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Grumpy Old Men Bank

Robert Peston | 09:26 UK time, Friday, 9 July 2010

It might be called GOM Bank (for Grumpy Old Men Bank) or, more exotically, OMIAH Bank (for Old Men in a Hurry).

Either way, one striking characteristic of the bank being created by Sir David Walker, Lord Levene, Lord McFall and Charlie McCreevy is their respective ages: 70, 68, 65, 60 (actually some biographies of McCreevy say he's 61).

Another, of course, is that they're immensely distinguished and energetic.

Sir David Walker, Lord Levene, Lord McFall, Charlie McCreevy

But none of them have ever actually run - or even worked in an executive capacity for - a retail bank, which is what they want to create.

Walker: Bank of England and investment banking.

Levene: Lloyd's insurance market and investment banking (and government).

McFall: erstwhile chair of the Treasury Select Committee in the Commons and scourge of a failed generation of bankers.

McCreevy: Irish politician, former EU internal market commissioner and accountant.

So the FSA will have to risk asking them some seemingly impertinent questions before authorising them to own or run a bank: how will they get some genuine retail banking experience on to the board; isn't there a risk to the continuity of the business from their respective ages?

And who's actually going to run the bank - in that they're all uber-grandees, non-executives par excellence, not in any sense dirty-hands executives?

As for the future employees of GOM Bank, they'll have every moral right to demand that they too can work way beyond 65 - which would create an intriguing operational problem.

Lots of you, however, will welcome their initiative, I am sure.

Retail banking in the UK is dominated by an oligopoly not that dissimilar in structure or membership from the oligopoly that ran British banking in the 1930s. So a bit of competitive tension would suit most consumers, though the history of British banking is littered with failed initiatives to create such competitive tension.

How does GOM Bank intend to become a serious player? Well it'll list itself as a shell company in the next few weeks. Endowed with £50m of cash from some investment institutions, it then hopes to buy a small bank and obtain a deposit-taking licence.

So far, so pedestrian. But GOM would then want to be seen as a credible bidder for the retail banking business that the European Commission is forcing Lloyds to sell.

Those 600 Lloyds branches, with a 4.6% share of the retail banking market and 19% of Lloyds' mortgage assets, is what GOM would most like to buy, rather than Northern Rock, the nationalised bank (which it sees as less appealing).

As you can gather, there are quite a few hurdles for these grumpy old men to vault before they're giving HSBC and RBS a run for their money.

But I've know all of them (apart from McCreevy) for more years than I choose to admit. And they're all gritty long-distance players who won't be put off by the odd obstacle.

Comments

  • Comment number 1.

    They've cottoned on to the fact that there are a lot of grumpy old bank customers out there who aren't too happy with what they've got - but to be honest (sending this from Ireland) I won't be touching anything that McReevy is involved in. Have you seen what's happened in Ireland since his days of influence and policy-making here (then made worse by Cowen when he was finance minister). The place has turned into a disaster zone.

  • Comment number 2.

    I wish them well. If they have integrity, a good ethical approach, and can build it slowly and responsibly then I think this is a great way to recover from the disasters of the last three years. More small banks and building societies, together with credit unions, will all help the process of starting over.

    Robert,
    In view of your position at the BBC, I would have thought that you would realise that 70-something is young these days. Haven't you heard all of the news & current affairs items, telling us we are going to live for ever? Well, maybe into our '90's, possibly. Assuming you live in an affluent location ...

  • Comment number 3.

    First we MUST break up the existing highly protected big banks! I have yet to see any sign of doing this or even any real plans to do this. But it MUST be done.

    You rightly point out that any bank that wants to take customer deposits has to negotiate a huge number of regulatory obstacles - the is where the protectionism and entrenchment of the monopoly cartel starts.

    As I see it the only way to break up the big banks is to regulate them in such a way as to make it financially beneficial to break them up from the shareholders point of view. For example: punitive corporation tax fro large banking corporations over a specific size. Then shareholders would start to insist that the big banks would break themselves up. (Existing shareholders would get 10 different shareholdings in 10 separate banks for their existing single big ban shares.) But the only way this will happen is to make it financially beneficial.

  • Comment number 4.

    Sounds just like the type of team Richard Branson forms to start a business.
    Would we all go for a load of Virgin banks on the high street? Well if it gives good service, why not?

  • Comment number 5.

    Hmmm.

    Friends and revolving doors?

  • Comment number 6.

    Hmm - they need a chief exec with some major banking experience and also knowledge of purchasing assets - time for Fred the Shred to come out of retirement?!

  • Comment number 7.

    I know I am a pessimist, but how is this bank going to be any different? The market moves as a herd... had this bank been around 3-4 years ago, they would have been caught out just the same. I would stake my career on the fact that they would have had sub-prime exposure as it all looked so 'attractive' at the time that they would have been punished by the market had they not been involved.

    So creating a 'prudent' bank based on avoiding the last financial crash is a bit like closing the door after the horse has bolted. How will they avoid the next crash and protect the retail depositors is what I'd like to know.

  • Comment number 8.

    Robert,

    As far as I know, Adenauer was 73 when he became chancellor. Without wanting to draw a parallel between the respective states of the financial sector and of post-war Germany, grumpy old men may just be what is required.

  • Comment number 9.

    Robert, Jokes aside (how many politicians make a Bank board) there is no reason for seasoned hands not to make a venture such as this succeed.

    Age is something lacking in companies these days, too many youngsters easily bored or distracted.

    What is of more interest to us readers of your piece, WHO are the MONEY MEN behind the Bank?

    Didn't think you can buy Bank assets without 'pieces of silver', unless as swashbuckling pirates, they commandeer them from the taxpayer?

    "Aha me hearties. Long John 'Silver' McFall is back in town!"

  • Comment number 10.

    Don't think for one minute this grumpy bank will be any different to the others. Quite rapidly their profits will diminish - as do all over the long run - and they'll be overcharging and ripping off their customers - just like the rest of them.

    "Those 600 Lloyds branches, with a 4.6% share of the retail banking market and 19% of Lloyds' mortgage assets, is what GOM would most like to buy, rather than Northern Rock, the nationalised bank (which it sees as less appealing)."

