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Barclays may reject Asset Protection

Robert Peston | 09:47 UK time, Saturday, 28 March 2009

You don't have to be a Barclays shareholder or customer to be relieved that the blue-badged bank has been told by the Financial Services Authority that there's no pressing need for it to raise substantial amounts of new capital.

The FSA, in collaboration with the Bank of England, devised a so-called stress test that looked at what would happen to Barclays on a series of not-quite-Armaggedon scenarios, including three consecutive years of recession.

Unless you believe that the FSA is run and staffed by reckless numpties, it's reassuring that the City watchdog believes that Barclays should be able to withstand more-or-less whatever the enfeebled global economy throws at it, without crumbling.

And, I suppose, if the economy were to perform even worse than the hypotheses for this financial war game, well we'd be worrying about a good deal more than just the health of Barclays.

Which means that Barclays has discretion over whether to participate in the Treasury's Asset Protection Scheme: whether to purchase insurance from us, taxpayers, against future losses on some of its less magnificent investments and loans.

The board of Barclays will make the decision in the coming 48 hours. But my sense is that it will turn down the offered insurance.

Here's why:

1) the financial price paid by Lloyds Banking Group and Royal Bank for the cover looks exceedingly high to Barclays;
2) there's a less tangible perceived cost of insuring with taxpayers, in that it would give the Treasury a further mandate to meddle in Barclays' affairs, which could be detrimental to the wider interests of its owners and customers.

If Barclays does take up the insurance - and, as I say, that looks unlikely - it would insist on paying for the cover in cash, rather than shares.

It would use the £4bn to £5bn of proceeds from the coming sale of its iShares investment business, to pay the fee - which would buy it protection on perhaps £30bn to £50bn of impaired assets.

In the context of Barclays £2006bn in total assets, that level of cover might be useful but it would not transform investors' perceptions of the strength of the bank.

A better use for the iShares proceeds might be to put it to work in some old-fashioned banking.

It may seem odd to say this, but in some ways there's not been a better time to be a bank than right now: banks are paying out almost nothing to those who lend to them (depositors like you and me, for example) and are charging anything between 4 per cent and 20 per cent for mortgages, personal loans, corporate loans, and so on.

Or to put it another way, margins for banks are at record levels; they are spectacular. So there's a strong argument for Barclays simply deploying the capital generated from the iShares disposal to make lots of lovely, highly profitable loans.

In fact once we're through the recession, once banks have incurred all the losses on their reckless and imprudent lending of the bubble years, they'll probably be vulnerable to the charge that they're making excessive profits.

But that's for tomorrow.

Right now, there's still a question about whether the banking system as a whole - in the UK and globally - has sufficient capital to withstand whatever future shocks may be generated, as the tidal wave of recessionary forces holes industries and national economies, from insurers through to Eastern Europe's over-borrowed nations.

As George Soros - the hedge-fund legend - points out in today's Times, the UK is peculiarly vulnerable to these potential shocks, because our banking system is so large relative to the size of our economy.

You'll recall that I've hitherto highlighted that the foreign currency liabilities of our banks quadrupled over the past decade or so to around £4,400bn, or a bit more than three times our GDP, the value of everything we produce.

It means that the credit-worthiness of the UK is inextricably linked to the credit-worthiness of our banks, especially since so many British banks have been wholly or partly nationalised.

If, for whatever reason, confidence in our banks evaporated again in the way that it did last October, that - as Soros says - could undermine the Government's ability to borrow (although he does say that he currently thinks it unlikely the UK will need to be bailed out by the International Monetary Fund).

Which, as I say, is why we should all be reassured that the FSA believes that one of our very biggest banks, Barclays, has the resources to cope with almost the worst economic conditions that we can conceive.

Comments

Page 1 of 2

  • Comment number 1.

    "Unless you believe that the FSA is run and staffed by reckless numpties"

    The side swipe did not go un-noticed Robert!

  • Comment number 2.

    When the government first bailed-out the banks last autumn, didn't the FSA assess those banks in a similar way and say that the initial taxpayer investment would give those banks sufficent capital to withstand future events? In other words, is this analysis of Barclays by the FSA worth the paper it's written on?

