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Lloyds to settle PPI claims

Robert Peston | 07:57 UK time, Thursday, 5 May 2011

Lloyds has decided not to use the courts any further to contest the decision of the regulator, the Financial Service Authority, that it should pay restitution to customers who were mis-sold PPI loan insurance.

Lloyds logo

This will be welcomed by thousands of Lloyds customers, although it will be very expensive for Lloyds - which is making a provision of £3.2bn to cover the likely costs.

That £3.2bn charge means Lloyds is back in loss, to the tune of £3.5bn on a statutory or official basis.

My post from last night explains much of the background to this.

Ignoring one-offs, on what Lloyds calls a combined business basis, Lloyds remained in profit, to the tune of £284m, for the first three months of the year - although this was well down on the £1.1bn made in the equivalent period of last year.

There was also a charge of £1.1bn to cover the expected cost of Irish loans going bad. This was £500m more than expected.

The reason for the higher than anticipated Irish lending loss is that the new chief executive Antonio Horsa-Orsorio decided to factor in a further possible fall of 10% in Irish commercial property prices.

Other striking characteristics of these figures for the first quarter of the year is that net lending to small businesses rose, bucking the national trend, and overall income was down from £6bn to £5.2bn.

What stands out however is Lloyds' decision to settle with PPI claimants.

It was a unilateral decision, but will put pressure on the other banks to do the same.

The size of Lloyds charge implies that the big British banks will in total take a £9bn hit to settle PPI claims, with Royal Bank of Scotland, the second most exposed, perhaps taking a £2bn hit.

Update 09:21: For taxpayers, it is good news that Lloyds has been weaning itself off loans and loan guarantees provided by us.

So in the first three months of the year, there was a further reduction of £26bn of funding for Lloyds in effect provided by the state.

Which means that Lloyds' residual dependence on de facto loans from us is £70bn - with £26bn of this still owed to the Bank of England's Special Liquidity Scheme and £44bn of debt guaranteed by the Treasury (under the Credit Guarantee Scheme) still needing to be repaid.

Barring a meltdown in wholesale markets, Lloyds should be free of exceptional taxpayer funding support by the target of 2012.

By contrast, the timetable for privatising taxpayers' 41% stake in Lloyds is yet to be decided - although today's decision by the new chief executive to face up to the mistakes of the past (the PPI and Irish losses) should make privatisation easier.

The next milestone for Lloyds on the road away from state ownership and influence will be the announcement in June of Mr Horta-Orsorio's new strategy for the group.

Update 09:54: Royal Bank of Scotland will not make a decision till next week on whether to join Lloyds in agreeing to settle PPI cases.

It had the second biggest share of the PPI market, with around 20%, compared with 35% for Lloyds.

My banking sources are surprised by the magnitude of the PPI charge taken by Lloyds. It was significantly bigger than they had expected.

They would expect RBS to eventually take a PPI hit of around £1bn (as I mentioned in a post last month) rather than the £2bn implied by Lloyds' PPI provision.

That said, it is highly unlikely that RBS will quantify the potential PPI damage when it announces its first quarter results tomorrow.

On RBS's imminent results, I would expect it still to be in the red at the statutory level, including - for example - a debit from a market valuation of credit insurance provided to RBS by taxpayers under the Asset Protection Scheme.

But at the operating level it will be in profit. And RBS's general insurance operations should be back in the black (some would say 'at last') - which matters, because RBS is committed to dispose of these well-known insurance activities, probably by floating them on the stock market.

Comments

Page 1 of 2

  • Comment number 1.

    Is there a charge in the accounts for any involvement in Credit Default Swap market manipulation, Robert? The EU competion authority investigation that the CDS markets are allegedly rigged.

    And if not, why not?

  • Comment number 2.

    I just want to point out that this loss is due to a PROVISION against a possible liability. Merely to help avoid the usual endless round of mindless banker bashing ...

    Yes, the banks were wrong in the way they sold PPI. But then so were retailers, with their equivalents, which I think they are still selling.

  • Comment number 3.

    Robert,

    Do we know how much of this misselling is down to Halifax, Band of Scotland and Lloyds? And with which 'products' these missold insurance products were bundled?

    In other words which of the old managements did this and they still there doing similar things - 'putting one over on' the unsuspecting public.

  • Comment number 4.

    #3. At 08:31am 5th May 2011, John_from_Hendon wrote:
    "Robert,

    Do we know how much of this misselling is down to Halifax, Band of Scotland......"
    ---------------------------------------------------------------------------

    Lots and lots John, lots and lots.

    I can't put figures on it but Halifax alone were major players in the PPI market when it first reared its ugly head. PPPI sales were linked to any credit or loan and sold under extreme pressure.

  • Comment number 5.

    re #3
    Might be interesting to know. But I think Lloyds directors - if it came from them (Robert suggested it was a CEO/board initiative) - deserve some praise for saying 'we were wrong on this and we will seek to settle claims'.

  • Comment number 6.

    To Matt-US
    I read that Lloyds were not involved in the Credit Default Swap market, so no provision needs to be made, I am sure someone will correct me if I am wrong

  • Comment number 7.

    Tip of the iceberg - mis-selling was and probably is rife in a whole range of retail financial products even in straight forward savings account with complicated rules and conditions not to mention the periodic withdrawal of proper interest rates. The £3bn is probably a small proportion of the revenue that the public have been cheated out of.

  • Comment number 8.

    The size of Lloyds provision may have something to do with their Black Horse Finance division, which handled all personal loans for the group. Including being the 'lender of choice' for many car retailers, double glazing firms, furniture stores etc etc

    Fo many years Black Horse's standard loan agreements were of a type which included PPI by default and required customers to consciously opt out, even to the point of proving they did not need it. There were also complex clauses designed to avoid payouts in many circumstances where customers became unemployed, e.g. through a pre-existing medical condition, needing to resign to care for a partner or dependent etc

    The PPI contract was legally a separate agreement so worded that should a customer in difficulty have the loan included in an Individual Voluntary Agreeement, a Debt Relief Order or some other debt payment arrangement then although the loan had been cancelled, was being paid off at a nominal rate or set aside by a court the PPI still had to be paid on an ongoing basis.

    Some of the contracts even required that when the loan was repaid in full before running its full term, the PPI premiums had to be paid as if the loan had run its full term as part of the settlement.

    Black Horse? Black Mamba!

  • Comment number 9.

    #1. At 08:26am 5th May 2011, matt_us wrote:
    "Is there a charge in the accounts for any involvement in Credit Default Swap market manipulation, Robert? The EU competion authority investigation that the CDS markets are allegedly rigged.