    - Oh really? I thought we were 'going to make a profit' on our Nationalised stakes - surely there's some mistake - what do you mean NR is less appealing?
    Maybe the realisation is starting to hit home. we're getting nothing back, in fact we're just about to have to pay a whole lot more

    ...but why listen to me - go back to those dribbly old men who have served you so well in the past...

  • Comment number 11.

    People usually buy a piggy bank to put their own money into.
    I suspect these little piggies have plans to get rich on other people's money.
    But seriously, isn't this the worst time to start a bank? When most of the country is seething at the fact they have to suffer the hardships caused by the greedy excesses and reckless decisions and dealings of people like this lot?

  • Comment number 12.

    Robert,

    All good and well.

    I'm unclear on the new business tangibles this bank is to offer?

    Is it merely a predatory operation to simply take advantage of EU rulings for the break-up for Lloyds or Northern Rock?

    If so, then what differentiators will be offered by the leadership team in order to establish a competent, competitive bank (the million pound question!)?

    Or is this merely one almighty pension fund for the leadership team??!?

    ---

  • Comment number 13.

    #11

    No - this is the perfect time to start a bank provided it is prepared to take on helping to rebalance the economy. What worries me about this particular proposal is not that the team hasn't any retail bank experience but that they haven't any industrial experience.

  • Comment number 14.

    Robert

    Death is a tough obstacle to cross.

    These old boys will flop or drop.

    Retail banking is ferociously competitive and very hard even with extensive experience. If their main plan is to buy branches of Lloyds Bank then i predict a rapid flop. There is a high probability that large tracts of Lloyd's existing loan and mortgage book will go bad in the coming consumer downturn and crashing housing market.

    A superior strategy might be to obtain a proper sum of money perhaps as much as £50bn from a sovereign wealth investor and start from scratch and clean up. Also this new bank could do without McFall & Walker who remind me of badly dressed versions of Statler & Waldorf from the Muppets.

    Loans would only be given to those that meet sensible lending criterior and there would be no bad debts to worry about. The market has alreay shrunk enornomously and will shrink further as the bad debts come through. Fresh money will rule not a few quid wasted getting old men buying old tat.

  • Comment number 15.

    In Bulgaria they say - the wolf changes his cloth but not his personality.

  • Comment number 16.

    This sounds good, Einstein said 'you cant solve a problem using the same minds/brains that created the problem in the first place' So having non-bankers running a bank should produce a better result. This principle should be applied to more of our current problems.

    I am amazed that the same economists who failed to predict the the current mess are still employed, still touting the same old rubbish about needing growth, still wanting the world to run on the same old same old BAU principals and methods. Since the the whole tottering pack of cards was built on limitless virtually free energy and that has now gone (energy is still available but is getting more expensive by the minute) its time to replan based on new thinking not the old stuff.

    So good luck to the GOM lets have a new style bank where customers and bankers share the benefits instead of the current one-sided system.

  • Comment number 17.

    This is daft enough to be really great.

    And banking and the UK financial industries generally need something NEW. Not just more carbon copies of the same old junk. (Carbon copies?? Hey those guys are old enough to remember them!!)

    And their age and experience will make them tough cookies when it comes to whizz kids trying to sell them a line or have them over.

    Yep, I'll buy that, we do need bank bosses that are much more cynical about the things 'professional' bankers do and the way they do them.

    Long live the Grumpy Old Men.

  • Comment number 18.

    A very big welcome to ANY new entrants into the banking market - and the fact that McFall is involved sounds extremely promising.

    And when they eventually get going there's one key thing they can do to obtain the trust of the British people while at the same time distinguishing themselves radically from the other cartel players - disclose voluntarily a whole shed load more information about the business into the public domain. This is, for all financial companies, unquestionably the way to go to re-establish trust.

    However, the barriers to entry in banking ARE huge.

    Until they can be reduced, then indeed the best way of increasing numbers is to break up the existing banks.
    The UK should not wait for a European ruling on this, but get going unilaterally.

    The cost to every single man, woman and child in the UK of the complex cartel operating in banking, investment banking, fund management and across all 'financial products' is unbelievably high.

  • Comment number 19.

    6. Michael wrote:

    "Hmm - they need a chief exec with some major banking experience and also knowledge of purchasing assets - time for Fred the Shred to come out of retirement?!"

    Now that would be shooting themselves in the foot, wouldn't it? In my view that is neither a need, nor a want.

  • Comment number 20.

    There is only one ethical bank on the highstreet...

    The Co-operative Bank
    http://www.co-operativebank.co.uk/servlet/Satellite/1193206368227,CFSweb/Page/Bank-CurrentAccounts&WT.srch=1

    It takes 10 minutes online to open a new account and only a week to transfer all direct debits and standing orders.

    They are currently No.1 for customer service.

    They executives that run the bank are not paid 'eye watering' bonuses as well.

    I do not work for this bank although I do have a current a/c with them.

    I thoroughly recommend them.

  • Comment number 21.

    4. At 10:11am on 09 Jul 2010, barry white wrote:
    Sounds just like the type of team Richard Branson forms to start a business.
    Would we all go for a load of Virgin banks on the high street? Well if it gives good service, why not?

    ===============================================

    If he started a different kind of 'bank' and said they were not going after profit (and certainly not short term shareholder profit) as a main objective but aimed to be

    - the most ethical bank in the world -

    and they built up a reputation of transparency and trust - most people I know would join and their friends and relations, and I would now!

    Like it or not we still have to use banks for admin for as long as we still have money. His 'bank' could also do some of the services that post offices used to do and restore the heart of many a community... just ideas clearly we do not need more of the same, we do need thinking 'out of the bonkers banking box'

    Imagine that: "the most ethical bank in the world" a dream perhaps - but what a surprisingly nice 'if only' one

  • Comment number 22.

    Looking at their experience and age we can expect no fresh thinking from this lot. They will simply follow self interest and follow a familiar path as others have because they will fail to see the fundamental flaws in our montetray system as highlighted at http://www.chrismartenson.com/blog/exponential-money-finite-world/29744
    Only by bringing in those with an objective and scientific view point can a solution be found.