    If the banks do go on to make huge profits in future years, surely it would be appropriate for the taxpayer to retain a stake in the banks for many years. The taxpayer could then share in these profits and the banks could make recompense for some of the harm done to the economy at large (above and beyond merely paying back the money directly invested into the bank on our behalf by the government).

  • Comment number 3.

    Good news. But not only for Barclays. This announcement may signal the end of 'contagion' in the finance sector and a return to normal, competitive equilibrium market functioning. If so, that creates a whole stream of knock-on benefits which will boost the whole economy:

    http://www.knowingandmaking.com/2009/03/back-to-equilibrium.html

  • Comment number 4.

    I actually DO believe that the FSA is run by reckless numpties. They presided over the mess we are in now...

  • Comment number 5.

    We all like a good whinge.
    But it's difficult to whinge about Barclays, they "seem" to have been better run than other banks.
    I have banked with Barclays for decades, but if I see them dishing out 5 million pound bonuses I'll probably remove my account.

  • Comment number 6.

    I also reject Slavery, Apartheid, Barclay's and all evil's such as disproportionate banking charges

  • Comment number 7.

    "It may seem odd to say this, but in some ways there's not been a better time to be a bank than right now"

    Are you actually in the pay of the gov't, Robert? Do they pay you to write soothing words to keep the masses calm? Either that, or you've lost your way in the midst of this crisis. Maybe this suckers rally of the last two weeks has fooled you into a happy place where everything is getting back to normal.

    You still don't get it, do you?

    Or do you?

    We are about to undergo a fundamental shift in the way we lead our lives. This is just the start. The banks are not alright. Our entire financial system is bankrupt. Creating more debt is not going to fix it. Every day our self-serving gov't delays and bails out, prolongs and deepens the crisis.

    I am loathe to say it, but our country needs a strong leader to step forward and tell it like it is - and to start the long, slow painful process of building credibility for the UK again.

  • Comment number 8.

    All you 'clever' journalists have fallen for the same trick. Now's your chance to show you are not a sheep!

    The politicians have thrown the bankers to the baying mob as a diversion away from their own failings... Everyone is looking at the SUPPLY of credit. Banks are being blasted for greed, but this after all was linked to the creation of cheap credit - which is, afterall, what Wall Street and The City are meant to do.

    What no-one is focusing on is the DEMAND for credit - and more seriously the conspiracy by the UK Government to not to reign in consumer borrowing - especially for exponentially rising house prices.

    Here governments, and regulators have a key role to play - look for example at the difference in foreclosure rates between the US and Canada (where the latter had requirements to take mortgage insurance over 90%LTV).

    POLITICIANS WILL ALWAYS LET A BOOM RUN AS THEY ARE ON A 4-5YR ELECTORAL CYCLE - SO WILL ALWAYS TAKE SHORT TERM OVER THE LONG TERM. Taking the punch bowl away when the party is in full swing is not popular.

    Add on top the reckless tax and spending of this government, and we are left with what we have: a morally and fincancially bankrupt country. And a PM who will not admit his central role in this mess

  • Comment number 9.

    Well done John Varley for playing a smart game. And it will no doubt rile people that he is a trained lawyer, but he has shown dedication to the bank and stuck by his mantra of only doing what is best for shareholders. Yes the share price is a lot lower than 2007, but show me a bank whose share price isn't - not necessarily through their actions but those of the press and other institutions suggesting 'they must be hiding something'

    My concern,though, is what the government have in store for the independent banks now. It will have hurt GB that he does not control all the banks and that potentially makes a change in the rules necessary to address that. How many times now is it that Barclays have thwarted the government?

    But he wouldn't be so childish would he?

  • Comment number 10.

    This has now been going on long enough for us to come up with a framework for how banking will operate in the future....

    .... this determines (unfortunately and to a certain extent) what the economy will recover too....

    .... as you mention in the blog "there's not been a better time to be a bank" and however galling it is I can see some sense in having banks that have been bailed out by the billion making excessive profits in the short term in order that we get rid of OUR liability ASAP...

    .... what I find unpalatable is that a company like Barclays may use this period to strengthen it position and it's bottom line for the benefit of it's shareholders! The FSA may not be numpties, but they are naïve if they think a bank will not take advantage of a situation to make profit….