    And if not, why not?"

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

    Because that would be an admission! I'd wager they have no idea of value either to mark.

  • Comment number 10.

    can't believe no one is happy about this but then some people just like to have a moan.

    They report a profit - people moan
    They report a loss - people moan
    They put PPI claims on hold - people moan
    They say they're going to payout all PPI claims - people moan

  • Comment number 11.

    The important aspect now is to ensure that the full costs of the PPI
    fiasco are levied against the private shareholders and guilty employees of the Lloyds and RBS banks. They are the one who broke the law and caused great distress.

    This is an obvious requirement to support moral hazard – the guilty must pay. As we taxpayers weren't involved at the time, then compensation owed by us is zero.

    This could be via a rights issue hat excludes dilution of the taxpayers portion, or by a direct levy on the private shareholders, and a surcharge against employees and bosses involved in the misspelling.

    It's their choice how they pay – but pay they must. The days when bankers could shuffle their private losees onto the taxpayer are long gone.

  • Comment number 12.

    In my simple view mis-selling to the unsuspecting customer on the basis of a commission payment constitutes trying to obtain a financial advantage through deceit. This is an offence under the Theft Act. Now it is recognised that this has taken place will the police be called in?

    I bet they would be called in if it were a bunch of hippies flogging beads.

  • Comment number 13.

    @ 2. At 08:29am 5th May 2011, Up2snuff wrote:

    > mindless banker bashing ...

    Why shouldn't we bash mindless bankers - is there any other kind?

  • Comment number 14.

    This is quite interesting to me, I was paid a small goodwill payment by LLoyds not a full refund on PPI, Lady Grey, went to the FSA and was payed a full refund on her PPI loan payments, I trusted LLoyds, she did not. More fool me. Because the loans were issued by the same person and the same bank. Clever old Auden, first mis sold then misled !

  • Comment number 15.

    Robert,
    In net terms, is this the banks taking the hit directly and swallowing the losses, so that the future view of the banks is less tainted by doubt about assets and therefore taxpayer's stakes are worth more, not less? Please comment in one of your posts.

  • Comment number 16.

    @ 10. At 09:18am 5th May 2011, Mike wrote:

    > can't believe no one is happy about this

    So why do you moan about it?

  • Comment number 17.

    10 Mike

    It is not that people like to moan but it has been apparent to most people that for a number of years now that the banking industry was based on a commercial model that constituted abuse of the retail customer.

    Speaking as someone in the closing years of a lifetime spent in both industry and commerce, the most significant aspect of the last fifteen years or so has been the development of a `spiv' mentality within middle and senior management which actually constitutes abuse of the customer base. In other words the prevailing attitude is that the customer who pays your wage is a mug to be fleeced at every opportunity.

    The banks have just been part of the problem. It goes a lot wider. Customers are important people and should be treated with respect.

  • Comment number 18.

    @ 7. At 09:04am 5th May 2011, watriler wrote:

    > Tip of the iceberg - mis-selling was and probably is rife in a whole range
    > of retail financial products even in straight forward savings account
    > with complicated rules and conditions not to mention the periodic withdrawal
    > of proper interest rates.

    Too right. Bankers are greedy pigs, and they've been at it for years. This Horta-Osorio fellow is trying to draw a line under it to separate his feeble efforts from those of his dunderheaded predecessors who caused the biggest foul ups in the history of banking.

    Trouble is, he's got another think coming if he tries to do it with _our_ money - the greedy private shareholders in Lloyds will have to foot this bill, while the taxpayers sit back. The rule is that the guilty must always pay the price.

  • Comment number 19.

    matt_us,

    Banks being investigated are
    Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Commerzbank, Crédit Agricole, Crédit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Royal Bank of Scotland, Société Générale, UBS and Wells Fargo Bank / Wachovia .

    No sign of LLoyds in that list.

  • Comment number 20.

    Matt-us
    Alright, it's getting boring now. I'm sure RP has seen on EVERY blog he has written that you want an article about the CDS scam. It's his blog. If he doesn't want to write about CDS, he doesn't have to. Why don't you do it on your own blog?

  • Comment number 21.

    5. At 09:03am 5th May 2011, Up2snuff wrote:

    > I think Lloyds directors ... deserve some praise

    Yeah - let's praise them for losing 3.5 billion quid. Way to go, guys!!

  • Comment number 22.

    @ 15. At 09:50am 5th May 2011, Simon ORegan wrote:

    > the banks taking the hit directly and swallowing the losses

    If this Horta-Osorio fellow had his way, the Taypayers would swallow the Bankers losses, so that HE looks good. But he's way too late for that scam - we saw it all before, back in 2007, remember?

    The greedy bankers who caused this chaos have to stump up the dough, not the public.

  • Comment number 23.

    New Captain on board lets paint everything as black as can be and its not my fault. When things turn out to be “not as bad as expected” the Captain is hailed as the saviour…..or is this just my scepticism!!

  • Comment number 24.

    > the timetable for privatising taxpayers' 41% stake in Lloyds is yet to be
    > decided - although today's decision ... should make privatisation easier.

    You mean it'll be easier to sell once the taxpaying public have been laden with yet more private losses, on top of all that has gone on since 2007?

    No way - Horta-Osorio is a dollar short and day late. It's time ot gouge the bankers.

  • Comment number 25.

    Perceptive and well reported. At last someone actually appears to be in charge at Lloyds and has done exactly the correct thing re PPI and Irish impairments. Its the future funding of LBG which is the key issue. For all of us taxpayers.

  • Comment number 26.

    PPI was the biggest earner for the highstreet bank for many years.
    I had the sense to see that it was not a good buy. Millions didn't.
    And yes, it was mis-sold: I was told a load of rubbish by a pushy woman working for my bank in an attempt to sell me a policy.
    Sadly, those resposible are probably long-gone with their ill-gotten gains.

  • Comment number 27.

    I am sure the Bonus payments to the top executives will reflect, the fraudulent selling practices that this investigation has exposed.

    In a pigs eye....

    Is there any bank that doesn't scam its customers ??? are any worthy of the high reputation they used to enjoy ??? or are they all as corrupt as each other and all in it together ?

  • Comment number 28.

    I am sure Jacques and the other pathological banker bashers really want to will join us in thanking Lloyds for their excellent decision to pay for their mistakes/misdeeds.

    Or will it stick in their craw that they haven't got another reason to kick 'em?

    The latter, methinks!

  • Comment number 29.