  • Comment number 23.

    they look like the breed who would borrow at base (1/2%?) and lend commercially at 7% ie: 1400% profit.

    Oh, hello, all the banks do it. Or is is 14% retail ie: 2800%

    At those rates who wouldn't want to own a bank? Can I have one too?

    GC

  • Comment number 24.

    They will make a huge gain in about 5 years time having bought some very low priced assets off Lloyds shareholders (taxpayers and pension funds) and then sell it to some other institution owned by a pension fund to make it a bit bigger.

  • Comment number 25.

    Come on Richard! stop doodling around on your island - your country needs you!
    book a hotel and lets get all the contributors to these blogs together and form

    - the most ethical bank in the world -

    a new kind of 'bank' run for the people (but not some loose commune thing)
    and not for the short term gain of a few investors.

    that new approach could offer hope to millions in a time of change -
    by starting to redefine our attitudes and what we think is possible, and finding new ways of doing things..
    If we do not start to look for positive new ways - what is going to happen?
    more of the same until... ?

  • Comment number 26.

    20. At 11:48am on 09 Jul 2010, DebtJuggler wrote:
    There is only one ethical bank on the highstreet...

    ===============================

    Thanks - your post had not come up when I commented
    I had heard they were good I will go there.

    What I find inspiring is that this could be a moment to re define what 'banks' are
    and what we want them to do. They are at the core of a lot of problems but something new
    c o u l d be a great opportunity..

  • Comment number 27.

    We've been here before. HBOS appointed Andy Hornby as CEO. Hornby had no banking experience but wanted to bring his retail skill acquired at Asda to bear at HBOS.

    The rest, as they say, is history......

  • Comment number 28.

    Hmmm, so not experienced in retail banking? Surely given the mess most of our banks (with the notable exception of HSBC) have made of it they can't do any worse!
    I run a small business, and I am just trying to launch a new product that means we need to take money by credit card and direct debit - trying to get this essential service set up is a nightmare with the current banks, so if the new GOM's bank (love the name, they should go with it!) can offer a decent service to small businesses then it will get my vote.

  • Comment number 29.

    @ 20. At 11:48am on 09 Jul 2010, DebtJuggler wrote:

    > The Co-operative Bank ... executives that run the bank are not
    > paid 'eye watering' bonuses as well.

    That cannot be. There were bankers on this site who said that spivs _must_ get huge wages because they are so clever. They must be venerated - they are the masters of the universe!

    Unless banking isn't so hard, after all - I mean, they used to do it in the middle ages, eh? Shakespeare wrote about them - remember Shylock? Only now, we want OUR pound of flesh from them!!


  • Comment number 30.

    Are we clutching at a straw that's already broken the camels back?

  • Comment number 31.

    21. 24law wrote:

    "Like it or not we still have to use banks for admin for as long as we still have money."

    Well actually, you're not as dependent on them as you may think, though it does take a bit of "working around".

    There are other mutuals, e.g. building societies and Credit Unions. There is also deal ol' National Savings. Remember, an organisation's high street presence is not as big a deal as it once was - several banks have encashment and similar arrangements with Post Office which might effectively bring your bank closer to you (in some parts of the UK) and of course there are lots of cash dispensers everywhere these days.

    I personally have had only very limited dealings with the Co-op bank, but their customer services leaves other banks (e.g. Santander) miles behind, if my experience is anything to go by.

  • Comment number 32.

    17. At 11:42am on 09 Jul 2010, Sutara wrote:

    "And their age and experience will make them tough cookies when it comes to whizz kids trying to sell them a line or have them over."

    Well MCFall seemed to have difficulty in asking the really tricky questions in the select committee when the RBS board were there. I mean they got off lightly - maybe McFall realised at that point that 'this banking is simple, all the rewards and no risks!'

    As for age and experience, well I seem to recall the RBS board had a wealth of experience and age - and look what happened there!

    Still, what do bankers know - RBS was named Global Bank of the Year 2007 by The Banker magazine!!!!
    http://www.rbs.com/microsites/gra2007/profile/group_profile/index.asp

  • Comment number 33.

    So how exactly does this story differ from the one from Thursday, 4 March 2010?

    It doesn't. So I will post the same comment!



    In order to compete the "new" bank will either have to offer better rates or take greater risks than the other banks are prepared to.

    Oh how the other banks will chortle!
    Let the "new" bank fail. The taxpayers will bail them out of course..

    Meanwhile the other banks will just carry on business as usual.
    Yep this is UK business all right.
    More taxpayer's money pledged. Fed through to them of course.
    Nothing changes.

  • Comment number 34.

    We need more competition in the retail banking sector. It wasn't too bad a few years back with HSBC/Barclays/Lloyds/RBS/HBOS/Abbey/A&L. But when the old government let Lloyds buy HBOS and Santander buy all the small banks we went back to a big five system (With Lloyds and Santander having hugh market share).
    This bank sounds like a better buyer for these branches than the otheres I have heard. When RBS was told to sell some branches under the Williams and Glynn's name by the EU the ony bidder was Santander! That is hardly good for competition.

    For anyone who thinks there is no danger with small banks doing simple things, I would suggest reading up about the savings and loan crisis in the US during the 80s. Sometimes being part of a bigger group can get you through a crisis in much better shape (look at HSBC).

  • Comment number 35.

    Wouldn't you find the most likely outcome being that the grumpy old men buy the LTSB assets and then put up the 'For Sale' sign?

    Because there won't be any regulatory kerfuffle about one of the Banking Establishment players buying up some small insignficant organisation, will there????

  • Comment number 36.

    Robert,a GOM bank might not be a bad idea if some of the old style provincial bank managers were restored and given real lending authority rather than absurd monthly "product targets" that seem to involve shovelling money out of the door to anyone, creditworthy or not. It might also improve customer service - ask a question of most High Street bankers today and if it doesnt involve product sales they generally don't know the answer and will refer you to some regional office miles away or to a call centre ( in Hyderabad ). Welcome back Captain Mainwaring!

  • Comment number 37.

    Can you teach an old dog new tricks?

    Like other posters have mentioned, if you hate the way the big 4 operate then the alternative is the Co-op.