    Barclays should be allowed to save it’s self, but not to benefit by taking advantage of the billions shoring up the system it is a part of!

  • Comment number 11.

    Mister Robert 'I Am Legend' Peston
    Why aren't you protesting in the streets of London?
    None of your damned shadowy metaphors now,
    circumambulating instead going to the point again

  • Comment number 12.

    If the banking sector is too big for the economy there will presumably be competition to lend the to limited domestic market. So rates should go down and banks go bust, unless they can still all lend at exorbitant rates to foreigners.

  • Comment number 13.

    they'll probably be vulnerable to the charge that they're making excessive profits

    How else does the banking business pay back all those loans to the tax payer?

    Where did you think they were going to get the money from?

    Surely the not participating in the government insurance scheme could mean that they are ideally placed in a market that is barely competitive when Lloyds and RBS are so hobbled by their bail outs?

    P.S. Can we have something other than banks? Mandy is back soon...

  • Comment number 14.

    If Barclays have managed their risk adequately enough to continue to have a choice over the government insurance scheme, then surely John Varley should be cautiously applauded?

    However, with the current deep distrust of the banking world there is a persistent, underlying suspicion that causes us to question why Barclays are seemingly so steady.

    Until total transparency and full disclosure is forced on all banks, I don't believe we will ever know the true picture of banking. After all, it is such a massive part of our economy which us peasants are not able to influence in any substantial way, the nation is, effectively, held hostage.

    The more piecemeal the information that emerges, the more people of this country suspect foul play.

    The track record of banking over the last few months has been so bad, nothing will assuage that mistrust. Good figures will not be believed.

  • Comment number 15.

    And moderators

    Cease and desist calling me a new member! Check out my previous posts!

    Thank you.

  • Comment number 16.

    No4

    Agree with you 100% Frank 9999, I too believe that FSA is run by reckless numpties who presided over the mess we're in now.

  • Comment number 17.

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

  • Comment number 18.

    Just a reminder that if Barclays had had it's way it would now be the owner of a Dutch bank and not RBS. Therefore any suggestion that Barclays is run by more sensible people doesn't wash. They were just very lucky they lost out to Fred G.

    As to the FSA I'm afraid I wouldn't trust any of that crowd to look after my cat.

  • Comment number 19.

    there has never been a better time to be a banker

    there has never, in my lifetime, been a worse time to be a saver

    I'm suffering zero interest on my little nest egg so that the banking systme, WHICH CANNOT BE ALLOWED TO FAIL, can recover

    I'm truly lucky to have a little nest egg and not be one of the many unfortunates losing their jobs, businesses, homes.

    But I have a horrible suspicion that within the next few years inflation is going to let rip and reduce my savings to little more than the price of a bottom of the range car

    And I can't make up my mind whether Gordon Brown is knowingly planning for inflation to increase dramatically as a way of sorting out the mess, or is just happy to let it be a consequence of his strategy

    Either way I am not very happy for banks to be making any profit at the moment

    Should there be a legal requirement for all deposits and investments to give a minimum return of 5%. If the bank can't provide that it should not be legally allowed to trade.

  • Comment number 20.

    "Unless you believe that the FSA is run and staffed by reckless numpties"

    Run me by their track record?

    There is much less toadying from the FT and some of their contributors Robert. There are still a lot of questions around Barclays and their behaviour

  • Comment number 21.

    Ignore Barclays, whats happening to our country? We have record borrowing levels at nose bleed levels. Will Barclays survive if the country faces it's Armageddon? About time you turned some of your talents to examining the actions of your cronies Brown and Darling.

  • Comment number 22.

    Does the link between the nations credit worthiness, hopefully not done by underpaid incompetents, and bank stability not merely underline the fact that "mistakes were made" on a very large scale by Brown and his cohorts when it comes to regulation.

    I can't see that entrepreneurs would have been forced to take less risk in creating wealth if we had had better regulation.

    Its just making sure a few individuals can't play Russian Roulette with the nations finances again. Apparently with the government in bewildered ignorance.

    We got away with it, hopefully, this time but may not again.

    By the way Robert what is the future for instruments. Are we stuck with yee haa Credit Default Swaps that do sound like very large dominoes that could topple down one day?

  • Comment number 23.

