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Paul_42

Listed below are comments made by Paul_42 between Friday, 24th April 2009 and Wednesday, 2nd December 2009.

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RBS board to quit if chancellor vetoes £1.5bn in bonuses 4:20pm on 02 Dec 2009 Out in the real world would any other company even consider awarding bonuses to its employees after destroying so much shareholder value? I suspect any other business in this position would perhaps feel it more appropriate to use this profit to either repair its balance sheet, buy back shares or award a dividend to its long suffering shareholders.
Should Darling back Lloyds' rights issue? 12:11pm on 08 Oct 2009 As I’ve commented before one of the banks RBS or HBOS should have been allowed to fail with only the retail/profitable bits rescued. As the banks (from a retail customers perspective) aren’t doing the same level of business as 2 years ago you have to ask why are they still so big? I know there have been some job losses in the industry but that is largely tinkering round the edges. Taking a whole bank out of the equation would have achieved the overcapacity restructuring a lot quicker.

Maybe its time for Lloyds group to downsize itself, as any other “normal” business, would be forced to do. Perhaps ditching all the non retail bits of HBOS (which it should never have been made to take on) would reduce its need to raise more money.

Call me a cynic but I believe that the government is just trying to survive till the next election without any more disasters and will throw anything at the banks to make that happen.
Banks can learn from retailers 11:19am on 16 Sep 2009 Banks have forgotten a long time ago who their customers actually are and what they want. They look on their retail operations (i.e. day to day branch activity and the automated payments) as a low profit operation. This view is only true because they were making more profit gambling the takings from these customers. Small business customers are especially hard hit because the banks treat them as cash cows.

Banks don't value customers as they know most will remain with them because of the perceived difficulty in changing banks. Up until very recently they haven't tried to compete on prices or products (unlike shops). They need to focus on what their customers want (faster payment clearing etc) rather than what the banks want (more sophisticated and complex fee charging systems). Then maybe they will be in a position to entice customers to switch to them and actually start competing likes retailers do.
Tory plan to sanitise banks 11:29am on 20 Jul 2009 The BOE is going to have the same problem as the FSA, namely that you have to get accurate figures out of the banks and be able to interpret which of these look risky. On the retail side of the banks the numbers are probably quite easy to interpret and should identify any future Northern Rock type problems (provided the banks are giving honest figures).

It probably means that the big banks will have to be broken into units (with the retail bank being 1 unit) under the group and I suspect these will have to become separate accountable business to ring-fence customers deposits. Flows of revenue between units should then be easier to track and its these that should start to show odd trends. The investment and gambling arms of the banks would then be the bits requiring the most scrutiny.

Getting relevant and accurate info out of the banks will be the problem. No doubt the banks will try to argue that such info is commercially sensitive and more internal creative accounting will be done to massage the figures before reporting to the BOE. The BOE need to be able to understand what these figures really represent. As the FSA never got to the bottom of them (although they probably hadnt asked for the right info) and that many of the people displaced from the FSA will probably end up in the BOE, what is going to change to make the BOE more proactive?

I think hindsight is a wonderful thing.... Can the BOE even identify now what info would have allowed them to spot the problems with RBS and RBOS earlier? And what info should they ask for now to allow them to identify the next problem in the future?
Can non-execs cure banks' madness and badness? 10:20am on 16 Jul 2009 ...beware alpha males in positions of power without formal qualifications for that industry.
No quick sale of RBS and Lloyds 11:58am on 13 Jul 2009 At least 1 of the banks should have been allowed to fail. The problem we now have is that there is probably no politically correct way of reducing the overall banking sector or of reducing their costs or of re-modelling them. As the property bubble has burst and in the next few years there will be less consumer money around (through higher taxes and higher unemployment), where are all these banking businesses going to generate revenue/profits?

Letting a bank fail would have achieved the reduction with the profitable bits being taken up by the prudent banks. Instead what we have is a bloated RBS struggling to keep it all going and LTSB now saddled with the same problem from absorbing HBOS.

Rescuing the banks has just prolonged the agony. The culling will just be done by a thousand strokes, but without a major restructure to the model.

Once the banks have done the culling they may be profitable again but will they be worth what the government has invested? If not the government may have to crystallise that loss
Paternoster and what to expect of non-execs 7:24pm on 01 Jul 2009 I've never fully understood the concept of non-execs being paid 6 figure salaries for a few days work a year, especially when these people are in theory holding down other executive positions. How can you do a job to any level of competence when it becomes just a small part of your working year?

At best non-execs should be coming from a non-related business to ask the simple questions that the execs might not be able to see because they are too close to their own business/organisation.

I think in the finance industry the directors have lost sight of this and now only appoint similar thinking insiders who are then effectively yes men. You are not going to get anything constructive out of them. Hence some financial organisations are effectively sailing off to oblivion with the directors wondering what happened.

Now that Paternoster has effectively sailed itself to a standstill, I wonder if it will think its time to hire a new crew capable of challenging its model. Maybe they will just hire more of the same type of non-execs and pay them more until they run out of money!
How big business copes with recession 12:18pm on 13 May 2009 Quote

And although Land Secs says vacancy rates in its buildings will continue to rise and rental income will continue to fall, it is hopeful that "investment property pricing may reach a turning point ahead of the rental markets".

Let me translate that.

we have made a loss, we know its going to get worse, we dont really know when (or if) our position is going to get better, but we need to raise more capital. So well issue a positive message to support our rights issue
Brown's right royal dilemma 11:49am on 06 May 2009 Maybe its time to let RM get on with it. Get rid of whatever quango is regulating it (an easy start to the public services savings) and let it charge the economic rates for what it does. Competition from the other 2 carriers will allow them to evolve without all replicating each others services. How many of the RM/TNT/UKMail trucks run up and down the country, running partially full and duplicating routes?

I suspect what would happen is that RM would be doing most of the domestic collecting and all of the domestic deliveries. The bits in between (collection, sorting, trucking and delivering to the local sorting office) would then be done by whoever was best suited to it. If this is done properly commercial customers should then get all their mail/parcels delivered and collected by 1 van. Currently I suspect they get numerous collections/deliveries by RM/TNT/DHL etc.

RM could then start running post bus services in the highlands again, there must be some money in that, as they are running the routes anyway!
Why tax the rich? 11:49am on 24 Apr 2009 Well the budget just hinted at how bad it is, and it going to get a lot worse before it gets better. The full impact of those not working (in addition to the official unemployment figures) and those on rate cuts or reduced hours, leading to a bigger than expected reduction in income tax to the treasury, has yet to hit home.

This budget was all about deferring the difficult decisions till after the next election by mainly targeting people who wouldn't vote for them anyway. The strange thing is this implies that they actually want to get back in! Now we know they must have lost the plot!

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