I’ve just received this month’s Banker magazine which the editor, Brian Caplen, describes as their most important issue of the year as it covers the latest Bank 1000 listings.
This year’s listings show a surprisingly stable crew of American and British banks.
World Bank Tier One Pre-tax Rank Capital profit $m $m 1 Bank of America Corp 160,387.77 4,360.00 2 JP Morgan Chase & Co 132,971.00 16,143.00 3 Citigroup 127,034.00 -8,445.00 4 Royal Bank of Scotland 123,859.00 -4,366.29 5 HSBC Holdings 122,157.00 7,079.00
Considering the crisis was meant to have killed these banks, you may find it surprising to see that Citigroup and RBS have maintained their leading positions.
This is down to the fact that the Banker measures a bank’s strength by its Tier 1 Capital, and so their positioning is more of a reflection of the sheer size of these firms than by their brand or market capitalisation, which is used in some other studies of size.
The Banker’s data is fascinating though, as the database also contains profitability, revenue, cost-income ratio and more, so it’s a useful tool in all senses. And the online data goes back to 1996, so you can do some useful comparisons.
Mind you, my data - old Banker magazines - goes back even further so I quickly took a snapshot of a few useful year’s – 1994, 1999, 2004, 2008 and 2010 – to see how things have changed. Mapping out the Top 20 banks of the world for each year makes for an interesting picture (doubleclick the picture to see a larger version):
Back in 1994, Japan ruled the world.
Then their economy went South and Origami Bank folded, Sumo Bank went belly up, Bonsai Bank cut back their branches and something fishy went on at Sushi Bank where staff got a raw deal.
Post-Japan’s slump, the Anglo-American financial system ruled. So you would think that, as that system failed, it also would have gone South.
Not the case.
Maybe that’s a reflection of the sheer scale of investment American and European firms have put into these economies to avoid such a crash.
Well worth spending time looking at the data and looking forward to playing around with it further.
Just had a fascinating chat with Nick Ogden, founder and CEO of Voice Commerce and previously RBS WorldPay which is now part of RBS Global Merchant Services (GMS). As mentioned last week, Voice Commerce is one of the organisations bidding for RBS GMS, now that it is up for sale again, and this week was told that their bid has been rejected.
Here’s the detail.
It was a fully funded cash bid, comprising a group of investors and a major UK listed entity. The bid was “north of £1 billion and south of the £2 billion mark”. The bid would have made RBS GMS a UK-listed company, with Voice Commerce merged into it. In addition to the cash, RBS would have retained an equity stake shareholding in the new business, which would have moved RBS into new markets with new technology. This was a particular focal point for the bid, as Voice Commerce would have integrated voice biometric authentication into the RBS GMS merchant processing epayments business.It was also a stand-alone bid, rather than being some group of partners or partnerships. Apparently, the seventeen expressions of interest included many consortia of Private Equity (PE) and Venture Capital (VC) firms.The Voice Commerce bid received “full marks for management and technology, but was too low and our aspirations are higher” according to a letter Nick received from UBS, the bank advising on the M&A process to RBS.So what happens next?UBS is narrowing bidders to around three or four for a second round of evaluation. These bidders will then enter a due diligence process, with the view to completing the final round of bidding within the next eight weeks or so.Of particular note is Nick’s valuation of the business, bearing in mind that he founded WorldPay and sold it to RBS in 2002. Nick therefore has a “good understanding of that business worldwide and it will be interesting to see the final valuations and whether they have that same level of understanding.”Meanwhile, Voice Commerce is looking elsewhere for acquisitive growth with a focal point around distribution. That’s what they wanted from RBS GMS – the 500,000 merchants and their customers – and could lead Nick to look at companies such as Heartland. Nick would only say they are looking around America, Asia and the Middle East as, having received their PSD approvals in the EU, he wants to take their PSD and Visa authorisation overseas as a critical differentiation point. Equally, he believes that “the emergence of IP-based POS means significant changes will occur with merchant acquiring” over the next few years, and Voice Commerce is ideally positioned to capitalise upon this.
Watch that space, and also the RBS GMS deal. This could get interesting.
Moneris enters the fray for RBS unit By Martin Arnold and Patrick Jenkins Published: April 15 2010 23:19 | Last updated: April 15 2010 23:19Moneris Solutions, the Canadian card payments company, is a surprise bidder for Royal Bank of Scotland’s Global Merchant Services division, as the auction of the business moves into its final stages.The £2.5bn ($3.9bn) operation, centred on the WorldPay payments business and incorporating the Streamline cards operation that dominates the UK market, is one of the assets that RBS must sell under the terms of a European Commission state aid ruling. The government has a shareholding of 70 per cent in RBS after bailing it out last year.Toronto-based Moneris, a joint venture between Royal Bank of Canada and Bank of Montreal, provides credit card payment processing to more than 350,000 North American merchants.RBS plans to invite a small group to join Moneris in the second round of bidding for Global Merchant Services, out of the more than a dozen bids it received earlier this month.The other bidders that are moving into the second round include CVC Capital Partners, the UK-based private equity group, and a consortium of US private equity groups Advent International and Bain Capital.Talks were still being held on Thursday night by RBS on whether to include others in the final round, such as a consortium of Silver Lake, the technology focused US private equity group, and Tsys, a rival US payment services group. Other private equity bidders thought to still be in the fray include TPG, Carlyle and Permira. Groups no longer in the running include JPMorgan Chase Paymentech, Atos Origin of France and Apax Partners, the UK private equity group.Advent believes it may have an edge as it bought 51 per cent of the credit card processing unit of Fifth Third Bank a year ago in a $2bn (£1.3bn) deal. The US arm of Global Merchant Services could be combined with Fifth Third’s business.Moneris has held talks about joining forces with one of the private equity group bidders, but without reaching an agreement.Global Merchant Services generated operating profits of £249m last year. RBS has agreed to provide vendor financing on the deal alongside Goldman Sachs, people close to the deal said.RBS and the bidders all either declined to comment or could not be reached.
It seems that I’m having a long whinge and rant all week, but I’m trying not to.
What I’m really trying to do is to get some answers to this crisis of confidence in the banks and, consequently, the banking system. This is nothing to do with the credit crisis, but the response of the banks to the credit crisis, which is to trash all trust and confidence in their ethics and approach.This is why there is this non-stop bleating about bonuses and interest rates. The banks justify this behaviour on the basis of all the other kids on the block are doing it so, if we didn’t, we would just get beaten up in the banking playground by the bonus bullies. This is what Stephen Hester said today:Mr Hester warned “that employees are leaving because it was offering lower bonuses than City rivals. He also said that profits at the bank, which is 84 per cent owned by the taxpayer, would have been about £1 billion higher if it had managed to stop staff leaving. The bank said it had ‘paid the minimum necessary to retain and motivate staff who are critical to the recovery of RBS’.”Trouble is, this doesn’t cut the mustard.MPs warned that the public would be astonished that the bank was paying £1.3 billion in bonuses given that it today reported a £3.6 billion loss for last year.