    We probably need another ethically run bank in this country. I'm not really sure the crumbly brothers above can pull this off.

    Is this another job for the Branson Bandwagon.

  • Comment number 38.

    A retail bank that has the unique concept of looking out for depositors rather than staff and BoD, is what no longer exist so the opportunity is there. Banking, these days, is about ethics. How about a statement of ethics, a purpose to actually serve the customers. That would work. The cynical bankers that decieve and manipulate to create bubbles and bonuses continue because the governments are too weak to protect the people form street level card sharks sitting in board rooms and laughing as they steal from the people and are protected by politicians. A non-gambling bank..what a nice idea. Of course those that currently run casino banks and investments houses will oppose any effort to create something that wasn't taking advantage of customers...wouldn't want to set such a precedent. They will have political handmaidens to assist in maintaining the existing corrupt and vile standards of today. There still has been no real reform in banking and that tells you all you need to know.

  • Comment number 39.

    29. At 1:25pm on 09 Jul 2010, Jacques Cartier wrote:
    "There were bankers on this site who said that spivs _must_ get huge wages because they are so clever. They must be venerated - they are the masters of the universe!

    Unless banking isn't so hard, after all - I mean, they used to do it in the middle ages, eh? Shakespeare wrote about them - remember Shylock? Only now, we want OUR pound of flesh from them!!"

    G'day Jacques In The Box. Glad to see you on your favourite subject.

    Why *do* salaries tend to be higher in the financial sector than if, say, just for example, selling bananas down the market?

    And when you say 'spivs' - who are you referring to? If your daughter/wife/mum worked as a cashier in the local branch of Barclays, or your uncle was the manager of the branch, or your old schoolmate worked in Essex as an FX dealer, or your cousin was an HR manager at an investment bank in Canary Wharf - who would be the 'spivs'? Or is not specific to a job type, is it just when you do a job which involves a bonus - in which case bankers are just one of hundreds of industries? Or is it when you earn more than a certain amount?

  • Comment number 40.


    - the most ethical bank in the world -

    How about one that actually gives you a choice whether you want to take part in the giant ponzi scheme or not?

    Give me a 'bank' where I can pay a small sum monthly for the administration/management but have the option of (any combinations of the following) ...

    (1) leaving my deposit dormant in my account earning no interest, but under no circumstances being lent out by the bank to increase the money supply, increase their profits (and bonuses) and decrease the real value of my deposit - so basically a risk free holding account that I can use to pay for my day-to-day outgoings that is legally seperate from the rest of the business, 100% guaranteed by the government

    (2) getting paid a low risk premium for allowing my money to be invested in 'low risk' instruments such as government bonds (implicitly 100% guaranteed by the government)

    (3) getting paid a reasonable risk premium for allowing my money to be lent out through simple, low risk savings and loan operations, but with transparency/visibility of the profit and loss of this side of the business and the payroll/salaries/bonuses of those that manage this, so I can move everything back to (1) if I consider I am getting fleeced - guaranteed up to £35k by the government

    (4) getting paid a higher return for allowing more risky casino banking activities with my hard earned cash, but with a similar transparency as (2) so I don't get fleeced quite so much (although I would assume something of a higher payroll cost due to the higher interest earned) - not guaranteed in any way by the government

    (5) lending/investing money directly (and legally documented/supported/managed by said bank) to support the business or personal activities of friends/relatives/acquaintances or their companies whose ideas I believe in or who I trust to repay me, through a variety of debt/equity options, perhaps through leveraging social networking technology

    (6) lending/investing money directly to others in a similar way as (5) but to companies on a wider scale, whose business activities I wish to support and have confidence in

    I guess with such a system there would be some sort of time delay and/or charges for moving between facets { 1, 2, 3, 4 } of the account, although I would assume that I would stuck with an agreement in { 5, 6 } once I have taken the decision to invest.

    Also, by opening up { 2, 3, 4 } to competition from other 'banking service providers' you would be able to move the money around relatively freely to the 'account' that most suited your needs and personal choices.

    I suspect there would be major problems migrating everyone to such an account however, as if everyone were to sign up and race to option (1) the entire financial system would soon come crashing down (again) ...

  • Comment number 41.

    #4 and #21

    Virgin has already bought a bank. Recently they purchased Church House Trust, which is based in my town, Yeovil in Somerset. So there you are guys, your wish has already been granted.

  • Comment number 42.

    We can have as many banks as we want or think we need.

    But what will change if we don't regulate them as tight as the Americans regulate child abusers?

    The Federal Deposit Insurance Corporation is currently listing 287 failed US banks since October 2000. 260 have failed since February 2007.

  • Comment number 43.

    @ 39. At 3:38pm on 09 Jul 2010, HaslemereBoy wrote:

    > Why *do* salaries tend to be higher in the financial sector than if,
    > say, just for example, selling bananas down the market?

    Because bankers (like all spongers and parasites ) developed a sense of entitlement that society should help them along. Well, those days are well and truly over now. The only thing they are entitled to is our contempt while they count _our_ money at low cost (if they can manage it).

    > And when you say 'spivs' - who are you referring to?

    Could it be - you?

  • Comment number 44.

    40. At 3:46pm on 09 Jul 2010, ScepticalMonkey wrote:

    - the most ethical bank in the world -

    ==================================

    what excellent starting ideas

    I am racing to number 1. where do I sign?

    That is the most important first base, I cant imagine that or something very similar, not being very popular.
    Personally I had not really thought about investing/saving or in any way giving any 'bank' money if I could avoid it - and yet, as you move into 4/5/6 - well = interesting

    number 4. - as long as it has - ethical - written through it like Brighton rock!
    as you move into 5&6 very interesting! Could almost signpost a whole new way of going on 'local support is the best there is' growing from the ground up.. a small positive social revolution here?

  • Comment number 45.

    42. At 4:16pm on 09 Jul 2010, copperDolomite wrote:
    We can have as many banks as we want or think we need
    ==================================

    Absolutely right and there were some big ones here too that took a lot of money - system crash

    Don't we need:

    regulation
    transparency
    integrity

    ethical banking

  • Comment number 46.