    Nice to hear some good news, Lloyds would be in the same situation but for the personal interference from the useless Brown.

  • Comment number 24.

    There you go again RP asking us to put faith in the very people who have so badly let this country down. We have been told many things by the banks and the FSA in the past. We have been told many things by our Govt - remember we`re better placed, etc, etc - but look at the mess we find ourselves in here at this particular time in our history.

    A prime example of this can be seen by looking across the atlantic yesterday. The Wall St. CEOs had a pow-wow at the White House with Obama. The CEOs of JP Morgan and Bank of America told reporters after the meeting that they were finding March to be a "difficult month"

    Are these not the same CEOs who told the world back on March 10th and 11th that Jan and Februrary were very good months and that they were "profitable" again. It was these comments that sparked off the recent stock market rally.These comments took the pressure off of the Wall St. giants at a time when the world knew they were insolvent and there was increasing for nationalization. When they said they were in the money again and all was looking rosy, they bought themselves enough time for Tim Geithner to announce his new plan which again worked in their favour. Nothing more than a game of smoke and mirrors!

    These guys have just pulled the perfect slight of hand trick and the taxpayers are stuck once again. It is beyond outrageous what these banks are getting away with and our Govts are willing participants. Please feel free to read the full details of this:

    http://creditcrunchedoutinuk.blogspot.com/2009/03/big-banks-pull-off-ultimate-bait-switch.html

    I'm sure you will find this an outrage as well!!

  • Comment number 25.

    Think not what you can do for your country but what you can do for your shareholders (with apologies to JFK).

  • Comment number 26.

    Unless you believe that the FSA is run and staffed by reckless numpties

    Good stuff Robert!

    Personally, I have as much confidence in any banker as I do with an estate agent.

    A large bank that used to be Scottish (not where Fred used to work, the other one) tried really hard to entice me to open a new current account this week. You, know the one with a fiver every month, but go overdrawn and we'll charge you a fiver a day.

    And my pointing out that I was on unemployed didn't seem to deter the sales chomp! Eh, I'm just unemployed, not daft.

    I know she was doing her job, and not making much in the way of bonus, goodness sake! They haven't realised it yet but, it is they and not us, who are the muppets.

    Let's see what proportion of loans and total cash are provided to the genuiney Green Businesses that will help provide the jobs of the future shall we? Or will it be loans for more handbags?
  • Comment number 27.

    "It may seem odd to say this, but in some ways there's not been a better time to be a bank than right now: banks are paying out almost nothing to those who lend to them (depositors like you and me, for example) and are charging anything between 4 per cent and 20 per cent for mortgages, personal loans, corporate loans, and so on."

    The blatant bank rip-off continues, encouraged by HMG as usual, as a result my bank deposits are being reduced and my Premium bond holding increased to the maximum, better chance of a return there than the bank provides and probably just as secure.
    Perhaps we need a new way, a more direct way of getting cash to folk such as Grimupnorth and cut out the official loan Sharks.

  • Comment number 28.

    I have written in my diary today in blue/black Parker ink that Barclays is safe. This is the same type of ink that I used to mark Darling's autumn pre-budget report and Victor Blank's valedictory speech.

    At this late stage in the day the only way to prevent the financial crisis from obliterating perhaps half of all economic activity in the world, is to nullify all CDS contracts. This can be done by compelling the contract writer to give back to the contract holder the whole fee that the writer has received for the CDS. Only then will the bankruptcies come out into the open - as they eventually must. Only then will trust return.

    As for the aftermath of the crisis. There will have to be a well thought out policy of industrial reconstruction. It is utterly inconceivable that the reconstruction effort will not be built around the process of re-engineering all industrial processes so that they become consistent with carbon reduction goals.

  • Comment number 29.

    All this softening and attempts at painting a better picture, anything to do with calming the masses ahead of the G20 protests?.

  • Comment number 30.

    a) Yes, FSA are financial numpties and should be taken to animal hospital where its recovery will miraculously last a day or two then it will die (with Rolf Harris giving australian eulogy).
    b) Didn't HMG, BOE, FSA et al say that the exposure of banks was unquantifiable, in view of the potential failure of other banks, insurance companies and countries? So how come they are now so sure?
    c) The credit worthiness of the UK is poor and worsening. We have Gordon and Alistair to thank for that. Quantitative easing is not just printing money, its an attempt to buy the next election before the taxes have to rise and everyone is even more impoverished.
    d) The immigration situation is another attempt to buy labour votes (most migrants to uk will be labour voters).
    d) The UK economy is like the titanic, but less seaworthy and with a captain and first mate who aren't fit to be in charge of a pedalo.