“Vince Cable, the Liberal Democrat Treasury spokesman, said: ‘Stephen Hester is trying to justify the unjustifiable. Most bankers owe their jobs to the taxpayer. His comments will just reinforce the view of bankers in many people's minds as greedy and selfish.’
“Shadow chancellor George Osborne echoed the views of Mervyn King, the Governor of the Bank of England, by telling BBC radio: ‘I do think the level of payment in the banking sector has got completely out of kilter with the rest of society. It is totally disproportionate to what doctors are paid, people working in industry are paid, teachers are paid and the like. We need to bring down pay across the sector — not just in one bank, across the sector — and things like a bank tax, internationally agreed, might help do that.’”
Oh yes, and I love the photograph the Evening Standard chose to run with that report.
Hmmm ... Hester, the fox killing, horse and hound man.
Nice.
Meanwhile, in the same paper, Chris Blackhurst writes about how we've blown our chances to rein in the banks:
“We somehow think that the bankers will take it upon themselves to lie down on the steps of St Paul's and seek forgiveness — and reform their ways and slash their incomes. They won't. They're human. Yes, they're pariahs, but they will carry on taking the money until they're forced to stop, until the authorities say bank licences will be relinquished if bonuses are paid.”But none of these arguments raging in the media address the real issue here.The real issue is not bonuses, profits, lending or interest rates.The real issue is a lack of internal market leadership within the banking industry.Nothing to do with regulators, politicians or press. The most significant failure has been the inability for the industry to act as a cohesive hole (sic: whole) to respond to the issues arising under their watch.Instead we act as a fragmented group of a thousand voices.Individual voices stand up and are counted, and some count more than others such as the Jamie Dimon’s, John Varley’s and Stephen Green’s. But nothing is co-ordinated or arranged in a way that makes sense or alleviates the public anger and distrust in the system.Take the example of the past week of banker’s bonuses.Initially, one bank – Barclays – set an example of waiving bonuses payments, as their leaders chose to repeat the actions of a year earlier and declined the multimillion pound pot they were entitled to. Reluctantly the rest then followed with RBS, Lloyds and now HSBC one-by-one agreeing not to award their leader’s bonus.The result is that they were accused of being lame sheep in doing so, just following the lead of one, and it just looked limp.It also rang of insincerity anyway, in that several of these leaders are purely deferring bonuses and have taken large swags of cash via other means (e.g. Bob Diamond’s $46 million payout on the sale of Barclays Global Investors last year) or just don’t need it as most are on million-pound plus packages. In fact, one cynic said that there would just be a top-up of their pension pots to compensate, and so no-one sees these token gestures as being anything other than that- ‘token’.Does this justify the payouts to their investment banking teams by making such sacrifices?No.Does it restore faith and trust and displace the anger and mistrust?No.So all it’s done is served as some form of internal justification for the continuance of mega-bonus payments to investment banking staff.The issue still lies with the press, politicians and regulators however: in this land of 1,000 voices, where no-one coordinated single voice resonates, where is the leadership to change the system?Take the example I’ve just given.What bankers should have done is worked together to create a co-ordinated plan across the sector pre-emptively and early on.For example, Stephen Hester (RBS), John Varley and Bob Diamond (Barclays), Eric Daniels (Lloyds) and Michael Geoghegan (HSBC) see each other often enough in front of Treasury Select Committees to be able to co-ordinate their responses.So why didn’t they all agree upfront to defer leader’s bonus payments, and announce this as a co-ordinated approach pre-results season?A joint announcement of rationale and reasoning would have been far more powerful than the sheep mentality manner of following the leader.Equally, Jamie Demon Dimon (JPMC), Vikram Pandit (Citi), Lloyd Blankfein (Goldman Sachs), Brian Moynihan (Bank of America) and John Mack (Morgan Stanley) see each other all the time in front of Federal Committees. So why didn’t these leaders co-ordinate responses to bailouts and bonuses?You may say they did, but not from an observer’s viewpoint externally.It looks like maverick individual actions and approaches, with no single voice to rally the industry to a resolution.Why these ‘leaders’ cannot organise themselves is beyond the ken.After all, if these global CEO’s of banks had created a co-ordinated and rational campaign to cap bonuses, waive their own, provide charitable donations, show how bank lending and bailouts had been atoned, then the media, public and politicians would not be baying for their blood.The fact that: (a) there is no single voice of leadership that is co-ordinated across these banks speaking on their behalf; and (b) these leaders have allowed banks to behave without change, as they were before and as if nothing had happened, is going to lead to a showdown.That showdown is not far away and, according got all my sources, will be far more draconian and vicious than any action that would have been taken if the industry had spoken with one voice, rather than thousand.But then, this industry’s ability to self-regulate with transparency and integrity historically has been pretty poor so this comes as little surprise.
Meanwhile, you only have to look at the fact that our poor old Queen has been forced onto the tube these days, to realise how hard times are in Britain ...
Banks aren’t charities and yet the non-stop bleating about bonuses and interest rates would make you think they should be run as though they were not-for-profits.
But banks aren't not-for-profit; they are proprietary firms with stock listings. They are there to make money, not to exist for the public good.