    @ 42. At 4:16pm on 09 Jul 2010, copperDolomite wrote:

    > We can have as many banks as we want or think we need.

    I think that's a key issue. We need to have as many tin-pot banks as the economy needs, and none of them coupled together. We need to get used to trashing and building banks (and bankers) whenever they step out of line.

    Low coupling and high cohesion and a good deal of regional distribution is the right thing. It means they have to compete with each other on a level field. And we have to be very tough on Londoncentricity, and the causes of Londoncentricity.

    There is hope for Britain, as long as we make it work well.

  • Comment number 47.

    There is no greater compliment from the business media than to be the subject of a Robert Peston blog, especially when it laud's so fulsomely one's energy, grit and stamina in pursuit of achieving our objectives. As a team, these qualities will serve us well as we seek to identify and recruit the executives who will actually roll up their sleeves, run this new bank for the benefit of the public and its investors and ensure that we deliver to the deposit-making public a service of which the FSA will, we believe, wholly approve. Whatever age we may be, we are slightly hurt at the implication we are collectively grumpy. On the contrary we are full of optimism and good humour at the thought we can create a bank stuffed full of the youthful banking talent needed to take the reins from us when the time inevitably comes. Until then, we will lean on our Zimmer frames and create this exciting new enterprise. After all, 65 is the new 45…

    PS. There was one small factual error in the blog. We do have a retail banker: David Walker was Deputy Chairman of Lloyds Bank

    Lord Levene

  • Comment number 48.

    Do we need a group of grumpy old men buying up banks in Britain?
    I don't think so.
    Four (4) veterans of business and politics have joined forces to back a new venture that will compete to buy government-backed assets such as Northern Rock + a portfolio of branches of Lloyds Banking Group.
    The new venture, which is expected to start trading on the stock market as a “cash shell” in the next few weeks, will be chaired by Lord Levene. Lord Levine is due to step down as chairman of the Lloyd's of London Insurance next year. Cash shells may be literally just that: a shell company with a bit of cash added. The normal fate of these businesses is to be SOLD once the shell successfully completes a reverse takeover.
    According to reports, about a dozen institutional investors, including Aviva, F&C Asset Management and Invesco, have been approached by Lord Levene to back an initial fund of £50 million. That money would be used to buy up smaller banks but the new group is also eyeing Northern Rock and Lloyds branches.
    Venerable names do not add credibility; in fact, they make me nervous.
    Why?
    Walker, investment banking.
    Levine, investment banking.
    McFall, The Treasury Select Committee.
    McCreevy, Irish politician, former EU internal market commissioner and accountant.
    Too much investment banking in this background for my blood. These grumpy old men could so easily, so temptingly mix regular banking with investment banking, which of course is something that MUST not happen because mixing regular banking with investment banking was a prime cause of the economic fiasco of 2008.
    The government has been looking for a buyer for the 'good' savings and mortgage lending operations in Northern Rock, the bank whose near collapse in 2008 started the financial crisis. It has ring-fenced the toxic loans that went bad for the bank, thereby strengthening its balance sheet and paving the way for the bank to be re-privatised - either as a mutual or through sale.
    But do we want to put a cleaned up Northern Rock bank into the hands of this particular pro investment-type group?
    I don't think so.

  • Comment number 49.

    #4 and #21

    Virgin has already bought a bank. Recently they purchased Church House Trust, which is based in my town, Yeovil in Somerset. So there you are guys, your wish has already been granted.

    Is this just a prelude to what the Virgin has wanted to do?
    Maybe Richard is just a man who chances himself and most of the 'real world bankers' don't really like that but then again look what he has physically assembled for the brand.
    After all who else would you give a chance to? Most of the current banks needed baling out these last few months and years so who of them?
    I agree the Co-op is ethical and runs in the interest of the customers, again maybe that is what has been forgotten in the new age of customer service..

  • Comment number 50.

    Banking involves borrowing short term and lending long or medium term. This is inherently a risky business and a logical reason for banks to merge and form big banks is to spread this risk. The flaw in this strategy is that diversity gives no protection when there is a universal crash, as in 2008.

    The idea behind recreating a world of small banks is that then they will be able to fail without causing a serious domino effect.

    It may well be less damaging to the economy to have regular small bank failures than occasional massive bank failures. But is this in the interests of us as bank customers?

    Competition might improve some bank services, but it is likely to be detrimental to bank security, as banks are tempted to take greater risks in order to attract more customers. Competitive pressure will encourage banks to use their ingenuity to get round.

    The obvious, although unacceptable in the present political climate, solution is a nationally owned bank.

  • Comment number 51.

    To any one thinking of starting a new bank

    If you are have integrity, are ethical, and transparent then good luck to you!

    The door is open because we need a change! The whole world does.
    You will see in all the different posts that people have posted up some very pertinent points and good advice.
    But I would say just one thing, I think the British public is prepared to 'trust' (just) one more time, a bank -a new 'bank' that is, because 'hey' it just might work. BUT If they found that they had been lied to by that bank - 'Yeeeewwww that would be scarey!!

  • Comment number 52.

    Fiat money, deficit spending, same puppet masters. Change the puppets - it matters not.

    Zombie Nation

  • Comment number 53.

    6. At 10:22am on 09 Jul 2010, Michael wrote:
    Hmm - they need a chief exec with some major banking experience and also knowledge of purchasing assets - time for Fred the Shred to come out of retirement?!
    ---------------------------------------------------------------------
    What they need are people with ACIB (whatever it is called these days)and other FSA qualifications who care about building something medium to long term, not merely making short term gains - personal or corporate.

  • Comment number 54.

    re #51
    Hope you are not making the mistake of blaming the financial sector, in general, and banking, in particular, for the credit crunch. The causes were many and more varied. Other reforms, changes and new approaches are required for the future.

  • Comment number 55.

    23. At 12:22pm on 09 Jul 2010, Guy Croft wrote:
    they look like the breed who would borrow at base (1/2%?) and lend commercially at 7% ie: 1400% profit.

    Oh, hello, all the banks do it. Or is is 14% retail ie: 2800%

    At those rates who wouldn't want to own a bank? Can I have one too?