  • Comment number 31.

    Hi Robert
    1. Is anyone out there urging every shareholder and saver to actually fill in those proxy forms that hit the mat en masse this month for all the April AGMs, and read the blurb, and vote disapproval for their banks/building societies reckless behaviour. Because, it seems to me, they are all still "at it".
    Votes might work as well or better than mass demos.
    2. Have you looked into the Proposed Resolutions that Barclays shareholders are being asked to agree/disagree with at Barclays AGM 11am on Thurs 23 April at th Queen Elizabeth II Conference Centre, Westminster SW1P 3EE.
    There are wide and powerful resolutions in there, it seems to me, including the power to buy their own shares and allot securities(and make political donations -but those are ? limited apparently) Although their blurb on each resolution seeks to justify/explain, the language is quite technical so its difficult to unravel what lies behind.
    I am always suspicious of that which seeks to hide in verbage.
    If an explanation is complicated, it usually means the explainer doesn't understand it either.
    I've got round this by simply proxy voting against everything I don't think is clearly explained or that I disagree with in principle.That includes all the directors remunerations which although reduced for some,(notably Varley, Diamond and Seegers) are still massively out of step with what they actually do to earn it. All the nine non-execs get pay increases and 2 more are appointed.
    Anyone earning a million pounds a year salary is being paid for doing what exactly? The rate equates to over £114 an hour 24 hours a day 365 days a year, whether they are asleep or awake, being decisive, or not, sitting on the toilet, in traffic or in a boardroom. Sit back and think -no-one on earth can possibly be working that hard or smart or risking enough comparatively to deserve such a salary, except possibly those who risk their lives, eg soldiers on duty in Afghanistan.

  • Comment number 32.

    PS - I forgot to say -
    Huge thanks for all your thoughtful, clear and comprehensible analysis Robert, it keeps us up to date, cuts through the sewage, and is invaluable at this time.

  • Comment number 33.

    "in some ways there's not been a better time to be a bank than right now"

    Surely not.

    Low interest rates are bad news for banks and may inadvertently threaten the UK's fee-free banking model.

    A year ago a bank would earn c5% on current account deposits and would pass next to nothing of this on to the customer in way of credit interest. Interest rate cuts have wiped out this income stream.

    Also, previously overdraft charges effectively meant that those breaking their overdraft agreements were subsidising banking for the rest of us, the merits of this are another matter, but the inevitable end of overdraft charges, combined with the disappearance of current account margins, will accelerate the end of fee-free banking.

    Although banks are paying low rates on deposits, this doesn’t mean they’re making more money. Low base rates mean that banks make LESS money on deposits and so must pay lower rates of interest to customers. Income generated through customer deposits is down significantly for banks.

    Operating in a low-interest rate environment is difficult for banks and forces down income. Given it’s clear we need a healthy, profitable banking system, surely this gives reason to halt base rate cuts?

  • Comment number 34.

    Any thoughts about how Barclaycard are doing?
    With unemployment CERTAIN to rise steeply (and I believe the figure of 4 million that has been suggested) credit card debt defaults are also CERTAIN to rise steeply.
    Nobody seems to have discussed how this might affect Barclays?

  • Comment number 35.

    I have tried a bit of the old fashioned scientific method. Ignoring fancy simulations and finger in the air predictions I had occasion to transact business in the high street branches of a few clearing banks. Funny thing - Barclays came out on top by quite a margin.

    This correlates well with my experiences supplying equipment to the banks. Some banks employed more competent staff than others. Comments on ethics are another matter. See lobbygroup.org.

  • Comment number 36.

    "I've hitherto highlighted that the foreign currency liabilities of our banks ...[are] or a bit more than three times our GDP, the value of everything we produce."

    As often, you're comparing apples and oranges for dramatic effect here. In particular, surely you understand the difference between stocks and flows, Robert?