So what’s gone wrong?Unfortunately during the past two years, the line between public and private has blurred, as evidenced by the Royal Bank of Scotland and Northern Rock, or by Citi and Bank of America in the USA, or HVB and Commerzbank in Germany, or UBS in Switzerland or ...The fact that these banks were bailed out by their respective governments, albeit temporarily in most instances, has blurred the media and public’s view of what they are there for.The media and general masses now think they own the banks or, at least, have some skin in their game. And sure enough, in the case of RBS and Lloyds, the UK taxpayer does have some skin in the game: 84% and 43% respectively.But that doesn’t mean the taxpayer runs the bank or that they exist for the public good.In the case of RBS and Lloyds, they actually now exist in a shadowland where they are competing with openly aggressive trading firms like Goldman Sachs and JPMorgan, whilst having to conform with the requirements of the Treasury and UKFI.This causes this schizophrenia between being openly competitive versus being humbly contrite.What a pain.But look at the bottom-line: these banks are still private firms with stock listings who have to serve their shareholder first.That’s why they are paying bonuses, restricting lending, avoiding risk and being competitive.Or that’s their thinking.This is why we find it so hard to determine the right approach to bonuses and remuneration.But take this a step further and we now have the journalistic and taxpaying community believing that they should somehow determine the interest rate setting policy and fees of the bank.For example, over the weekend, the Beeb got itself into a tiz over credit card interest rates. The question posed is why, when the Bank of England’s interest rates are at their lowest levels ever, are banks charging the highest rates ever on credit card balances?The answer is simple. The credit card portfolio runs as its own division with its own P&L. Today, more folks are defaulting than ever before. As the risks are greater and bad debts increasing, the interest rate has to rise accordingly.The media and public then say: but you’re paying out all these hefty bonuses, what about us? Decrease the bonuses so that you can reduce our credit interest rates.C’mon now and be serious. The investment bank doesn’t subsidise the card portfolio. They are separately run businesses with their own P&L and both are tasked with making a profit, so both run their book as competitively and profitably as possible.That’s why Barclays announced an increase in overdraft fees on deposit accounts just two days after saying that BarCap’s bankers would get an average bonus and pay package of just under £200,000 each for the 23,000 staff in that division.You see the latter achieved their annual objectives and targets, so that’s why they deserve it.And all of this is in a competitive battlefield where anyone can walk – both staff and customers.But it ain’t that easy.First, Barclays are justified in their actions because they never dipped into the taxpayer’s pocket, unlike RBS and Lloyds. Therefore, are RBS and Lloyds justified in providing bonus packages in the same way as Barclays? If they are privately held, shareholder-owned competitive banks, yes; if they are semi-nationalised, taxpayer-funded state-run banks ... In addition, the divisional components of the bank may be independently structured by their P&L but that argument doesn’t hold water when the bank would have gone under in the case of RBS, Citi and others, thanks to the failings of that very part of the bank that is now sharing the spoils amongst their staff at the customer’s and taxpayer’s expense.It is this blurring of the lines between a nationalised business that should operate in the public’s interest versus the privatised industry that operates in the shareholders’ interest that is causing all of the media and general debate today, whether it is about bonuses, remuneration, profits, fees, interest rates or any other aspect of banking.This half-hearted, schizophrenic shadow of an industry that doesn’t know whether it’s coming or going, and has no idea how to regulate itself or be regulated, needs a strong hand to steer it to an objective and vision for future operation.That vision appears to be one of an independent industry, run under free market principles with shareholder focus as its central tenet. If you don’t like it ... lump it.
With the announcement that the cheque is ending its existence in 2018, I wonder whether Gordon Brown inspired this decision.
This is because one of his cheques bounced way back in 1972, during his student days.
It was sold on eBay for £3,100 yesterday (double click to enlarge).
That's 1,000 times more than the value of the cheque itself which was for £3.
Here's the description from the eBay item:
"This is a cheque for £3 which Gordon Brown bounced in his student days. The Bank of Scotland cheque is marked 'refer to drawer', and is supported by a completed form from the Royal Bank of Scotland, advising the payee that the cheque has bounced, and debiting him 13p in charges.
The cheque was payment for Brown's room rent in a student house at the University of Edinburgh; the payee was Bill Paterson (misspelt by Brown), who was the Warden. The cheque should have been made out to the University, not to the Warden. Failing to find Brown again, to get the cheque made out properly, Bill dealt with Brown's mistake by writing a cheque to the University himself, and paying Brown's cheque into his own account.. Bill demanded, and got, Gordon's repayment in cash.
The cheque is currently owned by Kate Paterson, who was given it as a present by her husband, the ex-Warden."
It's amazing how your student days can set you up for the way you manage finances for life!
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This builds on their other recent launch of O2 Visacard powered by Natwest.
I would normally be congratulating the bank for doing this, as they're the first mainstream ads I've seen of this nature from a mainstream bank ... except that it is interesting that Natwest start a major push into mobile banking and payments just as RBS, their parent firm, disbands their dedicated mobile strategy team.
Something strange afoot one wonders?
Equally, the fact that these ads are hard to find online - they're not on YouTube or in the main Google search results - means that Natwest have missed a trick to use social media to leverage this rollout. And there also appears to be no direct communication to the customer about the new app, e.g. where's the ad on their homepage?
Nevertheless, as a first in my sphere of awareness in terms of advertising a core new banking service on the mobile, this a positive step forward.
Meanwhile, although this is a first in UK banking as a serious rollout from a bank, it's not the first iPhone app for banking with MoBank launching during the summer and, in the USA, Wells Fargo, PNC, HSBC and more rolling out iPhone apps recently.
Many more are expected. According to NetBanker,
"each major bank will roll out dozens of apps, perhaps hundreds, to
support their business lines, major products and large segments."
Great stuff.
Just a bit of a shame that all I've got is a Nokia ...
Just found this great online game called Fat Cat Cash Back, based upon the escapades of Fred Goodwin.
Yes, we all know that Fred is old news now but it's an old game released way back in March. Shame I only just found it as it's good fun.
The idea is to Shred the Fred of his pension by clicking on the pound notes as they appear around his office. I only managed £52,000 but this month's high scorer Jimmy managed a whopping £12.7 million.
Well done Jimmy, and welcome back Sir Fred (in case you didn't know he's back, undergoing Reputation Rehab).
Oh yes, and I did think of titling this blog entry: Dah, Dah, Daaaaaaaaaaaaaahhhhhhhhhhhhhhhhhh!!!!! The Return of Goodwin!!!!!! but that would have been a bit childish.
Nevertheless, the article is a good reminder of what an ego can achieve:
Despite his reputation as a costcutter-Sir Fred pampered himself to a degree that would make an African dictator proud.
As well as executive chefs and sommeliers dancing attendance, a
luxury executive jet was on permanent standby. The £47 million Falcon
was capable of flying higher and faster than a 747.
He also reputedly tried to have his own private road built
from the HQ to Edinburgh airport, so he could be spared the traffic
encountered by 'ordinary' motorists on their way to catch a flight.
Even more astonishingly, he was accused by a government
minister of hiring a lackey to ensure the cash machine at Gogarburn
dispensed only notes bearing Sir Fred's signature.
With the news this week of 3,700 job cuts in Royal Bank of Scotland's (RBS) branches, the government increasing its stake in RBS from 70% to 84% and Lloyds setting off on a £21 billion fundraising spree, it seemed like a good time to launch the Financial Services Club Scotland.
We had our first meeting on Monday at the prestigious Royal Society of Edinburgh ...
... with keynote speakers John Rendall, Chief Executive of HSBC Scotland and Professor Michael Mainelli of Gresham College and the London School of Economics.
The focus of the first meeting was to study what the financial crisis has meant to Scottish industry, society, the economy and its future?
Here's a quick overview of a few key facts and backgrounders.