    @ 25. At 10:29am 5th May 2011, MegaBobinski wrote:

    > Its the future funding of LBG which is the key issue.

    There are plenty who would draw a line under this too soon. Bankers still haven't made any attempt at restitution yet. When we see plenty of humility, gratitude, less hubris, no bonuses, strong efforts to repay us and large losses for the individual perpetrators of the credit crunch, then we can begin to bring some contrite bankers back into the fold. Until then, they remain public enemy number one and a great threat to trade and industry.

  • Comment number 30.

    The banks loved PPI , you paid them a premium but the banks paid little out - MONEY FOR OLD ROPE..

    The next SCANDAL will be the none repayment mortgage -AKA equity release. Massively mis sold to our old and financially naive retired community on the understanding that house prices will ALWAYS go up and the debt will only remain a small proportion of the capital value of the house.

    Well guess what ? House prices have gone down and the loans keep going up as do life expectancy ages .

    In the next 5 years this is going to be a massive issue with pensioners only receiving a small cut of the house value . Some of the scheme's are running at 8% compound interest !!! , another MONEY FOR OLD ROPE SCHEME.

  • Comment number 31.

    @Jacques Cartier
    You think the government's stake in lloyds should be protected at the expense of private shareholders? Does this mean any future gains the taxpayer might make should also be capped?

    I think your vision of shareholders as fatcats in tophats sipping champagne and laughing at the little people is a little out of date.

  • Comment number 32.

    CDS (Credit Default Swaps) - Sounds like a tragedy about to happen, financial Armageddon??

  • Comment number 33.

    27

    Dear Aqualung

    Try Hoare and Co.

    Free banking if you keep £25,000 in your account.

    Also the only unlimitde liability bank in the country - the partners are personally liable.

  • Comment number 34.

    Given their desire to disengage from Government part-ownership, isn't it in LTSB's interest to over-provision for PPI complaints etc? They can force the share price down in the short-term, buy shares from the Government, then release the provisions later on and let the share price spring back...

  • Comment number 35.

    Jacques Cartier is skirting VERY close to some extremely slanderous comments against Lloyds executives and in particular Antonio Horta-Osorio.

    I would be surprised that he is allowed to use phrases such as "time to gouge the bankers" but then again this is a Peston blog so anti-bank rants are acceptable.

  • Comment number 36.

    @ 28. At 11:01am 5th May 2011, Abysmillard wrote:

    > I am sure Jacques and the other pathological banker bashers really want to
    > will join us in thanking Lloyds for their excellent decision to pay for
    > their mistakes/misdeeds.

    It is necessary for _them_ to pay for their own mistakes/misdeeds (not the public). But that is not sufficient – these guys must also learn from their mistakes.

    I expect recidivist sycophants to go about "thanking" bankers for being minutely less stupid than their bone-headed predecessors. But I prefer to rough them up for trying to pass on a 3.5 billion quid loss to the taxpayers (again).

    Jeez – some of these spivs have more front than a double decker bus.

  • Comment number 37.

    First of all, thanks for letting me know that Lloyds does not seem to form part of the investigation by EU Competition authorities - so that seems good for them.


    20. At 10:11am 5th May 2011, TurnipCruncher wrote:
    "Matt-us
    Alright, it's getting boring now. I'm sure RP has seen on EVERY blog he has written that you want an article about the CDS scam. It's his blog. If he doesn't want to write about CDS, he doesn't have to. Why don't you do it on your own blog?"


    Boring to you, perhaps, but if I am right, I should heckle, surely.

    Well, I would like to see what journalists think about credit default swaps and the role they play. I, as a licence payer, pay Robert Peston's salary. He is answerable to the public. The public want to know what is up with CDS? And why nobody advocates a ban, as they are clearly dangerous.

    I would like to see if journalists, like me, think that an immediate ban of CDS wil help to solve the eurocrisis. And if not, why not.

    It might well be, that Robert Peston is in favour of having CDS, that he finds some economic arguments in their defence. I do not think there are any.

    But as it stands, CDS can enrich people in the know. The less people who know how the scam works the better for people who do know. That is the problem with CDS and other derivatives.

    Why not my own blog? I do not know how many people read Robert Peston, but I am sure I will have less followers.

  • Comment number 38.

    @ 25. At 10:29am 5th May 2011, MegaBobinski

    Don't woory about the frenchman, only a jilted lover could be so angry! I wonder what happened? Perhaps RBS pulled the rug on his banana bending factory and now all he has to do all day is fester in an attic room somewhere dribbling invective and eating pot noodle.

  • Comment number 39.

    The interesting question now is what happens to the judicial review. The review was sought by the British Bankers Association rather than directly by the banks themselves. The BBA is a trade body that describes itself as "the voice of the UK banking industry". It is difficult to see how it could now continue with the action when its largest member by some distance (in terms of UK retail banking) no longer supports the case. This then gives the other banks something of a headache if they want to continue as they were not directly parties to the original case (the only other interested party being Nemo). If the BBA can no longer continue, the other banks may not be able to launch an appeal.

  • Comment number 40.

    re #11
    Sorry old mate, this is where your one and a bit PhDs have let you down. Lloyds is a PLC. Limits to liability. It's in the name, the title.

    It would be great to nail all the guilty guys for what happened 2007-2009 but it ain't gonna happen. Indeed, some are off doing it all over again in the housing and commodities and other markets. And one of the culprits is said to be after a bigger, better paid job, where he could cause damage all over again as well!

  • Comment number 41.

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

  • Comment number 42.

    re #21
    Pay attention, Faker Jacques! They haven't lost it.

    They have it in their sticky little mitts. They may hand over all, part or more than that amount to customers.

    Do keep up!

  • Comment number 43.

    35. At 12:26pm 5th May 2011, Againstthetide wrote:
    I would be surprised that he is allowed to use phrases such as "time to gouge the bankers" but then again this is a Peston blog so anti-bank rants are acceptable.


    acceptable? I thought that they were mandatory!

  • Comment number 44.

    37. At 12:32pm 5th May 2011, matt_us wrote:
    I would like to see if journalists, like me, think that an immediate ban of CDS wil help to solve the eurocrisis. And if not, why not.

    Because CDSs are the messengers not the problem. The problem is the profligate spending, financed by borrowing at artificially low Euro area rates, perpetrated by the governments of Greece and Portugal in the last few years, those countries' declining competitiveness etc.

    Why not my own blog? I do not know how many people read Robert Peston, but I am sure I will have less followers.

    It’s difficult to argue with that statement!

  • Comment number 45.