    GC

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

    No. Not on the evidence you have provided above. Have you checked your calculator?

  • Comment number 56.

    #51 24law
    "If you are have integrity, are ethical, and transparent then good luck to you! "

    That's a good one! I could ask why would anyone with those credentials even entertain owning a bank!

    The reason the grumpies are considering it is because they think they can do better than the current crop of operators.

    Just like Branston did all those years ago when he smuggled albums in from France without paying VAT.
    He thought he could make 15%
    This lot think they can make untold wealth because:
    A. It is there to be made.
    B. Folk will queue up to give them the money.

    They aim to cover the new bank with a real thin skin, chimera even, of respectability. The rest they hope will be history.

    They may well start out by adhering to the Basel accords. Voluntarily.
    But the other banks will not take this new competition on without a struggle.

    It wont be long before the new bank has to fight tooth and nail for business.
    It will not be able to do that and also retain its morals.

    Nope, it will be in the same marketplace and the same rules will apply and it will end up playing the same way.

    It wont be long before it gets up to the same tricks. It will have to in order to survive.

    Think about it. To get customers through the door it will have to give better rates. Both for lenders and borrowers. And probably take greater risks with borrowers.

    Is that a good business model?

  • Comment number 57.

    re #33
    May I suggest you listen to a recent BBC R4 programme (I think it may have been File on Four - last week?) on banking? Bearing the imperfections of all journalism in mind, I think there might be something there to widen your view.

  • Comment number 58.

    #57 Up2snuff

    I'll look for it. With open ears!

  • Comment number 59.

    43. At 4:41pm on 09 Jul 2010, Jacques Cartier wrote:
    @ 39. At 3:38pm on 09 Jul 2010, HaslemereBoy wrote:


    **************
    > Why *do* salaries tend to be higher in the financial sector than if,
    > say, just for example, selling bananas down the market?

    Because bankers (like all spongers and parasites ) developed a sense of entitlement that society should help them along. Well, those days are well and truly over now. The only thing they are entitled to is our contempt while they count _our_ money at low cost (if they can manage it).
    **************
    A sense of entitlement - there's a lot of it around that's for sure.
    But as I say to my 8-year-old son, "I want doesn't get".
    You can't be happy with this answer, surely?


    ***************
    > And when you say 'spivs' - who are you referring to?

    Could it be - you?
    ***************
    Well, maybe, maybe not!
    I don't have a clue if you'd consider me one as you've made no effort to articulate any reasoning behind your constant raging of these spiv sorts.

  • Comment number 60.

    56. At 7:37pm on 09 Jul 2010, prudeboy wrote:
    #51 24law
    "If you are have integrity, are ethical, and transparent then good luck to you! "
    ===============================================

    I think you very clearly make the case with good reasoning, that as others have mentioned a 'carbon copy' of what already exists will sink, generating only a widespread cynical distaste for its owners, instead of profit. (not a good place to be)

    However

    we have three box's
    Box one: The OMIAH guys. will it work? it all depends on their motives
    (if, as BluesBerry suggests it could be selling cash shells - don't do it guys)

    Box two:
    Mr R B's rather beautiful Church House Trust (49) a 'banking experience' for the rather beautiful and the rather rich (not me then) interesting at least in its timing - I wonder if they are thinking differently after all this?

    Box three
    all sorts of new things began in these lands, good things, why not a new way of dealing with 'money' a new kind of 'bank'

    And here is a challenge - outrageous perhaps but read on - to Mr B, or any one similar, if you want to make money that is OK, we wish you well, but walk away.

    If you want to make - history - read on! So here is the challenge, spread some cash and influence and invite all the contributors to this blog to town and we would come up with a totally new 'bank' that could change our western way of going on. How is that for a challenge!

    Such a wide range of experience, views, firm beliefs, depth of understanding of different fields, buckets of smarts... but we can all focus on a need.
    Unfortunately there is a great creative talent and camaraderie that only seems to come out of latency in dire times of war or emergency in this country and , well we are in a dire time aren't we?

    respects 24

  • Comment number 61.

    RP, can I safely infer that this bank will not be an 'Investment' bank?

  • Comment number 62.

    Let us hope then, Robert, that these esteemed gentlemen do not need in the future to ask Mr King for a relatively minor short term liquidity contingency (not a loan at that stage).

    Else you might again be obliged to 'inform' the nation immediately (as happened with Northern Rock and sparked the infamous 'run' which crucified a worthwhile and profitable organisation and ruined 180,000 small shareholders - unlike the handling of the secret lending of a huge £71 billion to RBS/HBOS of course, which was kept from the public for years.

    Perhaps,in future,: TSC Chairman to McFall:-
    "Mr McFall, we see that you requested LOLR money from the BoE: why haven't you resigned? Why are you still in post?"

  • Comment number 63.

    @ 59. At 8:56pm on 09 Jul 2010, HaslemereBoy wrote:

    >>> Why *do* salaries tend to be higher in the financial sector than if,
    >>> say, just for example, selling bananas down the market?

    >> Because bankers (like all spongers and parasites ) developed a
    >>sense of entitlement that society should help them along.

    > A sense of entitlement - there's a lot of it around that's for sure.
    > But as I say to my 8-year-old son, "I want doesn't get".

    And as we now say to bankers - "I want doesn't get". That's why we
    made the cuts and continue to cut them. And if they leave, it
    can only be good. we don't need scroungers and parasites, thanks.

    Look - bankers do trivial work like dockers, and they are scroungers
    who have found themselves in an ideal postion to help themselves
    from the flow.

    Those jobs are trivial, of course, and now we're making sure thier
    pay matches thier actual importance, i.e. low. You know we're right,
    so why do you make a fuss? If they could do proper work, they'd
    get out of banking, surely? I mean - it's all unproductive overhead
    (by definition) and who wants to be a "drag" on everyone else?
    Only bankers...

  • Comment number 64.

    Fine and welcome if this particular "gang of four" are investing their own resources to add much needed liquidity to the banking system. However, I suspect there will be much "borrowing-to lend" involved and a further expansion of the investment based on credit system that was at the rotten core of recent banking activities.