Scotland's population is just over five million people, with 2.7 million workers and an unemployment rate of just over 7%. GDP was £86.3 billion in 2006, but this is slowing with output in Scotland contracting 6.0% year-on-year since the second quarter of 2008, and Scottish GDP down 3.2%.
In particular, Scotland’s dominant service sector fell by 0.4% quarter-on-quarter during the three months to the end of June 2009, with banking showing contraction of 0.9%.
Banking in Scotland has a long history, beginning with the creation of the Bank of Scotland in Edinburgh in 1695.
Retail banking services to ordinary people followed in the 19th century based upon the trustee savings bank model and Scotland now has four large clearing banks: the Halifax Bank of Scotland (HBOS, now Lloyds Banking Group), the Royal Bank of Scotland (RBS), the Clydesdale Bank (part of National Australia Group) and Lloyds TSB Scotland.
RBS was, until 2008, the second largest bank in Europe and fourth largest in the world by market capitalisation and, in 2005, Scotland ranked second only to London in the European league of headquarters locations for European banks. However, having expanded greatly with a growth rate of
over 35% over the period 2000 to 2005, the sector is causing big
challenges today as RBS and HBOS keep hitting the headlines and
damaging the brand.
Even so, the financial services industry still employs 5% of the Scottish workforce or 113,160 people, and generates over £5 billion or 7% of Scotland's GDP. Edinburgh is still Europe's fifth largest financial centre and is the fifteenth largest asset managements centre of the world, and Glasgow has a thriving financial market in supporting operations and call centre management for many of the largest firms.
Equally, Scotland has one of the world's largest fund management centres,
with over £300 billion worth of assets directly serviced or managed in the
country.
All in all, the conclusion of the evening’s discussion is that you cannot linger over what is past.RBS and HBOS happened: GET OVER IT!Scotland now has to regroup, rebuild and refocus and probably get back to its fundamental roots of asset managmenet and prudence.,Meanmwhile, one of Scotland’s biggest success stories is the Scotch Whisky industry.The near totality of Scotch whisky production (90%) is exported, and exports rose 4% to a record $5 billion in 2006, when whisky sales accounted for 25% of Britain’s food and drink exports. Wow!
So, if Scotland’s banks can mess up our money, at least we can console ourselves with a stiff shot of whisky.
And that's what we all did at the end of the meeting:
Actually, it was just wine and nibbles, no Whisky, but maybe next time.
Oh yes, our next meeting will take place in January 2010 and will focus upon “Scotland the Future”, with senior figures from new, Scottish based banks such as Virgin and Tesco.
And our third meeting in March will examine “Scotland the Recovery”, and will look at how the Scottish banks have turned around with a focus upon the state of play with HBOS and RBS.
So, if you're reading this and you're in Scotland or you're Scottish, then come along join in.
It’s been a bit of a manic day today as we've spent most of the day talking about the news that the European Commission, after an eighteen month investigation, have given the all clear for Northern Rock to be split up into a ‘good bank’ and a ‘not-so-good bank’. Not just this news, but also the news last week that they would shrink ING by half and the implications for other banks, such as Lloyds.
The Northern Rock news will call the 'good bank' Northern Rock plc, and will have all the branches, customer deposits, savings and low-risk mortgage book. The other half will be the Northern Rock Asset Management firm, and will keep the more risky mortgages worth about £40 billion.
The intention is to sell the good bank and for the government to keep the not so good bank until it can be made good, or the losses written off.This gets interesting as it means that Britain’s first sign of big trouble – the Northern Rock –which went into terminal decline after a bank run back in late summer 2007 can finally pay back the £28 billion invested and give a return to the taxpayer.The fact the European Commission saw no competitive issues is also interesting, as the government pledged £9 billion to help get Northern Rock lending this year – in fact, they told the management to stop repaying the £28 billion loan so fast – and this resulted in very attractive rates for new mortgages that, in the case of three of their products, are far better than anyone else’s. Is that competitive?There’s also the question of who will buy them, and all money is on Virgin Money.Virgin applied for a banking licence last week, and is clearly positioning to get more business. But without branches they may feel confined to just being a telephone bank.They expressed interest in buying Northern Rock back when these troubles started, and still want a slice of an existing bank operation.The real interest must be however in how much more of the UK High Street Virgin could get. For example, the European Commission came out against ING last week and told them to split into two firms – a bank and an insurance group – and to get rid of ING Direct in America.In other words, shrink the bank to about half its current size.Similarly, back in May, they did the same with Commerzbank.It would be unthinkable to imagine that when they look at the Lloyds TSB and HBOS merger that they wouldn’t do the same – in other words, shrink the bank – but the question is by how much.Forty percent plus may seem harsh, but as the new Lloyds Banking Group has a third of all UK customer mortgages and deposit accounts, it must be major cutbacks.Rumours are, for example, that Lloyds will need to sell off about 500 of their 3,000 branches.Meanwhile, Santander has a lot of overlap on some high streets, thanks to having Alliance & Leicester, Bradford & Bingley and Abbey in their group. So they will probably want to sell some branches too.As will Royal Bank of Scotland.This means that Virgin could rapidly become a 1,000 plus branch-based bank in Britain by the end of the next couple of years, if they want to be.So this is good for competition?Or is it just creating a new bank brand for Virgin at low cost based upon easy pickings.We shall see, but either way having a few new banks like Virgin, Tesco and Metro in the UK must be good for the consumer as we do need a bit more competition that the cartel that has been there historically.So thank you Nellie Kroes and the European Commission.What’s next?
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For over four years, since Facebook first appeared on my radar, I've been waiting for a UK bank to really get into social media. There have been a few attempts but nothing really mainstream. For example, the Co-operative launched a MySpace site for Good with Money and Barclaycard did some good things, but most was a gimmick or poorly delivered.
Generally however, UK banks are reticent when it comes to blogs, podcasts, interaction and Web 2.0.
and have 464 followers and 168 tweets as of today.
So it's great to see them launch a truly open dialogue in their Live area, which was announced in the newsroom yesterday.
"We wanted to give our customers the opportunity to talk back and let us know how they really feel about us. With this in mind we recently launched our new acquisition campaign - "Live".
It works by taking everything that's said about us online, from over 8
million forums, blogs and social media sites, and then feeding it,
live, onto our website www.firstdirect.com/live for all to see. At the same time we also launched Talking Point - a section where customers can leave a message for us."
Viewing the Live home page, you get some nice commentary to encourage you to dialogue:
and it clearly highlights some of the positive views:
as well as the negative:
In fact they clearly demonstrate how positive or negative customers are being overall:
with + signs for positive and - for negative floating up and down the home page, in real-time we assume ...