    I don't know how anyone can say that it will be expensive for any of the banks to repay these refunds.
    It's not the banks money. It isn't new money. They are merely handing back money which they have wrongfully taken and shouldn't have had in the first place.

  • Comment number 46.

    11#

    Up2snuff , is right , its never going to happen, but it should of happened three years ago.

    The problem is cross selling .

    You go to the bank to put in some money and you get the Home insurance sell, you know its twice the price elsewhere but a % of the population always say yes.

    Direct marketing - The bank knows your business through your accounts and direct sells the most "Appropriate" product.

    The banks simply use accounts to sell more profitable cross services and until this changes banks will be ripping off customers for years to come.

    Make it a rule - Never buy insurance from your bank or a retailer you will almost certainly be paying over the odds and be ripped off, its called common sense and no amount of regulation will save you , if you do.....

  • Comment number 47.

    I was in court today for Fraud. I was selling a product that did not work nor was even needed to those who could least afford it. The judge said that I faced imprisonment. However, my brief said that I had only been 'Misselling'. - The man is a genius - I got my wrist slapped and told not to be a naughty boy again.

  • Comment number 48.

    @#5 "I think Lloyds directors - if it came from them - deserve some praise for saying 'we were wrong on this and we will seek to settle claims'.

    Aye...although it might be an admission that after talking with the FSA they don't believe the BBA's challenge will be successful, and its therefore cheaper (and better from an image perspective) to skip the legal costs and agree to settle.

    Bear in mind they're also setting the terms for that themselves - although £3.2bn has been set aside, there's no guarantee that's what will be paid out. Lloyds is relying on customers proactively indicating that they feel PPI was mis-sold and contacting them to lodge a complaint...they won't be writing to all PPI customers to invite them to lodge complaints if they feel there were missold, as the FSA originally wanted - and a negative result in the appeal might result in other banks being ordered to do this.

    @27 & 33 Re, Hoare and Co.

    By all accounts a very professional bank that trades heavily on reputation. Not cheap, though. If you can't stick £25k into the current account, you have a £60 monthly standing charge plus 10p-40p per entry.

    Definitely operating in a different market space to the "Low headline cost, but flog to you and fleece you at every opportunity" model pursued by some of the brands in financial services. ;)

  • Comment number 49.

    40 Upsnuff - dead right for the shareholders, but as I'm sure you know the liability of directors isnt limited - so in some circumstances they would be liable, trading whilst insolvent, breach of fidiciary duty etc etc.

    However of course it would require someone with a clearly defined loss atributable to their negligence and missconduct and deep enough pockets to have a go. Given that Lloyds intend to compensate everyone for the miss selling not sure it would be worth the effort.

  • Comment number 50.

    I'm pretty sure I'm in for a bonanza.

    Not only was I never told why they were charging me PPI (they just started adding it to my monthly payments).

    Not only did I never agree to it.

    But I'm also not even covered by 99% of insurance coverage, because of an underlying health condition.



  • Comment number 51.

    It is upsetting to think that many Bankers would have received huge bonuses for the sales of PPI! Most of these people will now have 'moved on' with their fat cheques.

  • Comment number 52.

    I'll have to take them three at once, because they are getting nasty now!

    @ 42. At 12:54pm 5th May 2011, Up2snuff wrote:

    > They have it in their sticky little mitts.

    Who would be gormless enough to think for one moment that's it's been put to one side? It's all gone on bonus times for empty-headed fat-cats. And what little is left has been burned up by avaricious little insurance-clerks. Basically, they've hosed it, pal. It's the taxpayers (i.e. his bosses) that Horta-Orsorio was trying to gun for. But that was a forlorn hope, given the low standing of bankers in this country. Nope – the perps have to get it in the neck this time.

    @ 35. At 12:26pm 5th May 2011, Againstthetide wrote:

    > Jacques Cartier is skirting VERY close to some extremely slanderous comments
    > against Lloyds executives and in particular Antonio Horta-Osorio.

    You are skirting VERY close to some extremely slanderous comments about Jacques Cartier, chum!

    > I would be surprised that he is allowed to use phrases such as "time to gouge the bankers"

    The judge says that they gouged enough out of customers and taxpayers over the years; it's time they got gouged themselves. OK?

    38.At 12:32pm 5th May 2011, Abysmillard wrote:

    Oh, what the heck. I can't be bothered with that one.

  • Comment number 53.

    Dear Matt_us

    CDS are tradeable insurance products.

    As with all insurance products, the price is set between a willing buyer and a willing seller. Both sides to a CDS transaction are professional finance organisations. If a bank(s) are manipulating the price, then as the buyer/seller you have the right not to complete the transaction. More fool you if you enter into a contract at the wrong price.

    The only reason for a cartel of banks to engage in price fixing is that CDS prices are used to determine the level of credit cost provisions that will be required in their financial statements. In which case it is up to the auditors to determine if the price used is reasonable.

    Your main gripe seems to be that the CDS market is the first to reflect reality, and you would prefer to bury your head in the sand and pretend that Irish, Portugese and Spanish government debt are worth what those governments say.

    Long live the CDS market, and those who get it wrong (AIG etc) - tough.

  • Comment number 54.

    What has happened to WOTW? I miss his comments. Is he on holiday or has he been sacked for blogging all day?

  • Comment number 55.

    @ 31. At 11:48am 5th May 2011, topher1979 wrote:

    > Jacques Cartier - You think the government's stake in lloyds should be protected at
    > the expense of private shareholders? Does this mean any future gains the
    > taxpayer might make should also be capped?

    No – we take our gains fine and dandy, but we transfer any loses to the bankers. That is the game they tried with us (the British Public), and now they must take their medicine. All of it.

    > your vision of shareholders as fatcats in tophats sipping champagne and
    > laughing at the little people is a little out of date.

    It is now!

  • Comment number 56.

    @AnotherEngineer
    "Because CDSs are the messengers not the problem. The problem is the profligate spending, financed by borrowing at artificially low Euro area rates, perpetrated by the governments of Greece and Portugal in the last few years, those countries' declining competitiveness etc."

    CDS are messengers?

    Well, if that is the case - CDS only messengers, why has every financial crisis and scam since 2007 involved CDS? My argument would be, if they were not there, there would not be a crisis. Let us shoot the messengers, and see what happens.

    If CDS are only messengers, let us have a thorough look into the books of the main market makers of CDS (something the EU competition commission is up to), to see whether they have not unduly profited from being simple messengers.

    And let us have an proper tax on messaging. At least 20%, which is the VAT on my phone calls or on my internet connection, where I normally send my messages.