    Too many have previously succeeded in creaming off a percentage of the false growth in other peoples' capital without bearing an equivalent percentage of the losses when excesses are corrected by capital losses.

    The majority of "small losers" have now awakened to the absence of "big losers" and it is hoped that this lot will not be regarded as too big to fail.

  • Comment number 65.

    Robert said "...Another, of course, is that they're immensely distinguished and energetic. ..."

    "And Brutus is an honourable man......"

    The nicer you are to people Robert, the more one needs to read between the lines of what you write! ;-)

  • Comment number 66.

    The only thing I can see these four senior citizens having in common is a desire for personal short-term financial gain. I would go along with the comments made about Mr McCreevy's less than auspicious record and as for Lord McFall - one really has to wonder what he's doing in this gang of four. This is a man who throughout the banking crisis consistently peddled worn out political dogma in favour of nationalisation and showed nothing but disdain and contempt for shareholders. Now he is playing the role of gamekeeper turned poacher trying to curry favour with investors to get this flawed proposal off the ground. While they claim their objective is to make the banking sector more competitive, everyone knows that successful small banks will always readily fall prey to the majors. That will mean financial gains for the initial investors but inevitably no long-term increase in competition or benefits for the consumer.

  • Comment number 67.

    Good luck to them (they will need it)

    I would rather see a National Bank set up, one non-transferable share for each UK resident.
    One that only does the simple retail stuff. One that publishes the true cost of a transaction.
    They could have the benefit of any interest on my current account to offset the cost of my transactions. I just want to pay my wages in, pay a few Direct Debits and have use of a debit/cash card.

    All profits to be distributed to the shareholders.

    All shareholders get to vote on the remuneration of the trustees.

    We used to have a publicly owned innovative bank, it was called the National Giro, the other banks didn't like it, it cut into their profits so the government of the day sold it off, the remnants are now Spanish owned.

    I want a bank like that but one that can't be sold down the river when it threatens the hedgemony of the current banking elite.

    The GOM bank will probably just turn out like all the rest, private profits and in the event it all goes horribly wrong, socialised losses.

  • Comment number 68.

    Richard Branson should start a new bank in partnership with a well respected public figure of known track record , impartiality,risk assessment faculties and ability to get the most out of their suckers .


    Which narrows the field down to the German Squid



  • Comment number 69.

    Are they for us or against us? That is what I want to know?

    Or will they sell us out like the other vultures and parasites at the earliest opportunity?

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7882118/HSBC-chief-Michael-Geoghegan-attacks-UK-public-sector-growth.html

  • Comment number 70.

    What difference does it make what age these figureheads are? Are they going to introduce something radically different e.g. ethical & transparent? If they do they will deserve public support.

    It's a foolish person that doesn't accept that there is a need for banks to earn on their activities but the test of their commitment to offer something different is to SHOW that to be the case. In so doing they would secure an, apparently, unassailable position in the marketplace.

    Let's face it, how many happy bank customers (whether personal, SME or Corporate) and employees do you know? There is an abundance of disgusted citizens: disgusted with the banks for their greed; disgusted with Politicians who knew exactly what was going on but were as greedy for the taxes as they were for expenses fiddles; disgusted that bailout money disappeared into an economic blackhole; disgusted at the short-sightedness of the inevitable impact upon social and cultural domains; disgusted that lending commitments to the economy at grassroots were not and are not being met; disgusted with the continuing arrogance of "new leaders" - Stephen Hester is barely plausible!; disgusted at the abuses of position; disgusted that WE continue to be treated with utter contempt by institutions who fail to recognise that the time when they enjoyed respect, trust and loyalty are gone.

    Institutions can no longer get off with sweeping things under the carpet, manipulating the press, dealing with some angry customer or shareholder letters and then carrying on as before once the dust settles. Information, communication and group-forming tools are available and being put to good use by informed, educated, like-minded people who won't just go away quietly...I'm sure the Pope would back me on that one!

    One final consideration - if it has already been pointed out in another comment please forgive me!

    We worked, spent, saved, invested and paid taxes. Politicians and Banks, in whom, we were told by our parents, we could trust, took multiples of that money and wasted, gambled (and lost) it all and more - after creaming off huge amounts.

    Banks mis-sold debt as credit because it served their purposes to turn conservative customers into consumers.

    They overpaid for assets in relentless pursuit of growth and marketshare - whilst creaming off yet more.

    The system essentially collapsed so was saved by creating yet more money, billing the current and future generations and, instead of using it to help support the source of its original and new wealth, rebuilt their capital base in an effort to resume what is the cultural DNA told them to do. Apart from direct injection of bailout money the same old customers - now also shareholders, who have been so badly served, will pay more for residual debt because of the lack of liquidity in the system!!!

    Now the institutions with whom so much of the citizens savings and pensions were/are invested and who lost so much value as a result of the above NEED to recover that ground and propose to fund the establishment of a new bank to buy back assets and infrastructure, no doubt AT KNOCK DOWN PRICES, from the banks that we own. In the process more highly paid legal and banking mouths before there is any chance of a new bank fulfilling its intended role.

    So, if I have this right, the short-cut would be to rid RBS & Lloyds/HBOS of the greed-mongers who perpetuate the ME culture to reposition them as ethical & transparent entities who reset the bar for banking.

    Where does the REAL VALUE lie? In being a shareholder (without a voice and an open tab) in self-serving institutions or as a stakeholder in organisations committed to customer service and sustainable stakeholder value?

    Easy call!

    David

  • Comment number 71.

    The word is Denial. The core inflation rate is persistently high in the UK , and yet the BoE officials do not belive this therefore do not take any action to prevent this. As far as Inflation is concerned, All the data indicate UK is going in opposite direction of the US and the EU. While many belive Inflation is a danger to the economy, the BoE officials do not seem to be concerned about this. All they are worried about is to maintain House Price Inflation. No wonder , you can not solve the problems using the brains of the same grumpy old men.

  • Comment number 72.

    @ 70. At 01:26am on 11 Jul 2010, David G Wilson wrote:

    > Are they going to introduce something radically different e.g.
    > ethical & transparent? If they do they will deserve public support.