So hats off to First Direct for being at the forefront of UK financial social media. In fact, a real hats off as you can find all of this easily from their home page:
as, being Mr. Cynical, some would think this would be hidden away in some microsite somewhere.
Only a bank voted consistently number one by independent surveys would have such confidence to do this of course.
And, just as a reality check, I thought I should see if any other UK bank had a blog, twitter link or anything on their home page to demonstrate social interactivity.
Barclays Bank seemed to be better as, on their homepage they have a clear area prompting customers to ask a question:
so I thought I would search for where's their blog?
Can't find the answer? Contact us.
UK banks generally don't offer anything social on their internet prescence today: no Facebook, Twitter, Blog, Podcast or even interactive live chat.
It does confirm that banks don't want to interact with customers online ... only on the telephone or in branch.
At least First Direct is demonstrating some leadership here and it will be interesting to see how their service develops as the first UK bank to be in the forefront of this space ... a bit like they were the first UK bank to lead the telephone banking revolution.
*
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I blogged in positive terms recently about Royal Bank of Scotland and the 'Powered by NatWest' partnership it had created as a mobile payments processor for O2.
Just as this landmark partnership was created, RBS decided to close down their internal mobile payments team.
So much for a commitment to the future and the most exciting part of banking around right now.
Mind you, it does make me wonder about the bank's future when they close down one of the few areas where there is clearly growth for the future.
Last week, I blogged about innovations in payments from a consumer's perspective, and followed it up yesterday with an ancillary note.
In this second part, I thought I would take a closer look at what is innovatory in the corporate world of payments.
Many of us would immediately start talking about e-invoicing, supply chains and working capital. Sure, there is some innovation in those areas but the picture is bigger than this.
First, a little clarity of definitions, as per my lingo.
Commercial payments are the domain of the large transaction banks and their multinational and global clients. These are the mega corporations of the world we refer to affectionately as corporates.
It is not exclusively owned by these banks, as there are many national companies with domestic banks providing commercial banking very nicely thank you ... it's just that my mind wanders off into global processors with global clients when I think about commercial payments.
This is because there is a big change taking place here.
Until recently, these corporates had been fairly undemanding of their banks.
They were happy to have the odd lunch with their banker, who would fine dine and ego-boost them for an hour or two every month.
Taking their treasury operations, charging solid fees for transactions and generally making a good mint out of cross-border payments was food and drink to the banker.
This is where the money was to be made without stretching too far or too hard.
In particular, get the corporate to do their dealings through the bank via a proprietary link and you had ‘em for life.
After all, once the corporates general ledgers were hard wired to the bank’s systems, it was all but suicide for the corporate engine to switch to anyone else. This was especially true as the savings made just would not be worth the effort involved. A few cents here and a few pence there, per transaction, goes hardly unnoticed in the global wheels of commerce.
That was until standards arrived.
Standards.
The bug-bear of some, the bane of many and the blessing for the few.
The few who can work out how to leverage scale and exploit standards for volume savings.
This is what SWIFT do well – exploit standards for volume savings – but, until recently, SWIFT’s volume savings were purely gifted to the banking community. The corporate was still waiting for the benefit.
This is the struggle that has been taking place within the SWIFT community for the past decade and, to a lesser extent, still rages today.
How do you give savings to the corporate and how do you allow corporates to exploit standards, when all it does is erode margins for their current payments provider and allows the corporate to become a rate tart with easy switching to any other bank.
Tough.
The days of proprietary lock-ins are over.
SWIFT has recognised this and are ever more embracing of the corporate community for this reason.
Forget payments, transaction and messaging ... SWIFT's future is all around secure information exchange between banks, between businesses and, you never know, but one day in the future maybe even between individuals.
And banks are now scrabbling harder and harder to keep their corporate clients happy and well served for this reason.
Some of us would say, “isn’t that how it’s supposed to be? Shouldn't banks always serve their customer well?” ...
... yeah, but it hasn't been that way in the past because once you got the sucker, they couldn't get away.
But now they can and so let's look at what the banks are doing to serve their corporate clients better.
This was a question posed by Gary Wright, Director for International Payments with Royal Bank of Scotland last week at the Financial Services Club.
The evening focused upon the opportunities and issues with real-time payments and this is the innovation in corporate banking and payments that is taking place today, as we speak.
Real-time.
Real-time money movements intra-corporate and inter-corporate, intra-bank and inter-bank.
Real-time payments across borders and continents.
Real-time trade flows of information and risk.
Real-time.
That’s where the corporate money is at.
For a bank, you see, the old world of reporting as the bank wanted, when the bank wanted, how the bank wanted and what the bank wanted to report, was how it worked.
There was no incentive to leverage the information flows the bank had access to, which was a privilege. Banks have access to masses of trade data you see, but where was the incentive to tap into that data?
For many, with customers locked in via proprietary network connections that were hard-wired into back office systems, the incentive just was not there.
But today, with open networking via cloud-based systems that plug and play into SAP and ORACLE Enterprise Resource Planning suites of software, there is a huge incentive for a bank to re-engineer itself back into the corporate value-chain.
And that’s exactly what banks are starting to deliver.
So Gary joined an esteemed panel of industry payments experts, including:
Chris Pickles, Head of Marketing for Financial Markets & Wholesale Banking with BT Global Services;
Jonathan Williams, Strategy Director for Experian Payments;
Martin Wilson, Chief Commercial Officer for VocaLink; and
Tom Buschman, Chairman of TWIST Standards and CEO of EDGE.
It was an interesting debate and Gary, as mentioned, began by posing what do corporates really, really want, a-zig a-zig ah!
Gary answered this with a great slide. Just one slide, but a real goodie.
Here it is:
What this slide shows is the range of drivers that corporates have towards real-time services and improved delivery of services from the payments provider.
The fact is that working capital is the issue.
Without good visibility and transparency of working capital, corporates are stymied into a vacuum of ignorance.
It reminded me of a debate I had about four years ago where we talked about cash pooling and netting. One software firm had created a system that provided a real-time view of every corporate client of the bank’s cash positions globally.
With the click of button, the bank’s risk managers could see which clients were exposed where and when, and manage the situation.
The problem the software vendor had is that no bank wanted their system.
Why would a bank spend millions on a system that told them their clients were possibly exposed in real-time?
Intra-day or end-of-day would do.
That’s why the system wasn’t selling.
But guess what.
Turn that on its head and start talking about real-time cash management for corporate treasury today as an information service and guess what? You’ve got a winner.
The corporate treasurer mindful of his global financial positioning loves the idea of real-time.
And this is what banks are now buying into as a value-add service that differentiates them from the pack.
The more real-time service, the more real-time information, the more real-time movement to decrease fraud and risks, the more real-time capability to see how to improve ROI and decrease losses, the more a corporate client will love ya’.