  • Comment number 57.

    51. At 13:34pm 5th May 2011, gutsygiggler wrote:

    > It is upsetting to think that many Bankers would have received huge bonuses for
    > the sales of PPI! Most of these people will now have 'moved on' with their
    > fat cheques.

    Don't worry - up2snuff tells me they have put the money in a sack, under the stairs!

    (God help us!)

  • Comment number 58.

    33. At 12:04pm 5th May 2011, treacle_01 wrote:

    Many thanks for the link but for me hardly a pop in chat with the manager, but a model more banks should run on in my opinion...

  • Comment number 59.

    Jacque Cartier wrote "The important aspect now is to ensure that the full costs of the PPI fiasco are levied against the private shareholders and guilty employees of the Lloyds and RBS banks. They are the one who broke the law and caused great distress."

    How exactly did the private shareholders break the law? Have you heard of the concept of a limited liability company?

  • Comment number 60.

    Dear Matt_us

    Every financial crisis since 2007 has involved CDS because CDS rates are the first to react to a pending financial crisis.

    Effect - not cause.

    Messenger - not perpetrator.

    Fire alarm - not arsonist.

  • Comment number 61.

    59. At 14:00pm 5th May 2011, Justin150 wrote:



    > How exactly did the private shareholders break the law? Have you
    > heard
    of the concept of a limited liability company?

    Ah... a “legal eagle”, eh? As you suggest, let's treat “limited liability company” as a concept, and look at reality instead. Reality might be hard, for you, so I'll step you through the facts slowly.

    Fact - The law was broken, so says a judge. So someone is guilty.

    Fact - The taxpayers weren't involved with the vast majority of it, as they weren't even there at the time. So it's not the taxpayers (who have been very helpful, despite a distinct lack of gratitude from dump yet avaricious City bankers, who just sit around grumbling and pretending they didn't screw the country up).

    Fact - That leaves the other "parties", which comprise (I think you know the rest of the story, don't you?) the private shareholders and the guilty employees.

    Taxpayers may be the lender of last resort, but they are certainly not going to be patsies for greedy, fatcat-bankers anymore. I hope that has clarified the politics of the matter for you. Is there anything else you are unsure about?

  • Comment number 62.

    All the banks should be required to re-populate the retirement accounts that were lost due to the gambling of the bankers. Of course none of it was illegal because the elected officials changed the laws and wrote the laws so it wouldn't be. In most quarters this would be call a conspiracy but with governments it is just called corruption. The governments continue to allow the same instruments that caused the problem to remain in play. I guess the bankers promised not to do it again and we all know how good the word of the bankers is. The cause was corruption in both the political and banking...economist were the cheer-leaders. I feel sorry for all those Asians who don't understand that there are things worse than oppressive governments....governments owned by bankers. Individual freedom means little when the government will allow the banks to steal what you make from your own initiative and than have the governments require the people to underwrite the banks. Most Western governments resemble criminal organizations.

  • Comment number 63.

    "60. At 14:27pm 5th May 2011, treacle_01 wrote:
    Dear Matt_us

    Every financial crisis since 2007 has involved CDS because CDS rates are the first to react to a pending financial crisis.

    Effect - not cause.

    Messenger - not perpetrator.

    Fire alarm - not arsonist."


    So change in CDS rates are the message, rather than CDS itself.

    CDS as I see it is a financial instrument that gives the illusion of hedging unsafe investments that ultimately encourages unsafe investment. But your right its not CDS itself, its the ratings agencies that fail to highlight their widespread misuse. But outlawing them would make the world a more stable place and maybe would be prudent in the light of recent events. No?

  • Comment number 64.

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

  • Comment number 65.

    @treacle_01
    "Every financial crisis since 2007 has involved CDS because CDS rates are the first to react to a pending financial crisis.

    Effect - not cause. Messenger - not perpetrator. Fire alarm - not arsonist."

    Nonsense.

    If I can make money through simple "messaging" or simply ringing the "fire alarm" which would me rich beyond my wildest dreams, I would make sure that the message "this euro country needs to reschedule its debt" or "this country is bust" is the alarm bell I keep ringing all the time.

    Ok, time for some maths in this hypothetical situation:

    You buy a credit default swap on a country which you think is bust. You bribe your way into the media, and ensure that international investors are scared off. By calling periphery countries PIIGS, for example. And mention that you have, as the largest US bond investor, long ago sold off all PIIGS country bonds. You also have an investment bank involved, which, through some financial "engineering" hid the real deficit of a country. Then that investment bank tips off a rating agency about that "fraud". The rating agency raises hell. It downgrades the credit rating of the country. Bond yields shoot up from 5% to 10%. CDS prices increase from 3% to 8%.

    That means, for a CDS, for which you pay $7,500 a quarter (or $30,000 a year, that is 3%) , you could insure debt worth $1,000,000. You are locked into that CDS contract for 5 years, though.

    Now, let us have a guess please, what that CDS is worth, bought at 3% yesterday, if CDS prices go up today to 8%?

  • Comment number 66.

    56. At 13:50pm 5th May 2011, matt_us wrote:
    If CDS are only messengers, let us have a thorough look into the books of the main market makers of CDS (something the EU competition commission is up to), to see whether they have not unduly profited from being simple messengers.


    I realise that you are not interested in inconvenient facts, but others may like to read the BBC’s report of the EU investigation ‘into CDS’ here http://www.bbc.co.uk/news/business-13244467 showing that the investigation is nothing to do with the actual market, but peripheral matters to do with clearing and the prices index.

    And how would banning CDS stop governments from overspending, the cause of the crisis?

  • Comment number 67.

    @ 54. At 13:47pm 5th May 2011, Tim from Sandhurst wrote:

    > What has happened to WOTW?

    Yeah - he's been silent since the yanks got Osama Bin Laden. Funny, that, eh?

  • Comment number 68.

    Jacques Clouseau is on the case and he has all the facts. It won't be long now before we've got all those dastardly bankers behind bars and he and Cato can take over for our own good.

  • Comment number 69.

    Dear Matt_us.

    CDS rates are the important thing. They give an indication of what the market thinks is going to happen.

    CDS do provide a hedging capability. The problem with them, and why they are now heaped in opprobium, is that

    1. Governments like to pretend that they are not in trouble
    2. Certain organisations sold CDS when they were totally incapable of assessing the risks (see AIG)

    The instrument in itself is incredibly useful. You just have to know what you are doing when you buy or sell it. Bit like second hand cars really.