    I fear that the four gentlemen referred to are just another bunch of squares in suits. It was squares that got us into this trouble, and, as Einstein says, no problem can be solved from the same level of consciousness that created it.

    We're supposed to be getting rid of the squares to stop this ever happening again. Yet more squares keep popping up all the time! How can we permanently neutralise the money-grubbing culture, and allow people to live full lives unencumbered by banker-parasites?

    These are the questions we need to ask. Tinkering is no longer a realistic option.

  • Comment number 73.

    The size of this proposed bank and the age of its creators are utterly irrelevant. I suspect these four are just another set of greedy, rather than grumpy old men. What we need to be talking about is the legal separation of retail and investment banking. That legislation existed here and in the States from the time of the Depression. It meant banks taking retail deposits from you and me were legally prevented from gambling them on risky products. Which meant that, when investment banks like ICC or Barings got in trouble, they could be allowed go bust as failed firms should, without taking the rest of us down with them. Removing that legislation was the worst thing Reagan and Thatcher ever did and I say that as a fan of Thatcher. Changing those laws gave banks the whip hand over us. They could never be allowed to fail again, because they would take all of us with them. They can still pretty much do whatever they want and know we will pick up the tab. Profit is private, loss is socialised. Bonuses go on. Greed goes on. And the poor pay the price. I simply do not understand how the whole nation is not rising up behind the demand for legal separation, Or rather I do. The bankers don't want it and they're powerful enhough to make sure the media and politicians don't raise it - politicians' preferred solution to everything is always tax which never actually benefits you and me. And the public can't comprehend the numbers involved and hate thinking about money anyway. It's pathetic that we don't have the gumption to do what our grandfathers did.

  • Comment number 74.

    Why could

    - The most ethical bank in the world -

    be important in any way?

    http://www.chrismartenson.com/blog/exponential-money-finite-world/29744

    we are not in a good place, for us or our children

    Unless we change

    we already suffer the pestilence of greed (something morally corrupting - a plague) we don't want things to become more 'biblical' so we need to change

    Lets not 'tinker' or sham - but why not build ethics and value? that must help form the cure

    What is a new bank? - a place/mechanism/ way set up with realism and transparency - throughout - for an individual to interact with society (get salary paid into, pay bills, have Debit card etc) and do cool things - clear clean 'retail banking' that might evolve in a again completely transparent way into exciting new opportunities for example like:

    40. At 3:46pm on 09 Jul 2010, ScepticalMonkey wrote: points 5 & 6

    'cool things' start - like millions of others to be an antidote to greed, for example have lots of graduates and other inspired young people pioneering 'profit without greed' what that could be !

    (just because we, older people have not thought of something yet, it doesn't mean that it does not exist, or wouldn't work brilliantly!)

    and encouraging in this place of interaction an exciting sense of CAN DO - like this existing example:

    http://news.bbc.co.uk/1/hi/business/10317992.stm

    Because one thing we obviously need to change in this country is the cant do attitude, into a can do attitude, and not to be so afraid of making mistakes... yes to that

    Could ethical banking change the world?

    Actually - yes! and imagine if it spread...


  • Comment number 75.

    This country has been on the YUF culture ride since the sixties.Having let it all hang out we seem to have run out of material and money.Along with this we have had the third way.Proggresive politics,equal oppertunities,fairness saving the world bla de bla de bla.How about putting this country and its people first.Who knows perhaps the population would not get the idea that the establishment and polititians.Were not a bunch of self serving cretins.

  • Comment number 76.

    74. At 3:59pm on 11 Jul 2010, 24law wrote:

    imagine ...

    Sadly, John Lennon got murdered in 1980. But we need people like him now. I’ve had enough of reading things by neurotic, psychotic, pig-headed politicians - all I want is the truth, just gimme some truth!

  • Comment number 77.

    75. At 4:16pm on 11 Jul 2010, RON HUTCH wrote:
    ===============================

    Ron, if I read you right - I absolutely agree, the sense I get from your post is:

    It is not what the country can do for me (there has been far too much of that)
    But what I can do for this country - and then the world because the world needs it - yes I agree! (and I absolutely hate PC too)

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

    We are not talking about dancing with the daisies here (although of course if that is your wish!... but count me out, if you don't mind) we, the whole interconnected world are in a not good place.

    Lets take a moment:
    in 1960 the population was around 3Bn and is now heading for 9.5Bn by 2050
    and right now we are consuming the worlds resources so fast we need two or three other worlds to keep up (don't take my word for it, there are facts and figures everywhere about this) obvious train wreck!
    we are going to run out of oil, food, water...

    The other thing that could happen, and has many times in the past is: war, famine, plague... until the numbers balance more.

    This is not some distant new age dream, this is today, it affects us and it affects our children - it is scarey real

    Unless we can change, and I do not believe in waiting for someone on high in the banking or political world to come and 'save us' and tell us what to do, that is not going to happen. I believe it is for each one of us to choose to try to make things better, not just wait for change but be a part of it.

    That is why I try each day to be positive in my own life, and for my family. and my country, the future...

  • Comment number 78.

    More haste... less SPEED...

  • Comment number 79.

    @ 77. At 9:23pm on 11 Jul 2010, 24law wrote:


    > I believe it is for each one of us to choose to try to make things better,
    > not just wait for change but be a part of it.

    That's why I got Canadian passports for my kids. I expect the Brits will be
    reduced to living in the dark and eating useless proteins (like rats,
    bankers ...) before much longer.

  • Comment number 80.

    If McFall's utterances as Chairman of the Treasury Select Committee are anything to go by, he is spectacularly unsuited to be anywhere near teh controls of a real bank. The FSA should dismiss his application summarily.

  • Comment number 81.

    nice to hear Peston point out people with no relevant or recent experience!

  • Comment number 82.

  • Comment number 83.

    Good luck to them ! --it may at least make the big banks start thinking and wonder if perhaps they are not bullet proof !

  • Comment number 84.

    Rich men with greed in their eyes - hardly a recipe for success.

    It is to be regreted that an organisation like John Lewis is staying away from this since the "partnership" structure and internal limits on executive pay have much to commend in these times where normal plc directors, see Marc Bolland/Stuart Rose et al, are so out of touch with the public mood.

 

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