And that’s what banks want.
Not to be loved ... but to keep their corporate client.
The other guys on the panel reinforced this view, but you have to be a member of the Financial Services Club to find out what they said.
Just to give you a glimpse however, I asked each panellist to see how they saw the future of payments and real-time at the end of the one hour panel discussion and here is what they said:
As you can see, the audience were riveted!
Anyways, the net:net on innovations in transaction services for commercial banking is that if you aren’t enriching your clients with real-time information services about their use of your bank’s services ... then you’re missing a trick because the competition is doing just that.
And by the way, e-invoicing and related innovations in supply chain management play right into that space too.
p.s. Martin Wilson articulated much more detail on this panel about the research VocaLink released at SIBOS on Faster Payments. If you want a copy, just click here.
The Finanser is sponsored by Vocalink and Cisco: For details of sponsorship email us.
It’s been nice having a break, and feeling like the banking system isn’t the only thing I care aobut in this world. Nevertheless, the eye wasn’t completely off the ball as several grumblings and mumblings have been taking place during the last two weeks.
The obvious and biggest story being the need to sort out bankers’ bonuses.
I’ve blogged about this stuff before, putting the arguments for and against big bonuses ... but seriously, there is nothing the governments of the world can do about bankers’ bonuses.
For a start, Barack Obama thought about a cap of $500,000 earlier this year. Various newspaper headlines screamed: “Obama imposes $500,000 ceiling on bailed-out bank bosses”, and this was seen as a good thing ... but only by the naive new incumbent of the White House that is who, like most of the populous, wanted to do the obvious thing and clip the wings of the evil banking system.
It just isn’t that simple.
Sure, bankers making ‘obscene’, ‘outrageous’ and ‘vulgar’ amounts of cash out of a failed system is a source of retribution to be sought, but not by making your country unattractive to the very people who fuel your economy.
That’s why Obama was rapidly shot down by those who understand these markets. Their argument went something like:
“OK, OK. So you’re a bit pissed with the banking system, as are all of us. But you gotta see it our way. The banking system is the fuel of the economy. If the system fails, the economy fails, you fail. You know that. That’s why you bailed us all out.
“Now then. What makes the banking system work? Having the brightest talent who totally understand and get these complexities of trading.
“Now you know how complex trading has gotten. That’s why we had these issues in Credit Default Swap Derivatives. In fact, the more derived a product is, the more complex it gets, the more risky it gets but, if you have guys who understand those risks and can trade in them effectively, then you make massive amounts of profit.
“That’s how the ‘vampire squid’ Goldman Sachs works, and that’s how all of us want to work. And it did us good for the past decade or so, didn’t it?
“So, you cap bonuses and you effectively are saying: the best and the brightest traders, go trade elsewhere. And they will.
“Just look at the dead meat on Wall Street and London.
“Royal Bank of Scotland for example. Lost a load of traders to BarCap and others overnight.
“Or UBS? Same thing.
“A bit of weakness in the system and stellar rewards await elsewhere for the best and brightest as can clearly be seen.
“So go on Mr. Obama. Put a cap on our ability to attract, retain and incentives the best and the brightest traders and you’ll soon see all your banks that are working fail. We will all fail because all the guys will be in some other country with some other bank.
“Oh yea, and you throw in a few things like: ‘working with the G20 in a co-ordinated fashion and we avoid this’. Sure. You think China and Russia would really see the opportunity to steal your main strength in the financial system – the knowledge – as something they would ignore or see as being just fair dues?
“We don’t think so.
“Your choice, Barack, but you stifle our competitiveness in salaries and bonuses and you sign our death warrant.”
In other words, the core of the financial system involves having top trading talent who understand their markets intimately in order to be able to deliver profits.
That’s why Citibank are arguing for $100 million bonus for their top trader Andrew Hall, and why Royal Bank of Scotland are paying Brian Hartzer $4 million as a signing on fee.
I liken it to footballers.
Do you really think that Christiano Ronaldo is worth or not worth £80 million?
Does it matter what you think because Real Madrid think he’s worth that and, if they have the money, they get the man.
This is how banks work and it may be economies they are kicking around rather than footballs, but the talented few who have proven track records deliver the greatest profits.
That is why America and Britain have fought Germany and France so hard over this matter, as America and Britain have the financial markets as the core of their economies and economic strength or, more recently, weakness. But to cede these markets now, as they move into recovery, would be to place a nuclear bomb in the heart of Geithner and Darling's Treasury operations.
It just will not happen.
Governments therefore have learnt that they have to protect their banks, that are too big to fail, and their bankers, who are too bright to lose.
Finally, on this last point, do the brightest really deliver the greatest profits ... or is it their firm and environment?
In a fascinating study by Harvard Business School’s Professor Boris Groysberg of over 1,000 stock analysts who worked for 28 American investment banks between 1988 and 1996, he found that when a company hires a star away from another firm: 46% did poorly in the year they switched jobs and their performance remained lower even after five years; there is a decline in the performance of the group the star analyst joins; the market value of the company hiring the star falls; and the star doesn’t stay with the new employer for very long.
Grosyberg concludes that hiring stars does not do much for a firms’ or the star’s performance, and that everyone would be better off by growing talent inside the firm.
Hmmmm .... it's good to be back.
The Finanser is sponsored by Vocalink and Cisco: For details of sponsorship email us.
Two years ago, the BBC ran a survey of 13,000 viewers about their satisfaction with banks and found that the leading financial providers were Cahoot!, Smile and First Direct, whilst Abbey came last.
Unfortunately, the Beeb has removed the survey from their website but the chasm between leader (90% customer satisfaction) and loser (45%) was dramatic.
The other thing I noted back then is that the winners were all banks without branches and that the respondents had no link between the bank and their parent. For example, First Direct's ATM network was voted the best in Britain whilst HSBC's was one of the worst - it's the same darned bank and ATM network!
Now Which? - the UK's leading consumer rights organisation - has surveyed 14,000 people during the first half of 2009 to find out who is Britain’s best bank. Here are the summary results:
Best current account
91% Smile (206) 90% First Direct (423) 84% Co-operative Bank (151) 84% Cahoot (68) 79% Nationwide (676) 74% Intelligent Finance (60)
Worst current account
50% Northern Bank (33) 51% Abbey (200) 53% Bank of Scotland (264)
* figure in brackets is number of people who voted with an account at that bank
The big four UK banks – NatWest, Lloyds TSB, HSBC and Barclays – are used by 47% of those surveyed and all scored between 55% and 60%, or low in other words.
Again, banks without branches represent four out of the top six.
Equally, the reappearance of Abbey in the bottom three is surprising as, two years ago, their issues were all about a systems upgrade. Maybe customers haven't forgotten how bad that experience was.