  • Comment number 70.

    At 14:47pm 5th May 2011, United Dreamer wrote:
    CDS as I see it is a financial instrument that gives the illusion of hedging unsafe investments that ultimately encourages unsafe investment. But your right its not CDS itself, its the ratings agencies that fail to highlight their widespread misuse. But outlawing them would make the world a more stable place and maybe would be prudent in the light of recent events. No?


    Why is it an illusion? Which CDS have failed to pay out? You are right that they encourage/enable borrowing by dodgy borrowers like the Greek and Portuguese governments. Outlawing them would prevent this so would rein back on excessive spending and deficits. Is this what you mean by a more stable world?


  • Comment number 71.

    "I say, it seems that I might have taken your money wrongfully, even deceitfully. Awfully sorry about that, not really my responsibility, but you know how it is. Now I'm putting some (of your) money aside in case I should pay you back."

    "Oh, that's jolly good of you. I really appreciate it. You're are a fine fellow (at least, not as rotten your colleagues who don't plan to give anything back)."

  • Comment number 72.

    # 54, 64 & 67 -

    Yep - the kleptocracy have finally tracked him down and administered due punishment.

  • Comment number 73.

    65. At 15:01pm 5th May 2011, matt_us wrote:
    You buy a credit default swap on a country which you think is bust. You bribe your way into the media, and ensure that international investors are scared off.

    So are you seriously saying that international investors who invest billions in sovereign debt believe what the media say and act on it? This must be your most ludicrous accusation yet!

  • Comment number 74.

    @Another engineer

    For people who are really interested in the collusion case against 16 banks which control 90% of the CDS market.

    Here is what the EU competition commission says:

    "The first investigation focuses on the financial information necessary for trading CDS. The Commission has indications that the 16 banks that act as dealers in the CDS market give most of the pricing, indices and other essential daily data only to Markit, the leading financial information company in the market concerned. This could be the consequence of collusion between them or an abuse of a possible collective dominance and may have the effect of foreclosing the access to the valuable raw data by other information service providers. If proven, such behaviour would be in violation of EU antitrust rules (Articles 101 and 102 of the Treaty on the Functioning of the European Union – TFEU). "

    Now, prices are only given to Markit, which company is owned by these banks. Everybody has an interest to keep these prices as high as possible. Otherwise the crisis could be over. Bank A could buy a CDS from Bank B, and tomorrow, Bank B could buy back that same CDS at a higher price. That is the kind of collusion we are likely to see, once we open the Pandora's box of CDS. It is a near certainty that these kind of issues will arise. Or do you think there is a fair market for CDS? Does anybody know - if I buy a CDS today, what can I sell it at tomorrow?

    Because I know if I can buy shares at 500p today, I can sell them tomorrow at 495p, perhaps, if the price has not moved.

    Or, why have we seen an increase in CDS prices for Greece over the last 3 weeks by 30%? What has driven that price hike, other than price manipulation. For which a Citibank trader is being investigated, by the way, by Interpol! The market for CDS is opaque. That means we are being ripped off. That has been the case since the first market was invented. If you are the only one in the know, you can make up your own prices.

    Any share transaction is immediately reported in real time at the real price. CDS prices are set in a dark dingy room, and made up of the main CDS dealers, and only reported to Markit - that is the problem here. The EU Commission is right to investigate!

  • Comment number 75.

    @ 68. At 15:10pm 5th May 2011, Abysmillard wrote:

    > dastardly bankers

    Bastardly bankers, more like!

  • Comment number 76.

    @treacle_01 and ANother Engineer

    Stop telling us about the usefulness of CDS. No doubt they are for the main players, but everyone else is being ripped off.

    Do the calculation for us, please in #65 above.

    I have spent $7,500 today to buy a $1,000,000 CDS protection on a europeriphery country. Tomorrow CDS rates go up from 3 to 8%, as bond yields go up from 5 to 10%.

    For how much can I sell my CDS to another party, which is now interested to buy CDS protection?

    Please can we have an answer.

    And what is the return on my $7,500 initial investment, in %, please?

  • Comment number 77.

    @ 75
    Yawn!

  • Comment number 78.

    @AnotherEngineer
    "Why is it an illusion? Which CDS have failed to pay out?"

    Well - let me say it loud and clear to everybody. The first CDS which fails to payout will be CDS written on Greece, Ireland, Portugal and Spain.

    Because their will be something which hedge funds and speculators always ask for. A haircut. A haircut for hedge funds.

    Their CDS will be shorn extremely short, so that they become invisible. Hedgefunds will be skinned, to use the appropriate barber expression. In fact, CDS will be abolished. Sovereing CDS will be the first CDS not to pay out!

    That example will be followed worldwide by every other CDS in the world. Claims under CDS will just become illegal. That is it. From one day to the next. All "smart" hedge fund investors will look like idiots who thought they "hedged" something, will look completely foolish, as money for CDS turns out to be money for old rope.

    CDS will not be worth the paper they are written on, and whole sections of the financial service industry will collapse. CDS dealers will have to so something more socially useful, such as sweeping the streets, or raking leaves!

  • Comment number 79.

    71
    Wolfie these people did sign the document. Not that I agree with the banks on this but people should have the common sense to read what they sign if only so that we do not have to endure another round of those idiotic adverts from no win no fee solicitors.

    Also most of the people who signed these contracts will have lost the paperwork and will not know what they signed up for anyway, Lloyds know it! One thing Mr Horta wotsit knows is it aint going to cost Lloys anything like 3 Billion.

  • Comment number 80.

    Dear matt_us

    When you purchase a CDS, your risk is on the seller of the CDS, not on the underlying credit.

    It may well be that the first CDS not to pay out will be Greek, Portugese etc, but it will be because the seller can't pay, not that Greece can't pay.

    So if you buy credit protection, you need to do a credit review on the seller, not on the underlying credit risk.

    Banks are overall buyers of CDS, as they wish to spread their credit risk. They have to report their exposures thus generated to the relevant regulatory authorities (if they are large enough).

    If they are stupid enough to buy credit protection without doing a credit review then that is their problem. Similarly for the seller.

    This is not to say that there are not a large number of stupid people out there. The case of the (mythical?) Norwegian pension fund who thought that sub-prime investments were good just because Moody's said so stands as a good example.

  • Comment number 81.

    @AnotherEngineer
    "So are you seriously saying that international investors who invest billions in sovereign debt believe what the media say and act on it? This must be your most ludicrous accusation yet!"

