

The Treasury, as it happens, is also fighting tooth and nail any attempt by the EU to force UK banks to increase their capitalisation as a result of the soon to premiere "Stress Test III".

Is the reluctance by the Treasury based on their confidence in the banks?

Errmm..no.

It is a reluctance based on pragmatism, namely that were RBS to require more capital, the Treasury would be forced to buy shares (using taxpayers' money) at around 50p (as per the agreement with RBS) compared to the current price of 23p.

The alternative would be for the government to fully nationalise RBS.

Neither option appeals to Osborne.

In other news, a certain London based financial newspaper (which heavily relies on advertising revenue from banks) is continuing to spread the rumour that there is a plan for saving the Euro and the European banking system.

However:

Learn this,
Repeat this, and
Retweet this:

THERE IS NO PLAN!!

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Santander Screws Up

Santander, the bank with the highest proportion of customer complaints in the UK (216,158 complaints in the first half of 2010, has decided to end the year on a "high" by sending out 35,000 customer statements to the wrong customers.

Well done lads!

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Lloyds Loses Touch With Reality

Lloyds Banking Group has appointed Santander's UK head, Antonio Horta-Osorio, as its chief executive. He will replace the current CEO, Eric Daniels, early next year.

Financial analysts, and so called "financial experts", seem on the whole to be delighted with this appointment.

All very well, maybe.

However, is this not the same Santander bank with the highest proportion of customer complaints in the UK (216,158 complaints in the first half of 2010), where complaints came in at the rate of one per minute in the first half of this year?

Jeff Prestridge wrote in the FT is September:

"..administrative problems at Santander including customers not being able to review their accounts online, customers’ savings accounts not set up promptly, as well as suddenly inoperable accounts even though they were set up on an enduring power of attorney.

There's more.

Customers have been designated dead when they are very much alive, customers' accounts have been set up in the wrong name, customers have been held on expensive telephone lines for ages, and branch staff have contradicted instructions given by the bank's call centres.

In terms of administrative meltdown, I've never seen anything like it in more than 25 years of personal finance journalism.."

Has Lloyds (one of the "people's banks") taken leave of its senses?

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The Shabby Habit - How Low Will a Bank Go?

Given the lousy, but very well deserved, reputations of many banks it is hard to find a story that actually plumbs new depths wrt how badly they treat their customers.

However, the Times reports that Santander has plumbed new depths in the way it mistreated one of its customers over the theft of £10K from her Abbey bank account.

"Emma Woolf, a longstanding customer of the bank, had £10,000 withdrawn from her account without her knowledge, but Santander, formerly known as Abbey, refused to refund the money and instead suggested that her fiancé, Jonathan Groman, had stolen the cash.

The bank relented and returned the money more than a year later only when the police arrested a Santander employee for fraud, after finding financial documents of customers in her home. But the bank agreed to pay back the cash only if Ms Woolf signed a confidentiality agreement. The bank also refused to apologise to Ms Woolf and Mr Groman."

It seems that the banks have yet to realise that the rules of the game have changed, and that they are no longer "respected" or "trusted" as they once were.

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Santander's Market Dominance

Santander, the Spanish banking group that owns Abbey, Alliance & Leicester and Bradford & Bingley, has announced a 58% rise in Sterling profits for the first 9 months of this year to £1.2BN.

Abbey's gross lending of £19BN represented 20.5% of the UK market, although it is 37% less than last year.

Santander is the eurozone's largest bank by market capitalisation.

However, Bradford & Bingley is going to split its good and bad assets (its balance sheet being £50BN), and sell the good assets to private buyers, in order to pay off its £18.4BN loan early.

The question is, what exactly is a "good" asset and what is a "bad" asset?

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Named and Shamed

The Financial Ombudsman Service (FOS) has finally had the guts to name and shame the worst offending financial services companies in the UK, being those companies that have logged the highest number of customer complaints.

Congratulations to the five major high street banks, which account for the majority of the complaints.

The big five have managed to notch up a staggering 38,286 complaints, out of a total of nearly 70,000 received by the ombudsman in the six months to 30 June 2009.

- Lloyds (which includes HBOS) came top to the league of shame with 15,233 complaints.

- The Royal Bank of Scotland group scored 5,533 of the complaints received by the ombudsman.

- Barclays scored 8,283.

- Abbey scored 2,493 complaints.

- HSBC group scored 2,363 complaints.

- Alliance & Leicester scored 1,786.

The chairman of the FOS, Sir Christopher Kelly, was more than unimpressed. He is quoted:

"I will now be writing to the chairmen of the financial businesses that generate the largest proportion of our complaints workload, to ask them to consider very carefully both their own complaints performance – as reflected in the data we are publishing today – and the complaints performance of their competitors."

As I have noted many times before, the financial services sector in the UK treats its customers appallingly.

Why does it use the word "services" in its moniker, given that "service" is the one thing that it doesn't provide?

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Famous Names Scrapped

Abbey, Alliance & Leicester (A&L) and Bradford & Bingley are to be scrapped; or at least their names are to be consigned to the dustbin of history.

Santander, the Spanish banking group that owns all three brands, has announced that it will re brand them under the "flame-logo" and Santander name by the end of 2010.

Given that the above names currently exist and function side by side in many highstreets, it is fair to assume that once the re branding has occurred the next step will be staff cuts and office closures.

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