Anyway, it makes no difference to customer loyalty with 61% of respondents saying that they have had the same current account for over twenty years. Of those who switched (23%) only 7% did so in the last year, even though half of them say it's easy and hassle free.
Combine this with another survey which found that most people wouldn’t bother switching their bank account, particularly to a new entrant, and you realise that once you've got the sucker's account opened, you've got them for life.
Whatever.
The Finanser is sponsored by Vocalink and Cisco: For details of sponsorship email us.
Marketing week ran a fascinating survey of British citizens last month and their views about banking.
The results find that most people don’t trust trusted brands with their money, and would rather stick with the banks.
The survey sampled 1,716 UK adults and asked a series of questions, including...
Which, if any, of the following brands would you consider taking out a financial product with (e.g. credit card, savings account, current account)?
None of these 65% Tesco Finance 20% M&S Money 18% Sainsbury’s Bank 15% A charity you support 6% ICICI 4% O2 3% B&Q 1% Pizza Express 1%
These results surprised me with 65% of consumers saying they would not take out a financial product with any of their favourite brands. I was also shocked as Tesco, M&S and Sainsbury have been in banking and financial services for over a decade. After ten years, can it be true that people really don’t trust these trusted brands? What would the score be for Virgin, another major brand that has been digging into this space for a decade?
This was no more surprising than the shock result of the next question ...
What are the most important features that you look for in your main financial provider?
Easy/convenient banking online 41% Competitive interest rates 39% Security 37% Overall stability of the financial institution 34% Reasonable and non–punitive fees 24% Error–free management of accounts 22% Convenient branch network 17% Well established financial services brand 16% Treating me like an individual 15% Friendly and easily accessible staff 15% Don’t know 5%
The number one answer is easy and convenient online banking? Wow! Only a few years ago, most people would have said that they weren’t interested in banking online due to issues over reason number three – security. Amazing what broadband access can do isn’t it?
Mind you, with online banking used by four out of five households these days, maybe it’s not so surprising.
Then they asked which statements folks agree with, and these were quite surprising (or not) too ....
Both individuals and companies have taken on too much risk for short–term gain (62%)
It’s easy to feel you’re no longer in financial control (59%)
It’s hard to know who to trust in the world of financial uncertainty (53%)
Banks don’t care about the person behind the money (52%)
Too interested in new customers, banks have forgotten the basics (50%)
Banks are too focused upon profits and shareholders to have customers’ interests at heart (49%)
Too complicated and confusing means I switch off (20%)
I get more out of spending money than saving it (17%)
I can understand the first three statements, but these results mean that every other customer of a bank thinks that their bank is not interested in them as a person or as a customer. Wow! So why do they stay? Why don’t they switch? Maybe it's because 1 in 20 have no idea why they chose their bank ...
... or maybe it’s because, as the editor of Marketing Week writes, “a month ago I changed my bank. I’m already fighting with the new people in charge of my money over £70 worth of what I consider to be unwarranted charges.”
There’s quite a few other worthwhile things to quote from the article too, such as Philip Mehl, Head of Marketing for HSBC UK, who says: “We have avoided jumping on to the bandwagon of telling customers how to run their lives better in a recession, as we have learned that customers want banks to run their own businesses better before we start throwing out unsolicited advice.”
Jeez ... a banker talking sense. Stick that in your diary.
The article about the survey has a number of classic lines too.
“It seems that while marketers are always told that trust in brands equates to commercial success, the financial sector does not appear to follow this rule. In a Morgan Stanley survey published last week, consumers claim they trust Tesco more than the banks and believe it offers better value. But a third stated they ‘definitely wouldn’t’ or were ‘very unlikely’ to open a Tesco current account and this figure rose to half when it came to taking out a Tesco mortgage.”
Mmmm ... that’s good news for the launch of Tesco Bank isn’t it?
“When looking at which words consumers associate with their main bank, ‘loyalty’ and ‘acceptance’ rate highly while words like ‘anger’ and ‘contempt’ receive just a fraction of responses in comparison.”
So, the media are wrong about the general populous hating their banks then?
The article then gets into some case studies with banks and non–banks, with some fascinating conversation with Alistair Johnston, O2’s marketing director:
“We’re acutely aware the communications sector around voice and text has reached its [full] size and, if we’re going to grow the business, then we have to find new areas ... we think we can offer new ways to manage money. In the future, people will be walking around with their phones, they won’t have cards or wallets”, he says.
That’s why O2 have launched a couple of payments cards, as have Phones4U, to test the waters of banking.
Even so, this is not necessarily the biggest concern for big banks. Their concern should be customers switching to small banks.
“Co–operative Financial Services claims it has seen a ‘massive increase’ in customers switching from the big names to smaller ones. Specifically, in comparison to last year, there has been a 636% increase in RBS customers switching, 236% in HBOS and 165% in Lloyds TSB.”
Yowzer! What does this mean for the big banks?
Maybe take a tip out of HSBC’s flagship customer brand, First Direct?
“First Direct head of digital marketing Joan Sutherland explains: ‘86% of all our transactions are now online, so our biggest challenge is how to replicate the fantastic rapport our reps developed with customers on the phone and inject the brand personality into the online space.’”
What did they do?
Lots of personalisation including the social media newsroom and Virtual Forest, a place where customers get to plant a tree for every time 20 accounts switch to paperless banking.
They also focused heavily on the mobile space, with 500,000 hits on the website from iPhones so far this year to July.
All in all, it’s about innovation, which brings me back to Philip Mehl of HSBC.
“The tendency in any recession is to go into lockdown mode and this is precisely not what we have done. First, if you don’t invest for growth, when it does arrive you’ll be slow to take advantage of it and second, innovation can take time to come on-stream so it needs to be planned well ahead.”
I told you he talked sense, didn’t I?
The Finanser is sponsored by Vocalink and Cisco: For details of sponsorship email us.
The UK banks announce their half year results this week (results are provided at the end of this entry, as they are released). And the results look good. Not great, but good.
This follows on the US banks second quarter results, with Goldman Sachs reporting record profits that were twice as good as expected, and even Citi and BoA reporting profitability, albeit thanks to sales of key assets. The rest has been down to a good investment banking run, with a strong stock market rally and benign yields on fixed–income products.
The UK banks don’t have quite the same conditions, although Barclays should see a strong surge thanks to Barclays Capital. Like the US investment banks, Barclays has the strongest trading desk of the big UK banks. They’re also benefiting from picking up the best and most profitable parts of Lehman Brothers American operations last year and, all in all, this strength will be demonstrated in very strong results.