    What, you do not believe the power of the media? Who wants to be the first fund manager in China or Japan, based here in London, to explain to the folks back home, why he invested in Portugal and Greece, when the FT and the BBC told us it was unsafe to do so? And Bill Gross and Mohamed El-Erian, the managers of the biggest bond funds in the world, PIMCO, suggested a year ago, it was unsafe to do so?

    Of course these folks look at what the media says and reports. It is credit markets, they only work if there is confidence. It does not matter, whether the confidence undermined on purpose. That is enough to scare off investors!

  • Comment number 82.

    I am puzzled as to how Lloyds are having to set aside £3.2bn to cover the likely costs.
    That is a lot of money. A lot.
    What percentage of the loans made does this amount come to?
    Were they price gouging at a high rate?
    Or were they lending out a stupendous amount of money?
    One or the other.
    No wonder they want to quietly settle.
    Either way they have been caught and shown to be lacking.
    But heck. No moral hazard. Taxpayers - us - pay.
    Clever bankers.

  • Comment number 83.

    @treacle_01
    "So if you buy credit protection, you need to do a credit review on the seller, not on the underlying credit risk."

    This is absolutely right. So sellers of CDS insurance policies will typically be "too big too fail" banks, which can be bailed out by the government, if things go belly-up. So that the seller knows that somebody will pay these insurance policies if things go bad.


    @treacle_01
    "Banks are overall buyers of CDS, as they wish to spread their credit risk. They have to report their exposures thus generated to the relevant regulatory authorities (if they are large enough)."

    First of all I do not think that banks are the main buyers of CDS. Why should they be? They can make lots of money selling CDS, why should they want to buy them? And I have not got a clue what they have to report. CDS was certainly not an item to report on when the EU did its last banking stress test!

    I suspect the general public "in the know" will want to buy CDS. The people who think they can be as clever as John Paulson, the richest hedge fund manager in the world, who made billions on CDS in 2008. Or they want to be like their heroes in "The Big Short" (book by Michael Lewis), the hedge fund managers in that book, who made money on CDS.

    It will be the usual assortment of chancers, insider traders, hedge funds and other speculators, who think they are cleverer than the rest of us. Led by George Soros and his hedge funds. He is always around if there is a country to destroy. that is what he specialises in, in between his undoubtedly charitable activities. They only have one thing in mind, though, to rip us off. And drive the europeriphery into misery and penury!




  • Comment number 84.

    Matt_us

    Re 76.

    You will be able to sell it for a price dependent on your credit rating.

    Is it better than that of Greece?

  • Comment number 85.

    With regard 3.5bn provision I wonder if the Lloyds staff bonuses, previously paid on what is in effect now "bad business", will be recovered or offset against future bonuses. Something tells me it won't be.

  • Comment number 86.

    @treacle_01
    "You will be able to sell it for a price dependent on your credit rating."

    No, sorry, maybe I did not make myself clear.

    I bought a 5 year CDS insurance yesterday. Issued by a Big Bank. Pick any of the 16 banks implcated in the CDS scandal. All too big too fail, as I want to be sure, that they can cough up, if the eurocountry on whom I have bought the $1,000,000 insurance, lets call it Spain, goes bust.

    So my CDS contract is a commitment by myself to make 5 annual payments of $30,000 for the next five years to Big Bank, in quarterly installments. I have to pay up $150,000 for the total of the insurance period of five years.

    I have paid $7,500 yesterday, for the first quarterly instalments, so I have another 19 quarterly instalments to go.

    Today the official price for CDS from the same Big Bank has gone up to $80,000 per year. (as bond yields increased from 5% to 10% for Spain, see #65 for details)

    How much can I sell my CDS, issued by a Big Bank, on for? To somebody who did not have a CDS insurance before, but now wants one?

    What is my profit on my $7,500 initial investment?

  • Comment number 87.

    #59 Justin150

    "How exactly did the private shareholders break the law? Have you heard of the concept of a limited liability company?"

    Have you heard of the concept of "Trading whilst insolvent?"

    Seems to me that the directors have made a virtue out of this crime.
    They should be chased down like a bin liner.
    But no. Fresh in their escape they carry on. And on. Ad absurdum.

    And who pays? You and me of course.
    And the shareholders. But they knew the score, they also stood to gain.
    So why did the taxpayers unwittingly carry the can?
    Clever bankers.

  • Comment number 88.

    I dislike the way bankers have behaved as much as most people but there is also a responsibility for people to work out whether these PPI policies, and any other for that matter, are worth buying and cover the worries people may have when borrowing. I have always been offered them and have always refused. If it has been mis-sold then fine, the bankers (and long suffering shareholders ultimately) have to pay up. I have a feeling that loads of people will jump on the 'I've been mis-sold - give me a payment' bandwagon and the cost of examining every policy means its easier for the bank to pay up and move on.
    I'm sure Lloyds - pre the disastrous takeover of HBOS - would have had to pay up but not nearly as much and from a position of strength had Messers Daniels and Blank not been seduced by G (Prudent - ha ha) Brown.
    Having senior management still in place at many of the banks is a real scandal as they were asleep on the job enjoying the ride and bonuses without thinking of the risks involved. Do they understand Risk Management now - not from my experience. Its not over.

  • Comment number 89.

    #86 Matt-US - for the sake of finding out what you want to actually say I presume the answer is something slightly less than $250k (being the original obligation to pay less the current value).

    So a nice profit for that day.

    Now on the next day I buy one for $80k/yr for 5 years but I can't make the same thing happen again so I don't make any profit.

    Whilst I accept there are lots of countries this seems to be a little bit of a limited opportunity - anyway who is buying the CDS on day 2?

  • Comment number 90.

    73. At 15:28pm 5th May 2011, AnotherEngineer wrote:

    @ 65. At 15:01pm 5th May 2011, matt_us wrote:
    >> You buy a credit default swap on a country which you think is bust. You bribe your way >> into the media, and ensure that international investors are scared off.

    > So are you seriously saying that international investors who invest billions
    > in sovereign debt believe what the media say and act on it? This must be
    > your most ludicrous accusation yet!

    It's true. International investors (i.e. bankers) who invest billions in sovereign debt also suffer from the “Madness of Crowds”, the same as the dunderheads who ran RBS etc. There is no “objective reality”, only a subjective one, despite what all those chumps believed. That is why they get burned (and burn us), over and over again. The Masters of the Universe are morons.

  • Comment number 91.

    @ 88. At 17:32pm 5th May 2011, Big B wrote:

    > I dislike the way bankers have behaved as much as most people
    > but there is also a responsibility for people to work out whether
    > these PPI policies, and any other for that matter, are worth buying

    "Never give a sucker an even break" might have worked for W.C. Fields, but it's not a very good motto for a City bank. It's too late now, though. They are stuck with it.

    > I have always been offered them and have always refused.

    Mackay wrote "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." You may have your sense, but don't just assume any banker has any. They've spent the last ten years cutting off their nose to spite their face.

  • Comment number 92.

    49. At 13:28pm 5th May 2011, feedbackloop wrote:
    40 Upsnuff - dead right for the shareholders, but as I'm sure you know the liability of directors isnt limited - so in some circumstances they would be liable, trading whilst insolvent, breach of fidiciary duty etc etc.
    -------------------------------------------------------------------------------
    Quite right - beg pardon - I should have posted that as a caveat or addition.

    Here in the UK, two B&B directors were caught on the latter. I think those are the only successful prosecutions in the UK to date. But it's hard to prove misfeasance and deliberately trading while insolvent. At any one time a substantial portion of the FTSE100 are probably technically in breach of that last one - usually due to a cashflow thing for a day or three - but I can't remember offhand any director of a susbstantial company getting clobbered for some time.

    It's a bit like the newspaper telephone hacking scandal: there you have to prove that the back desk - especially the Editor - was fully aware of what was going on at lower levels. In the same way, if any UK bank employee deliberately sought to wrap dodgy sub-prime loans into a basket of loans and flog them on, you have to prove that the senior management knew and had informed the board that this was being done.

  • Comment number 93.

    The clue is in the title with the word 'protection'. All you need do is change the 'I' to an 'R' to get 'Racket', and there you have it. Mobile phone shops do just the same, try and flog you the most expensive 'phone insurance imaginable. What's prenicious about the banks is that it is 'embedded' in the loan contract. Coercion or what? It's time some of these bankers found their way into the dock.

  • Comment number 94.

    @GRIMUPNORTH77
    "Matt-US - for the sake of finding out what you want to actually say I presume the answer is something slightly less than $250k (being the original obligation to pay less the current value)."



    Thanks for answering the question (#65 and #86). That is about it. On my initial CDS outlay of $7,500, I could make a profit somewhat short of $250,000. Lets call it $200,000 - that way the buyer is happy, he saved some $50,000, compared to buying it directly from the bank, and I am happy, as I turned my $7,500 into $200,000. Not bad for one days work, in that hypothetical example.

    Now GRIMUPNORTH77 says that "but I can't make the same thing happen again so I don't make any profit."

    Well, nothing stopping you from trying. If you manage to raise interest rates (ie bond yields) for Spain from now 10% to 15% you could, as the buyer of my CDS make another $200,000 when you then sell it on. So nowhere near the phenomenal return I made. But let us say in a year you are able to make such a big fuzz, together with your other pals in the hedgefund industry and the press, that you scare off investors once again. Spanish bond yields now are 15%. You sell on your CDS for about $400,000. So you almost doubled your investment. Still not a bad return for a year's investment.

    Now, really, what you want to achieve is a restructuring of debt. In theory, if can make a plea for a restructuring of all Spanish debt, you could get your full payout of $1,000,000. That was the sum insured with the CDS, and if there was a 50% haircut (ie Spains bonds are only worth 50% of the nominal value) you could make $500,000.


    So that is why you hear so many commentators argueing for a restructuring of debt. They all want their CDS to pay out. So that they can make a profit, No other reason.

  • Comment number 95.

    "...Lloyds to settle PPI claims..."

    +++++++++++++++++++++++++++++++++++++

    Any more headlines like this?

    "Man to pay parking fine".

    "Old lady to do as she is told by policeman"...etc...etc...?

  • Comment number 96.

    I note with interest the many comments on this topic. I was sold this type insurance in the past and had need to use it. When I took other loans I decided not to take it, the key point is that the choice was down to me. If the insurance was a condition to have the loan, I went elsewhere.

    People's greed is at the heart of this issue, nice new car, expensive hol, can't afford it, not to worry, lets get a loan. For some, the insurance was a sensible precaution, others decided to ignore the costs of the insurance just to get their hands on the money. Now things have gone south, it's someone else's fault but never their own.

    The other thought that occurred to me when reading the comments was that if you are all so down on the Banks, why not give your Debit and Credit Cards back, abandon Direct Debit, close your bank accounts and use cash only - no, thought not!!





  • Comment number 97.

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

  • Comment number 98.

    88 I must really take you to task over your comment "long suffering shareholders" in the case of RBS for example "the long suffering shareholders" agreed to Fred the Shred's salary and bonus structure. The same "long suffering shareholders" (most of the big names in the city) where only to glad to oblige on the basis of "you scratch my back and I'll scratch yours" The same "long suffering shareholders" and the city all breathed a big sigh of relief when Gordon Brown bailed them out with taxpayers money.
    I don't remember any of these "long suffering shareholders" protesting during the good times that what was being done by the banks was morally, fiscally and legally questionable. Oh no just keep cranking the handle and keep paying our directors to produce more and clever ways to part the banks customers from their own money.
    it is about time that those responsible in the banking industry were made to pick up the bill out of their own pockets and not be allowed to pass on the losses caused by their negligence to either the banks customers through increased charges (the usual slimy route followed by banks) or by taxpayers support. The EU is competely right in investigating all banking instruments, what is patently obvious is this present UK government has either not got the guts to do so, or are so in hock to the city that they dare not. The game is up on banking, people trust second hand car salesmen more than they trust banks, and it will take years before anyone with an ounce of intelligence will beleive in what ever a bank says.

  • Comment number 99.

    It’s payback time’

    The irresponsible banking culture of the UK banks lead to a total melt down of the economy. The recession saw a lot of job cuts, austerity measures and tough decisions made. The financial sector was greedy to make money out of their customers without safeguarding themselves with adequate risk measures.

    A bailout measure was announced to the banks in order to kick-start the economy at the expense of taxpayer’s money. The banks were quick to forget the genesis of the credit crisis and sooner than later started their so call bonuses to the ‘high fliers’

    With the recent announcement of the PPI ruling in favour of the public (customers), it is time for the banks to embrace a more transparent banking practise and these would put them in their place.

  • Comment number 100.

    96. At 19:56pm 5th May 2011, neil williams wrote:
    ...if you are all so down on the Banks, why not give your Debit and Credit Cards back, abandon Direct Debit, close your bank accounts and use cash only - no, thought not!!
    -------------------------------------------------------------------
    Actually YES. I have done this. It felt so good!

 

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