Barclays were also the bank that had a share price that sank to just under 48p at one point which also reflected the issues of taking over Lehmans and the volatility of Q4 2008. But now, the share price is up over £3:00 in latest trading, a six–times multiplier on a January investment, and all is good.
This is well demonstrated by by the Abu Dhabi investment fund. The fund has made a 73 percent profit so far on their investment after only eight months. Not bad for a loan that allowed Barclays to escape the UK governments clutches.
Result? Abu Dhabi decides to invest in Richard Branson’s space project, Virgin Galactic. Mind you, if you’re making that sort of profit, you would have money to burn wouldn’t you?
Barclays has had a few ups and downs this half–year though, as their dealmaker of the Middle Eastern bailout was Roger Jenkins. Roger Jenkins is one of the most critical players in Barclays’ investment banking operations, and he recently announced he was leaving.
But things overall are good in the Barclays camp which is why they filched the trading desk of Royal Bank of Scotland recently, which bring us on to RBS.
RBS will still have issues and are expected to report a loss. In fact, they’re expected to report a big loss as Stephen Hester, their CEO, is rumoured to be throwing in as much bad news now as he can. Nevertheless, he could be right to do so as, after Q1 reporting, there was a fascinating analysis in the FT about RBS and their asset backed securities.
In the Alphaville blog, the FT had an April article called: “Black swans, black sheep in the world’s biggest balance sheet”.
The FT had spotted in RBS reports that “impairment losses and credit market write–downs totalling £4,927 million ... were partly offset by gains on the fair value of own debt of £647 million.”
What this gets at is fair value accounting and who some screwy book–keeping can make paper profits and losses.
For example, RBS held £92 billion worth of asset–backed securities (ABS) in 2008, shrinking to £86 billion at the end of Q1 2009.
The article then goes on about complex investment banking stuff about hedgies and monoclines, but the reason I pickup on this is that discussion about ‘fair value’. Last year, RBS and the other UK banks were forced to write–down paper losses on assets that were far bleaker than the reality.
This is the nature of IFRS accounting and mark–to–market rules. The result is that the banks appeared to be haemorrhaging losses. What it forgets is that the assets that back those paper–based securities are still assets and, under fair value accounting rules, the write–downs made in 2007–2008 are now being written back in 2009.
This is why RBS should deliver a profit, although it’s a smaller one than expected thanks to Mr. Hester’s conservative approach.
Unlike Lloyds.
Lloyds Banking Group are also writing off major losses on their debt book. These losses will be the largest of all the banks, about £11 billion worth of the £32 billion expected across all UK banks, and relate to mortgage, credit card and other credit related losses. These are the losses that are the reason for banks to still be cautious about lending generally.
However, even with this big loss, I’m still thinking Lloyds will turn a small profit thanks to the accounting technicalities of fair–value accounting along with phenomenal operating profits. According to what I’m hearing, Lloyds delivered a £7 billion operating profit in the first half of this year thanks to low costs of borrowing due to low interest rates, whilst maintaining high costs of borrowing to customers, in line with the general markets. Add to this gains on write–offs last year, under fair value rules, and Lloyds like RBS will turn a profit.
Unlike the shock of HSBC.
HSBC should be delivering solid results, and usually do, thanks to their globally diversified portfolio. Trouble is, they took over household in the USA just before the subprime disaster hit and, as a result, have written off more losses than any other bank. Over $50 billion worth. No wonder they have activist shareholders baying for blood.
But read a little further between the lines of HSBC’s balance sheet, and you will see that it’s not as bad as it looks. Why? Because the same accounting rules that will gift RBS and Lloyds some profitability will take away the solid performance of HSBC’s operations due to their £12.5 billion rights issue in March.
All in all, it’s going to be a pretty topsy–turvy week ... except that John Varley and his merry crew will be enjoying the surge of being the only UK bank that can claim to be making a profit without using creating accounting ... this time.
[If you want an alternative analysis for this week's banking results, the BBC has a good summation]
Profits at Barclays Capital, the bank's investment arm doubled to £1.05bn from £524m, boosted by its acquisition of Lehman Brothers in the US and strong debt, currency and commodities revenues.
But a rise in impairments to £4.56bn, up 86pc from £2.45bn a year ago, dragged profit in UK retail banking down 61pc to £268m and knocked its commercial bank profits 42pc lower to £404m.
Barclays Capital reported a £4.68bn writedown on credit market exposures, including impairment on loans of £1.17bn. There was another £3.39bn in other group impairments and credit provisions.
Banking group HSBC has reported pre-tax profits of $5bn (£2.98bn) for the first six months of 2009. The figure is about half what it made in the same period a year ago.
BARCLAYS (BARC.L) (Pro forma June 30, 2009**): Tier 1 capital 47 billion pounds Core Tier 1 capital ratio 8.8 percent Tier 1 capital ratio 11.7 percent Presents the impact of the sale of the Barclays Global Investors business to BlackRock Inc.
HSBC (HSBA.L) (June 30, 2009): Tier 1 capital $117.35 billion Core Tier 1 capital ratio 8.8 percent Tier 1 capital ratio 10.1 percent (June 30, 2009)
LLOYDS BANKING GROUP (LLOY.L): Tier 1 capital 13.7 billion pounds (2008) Core Tier 1 capital ratio 6.4 percent (January 2009) Tier 1 capital ratio 9.8 percent (January 2009)
RBS (RBS.L): Tier 1 capital 69.84 billion pounds (2008) Core Tier 1 capital ratio 6.7 percent (March 31, 2009) Tier 1 capital ratio 9.9 percent (March 31, 2009)
STANDARD CHARTERED (STAN.L) (2888.HK): Tier 1 capital $21.51 billion (June 30, 2009) Core Tier 1 capital ratio 8.4 percent Tier 1 capital ratio 11.5 percent Pro forma August 4, 2009, reflecting 1 billion pound ($1.7 billion) fundraising
NORTHERN ROCK (NRKx.L) Tier 1 capital after deductions 0.5 million pounds
Shares in Lloyds Banking Group surged by 11%
despite its announcement of a £4bn loss in the first half of 2009, due
to mounting bad debts at HBOS. Comments that most bad news was now out and that future results would improve had heartened investors, said analysts. The
group, which is 43% owned by UK taxpayers, said £13bn of loans and
investments had turned bad, most of them from Halifax Bank of Scotland. It predicted future such charges for bad loans would be smaller.
Royal Bank of Scotland on Friday said its results were likely to be poor for the next two years as it reported a net loss of £1bn for the first half of 2009 following a quintupling of impairment charges to £7.5bn.
RBS, which is 70 per cent owned by the UK government, said the buoyant performance of its investment banking arm, whose £4.9bn operating profit saved it from posting a worse interim loss, was “likely to weaken substantially in the second half”.
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