    Liabilities are a stock - like the amount outstanding on your mortgage. Whereas GDP is a flow - like the amount you earn in a week, month or year. (And I assume you're, completely arbitrarily, thinking GDP per year here?)

    For many people, the amount outstanding on their mortgage - a stock - is many times a flow like their annual salary. Hardly something to get excited about, or even mention, as long as they can afford the annual interest payments.

    Of course you make this comparison for dramatic effect, but you ought to know better.

  • Comment number 37.

    Strange is it not the Bank that lost so much in Africa and Brazil should learn those lessons and have a policy of scrutinising the real risks of where it invests and not trust spivs with a plan - indeed lots of activists will still not use Barclay's due to the abuses of those apartite years.
    As to AMRO - John knows he missed a bullet there
    But I love the concept of "the Banks are too big for our economy" - was that not the whole excuse for the Thatcher years ?
    Manufacturing was cheaper abroad and the profits from finance would cover the conversion to a service economy - maybe we should insist that the UK manufactures, manufacture in the UK before they get government help.
    Sounds like British jobs for British workers - or is that what the French have just done.

    He ho

  • Comment number 38.

    If Barclays was so solid, why did it have have to be nationalised?

    Granted not by the UK but by Qatar. Oh and by the way for those not familiar with the workings of that particular middle-eastern state check out who runs there version of the FSA.

    http://en.wikipedia.org/wiki/Qatar_Financial_Centre

    Jobs for the boys! You sratch our back and we'll shove a bloody great big knife in the backs of the public.

  • Comment number 39.

    Re:

    "A better use for the iShares proceeds might be to put it to work in some old-fashioned banking."

    Wouldn't the 'old-fashioned' course of action be to not sell the iShares business in the first place? I.E. not sell a sensible no-nonsense business that's probably a genuine asset and a useful service to us just to make a fast buck?

    (I speak as a satisfied iShare customer with a lot of his savings invested in iShares ETFs)

  • Comment number 40.

    i am afraid Barclay's good fortune is more by luck than management..it is still being run by the same people who tried to buy ABM Amro...!
    One thing puzzles me.......at the start of the year the banks were basically bankrupt, the taxpayer threw huge amounts of cash at them, but still apparently they refuse to lend... As the only way a bank can make money is by lending, how come banks are now "profitable"?

  • Comment number 41.

    It seems that the rest of the world are as disgusted with British and American bankers as the British and American public are.
    Europeans will probably now prefer to deal with Frankfurt.
    Asians will prefer to deal with Shanghai.
    South Americans will prefer to deal with Rio.
    In fact, a new World Financial Network may be created which by-passes New York and London for much of the business.
    You can't really blame them.
    And the dominance of the US dollar?
    One thing is for sure...if Anglo Saxon governments don't bring in very strict controls, the rest of the World will go do their business elsewhere.

  • Comment number 42.

    It is Gordon Brown's fault that we are now 'inextricably linked' to banks and that we will be bankrupted by Britain defaulting on its debts when nobody will want to lend it more money.

    He should have left the banks to go bust with all their £4.4 trillion pounds of foreign currency liabilities that he allowed them to build up whilst he was 'chief regulator' chancellor. Now we and our children will suffer the consequences.

  • Comment number 43.

    It's all very well thinking Barclays may have passed a fairly solid hurdle. The share price action of the last week has seen investors piling into Barclays shares driving the price skywards on the back of the news and no doubt they think, what a wonderful decision they've made! But one wonders if investors aren't treating the market like it's a casino. Or have just completely erased from their tiny minds the financial crisis and inparticular its effects on the wider economy? Unless they believe banks work in some strange isolation from all of this.

    The Investors Chronicle commenting on Barclays 2008 results in late Feb, issued a Sell piece of advice. That's because the downturn in the economy is yet to feed into the Bank's trading activities in a meaningful way. House buying has pretty much collapsed, (only Estate Agents and some R.I.C.S officials are trying to say different - which is pathetic,) and no banks are keen to lend to business. That ought to be telling investors something.

    Then as you comment Robert instead of the banks, which no one trusts, (as espoused by Alistair Darling,) we're now being asked to believe that the FSA knows best? I mean come off it, they're just as much a villain of the piece as the banks!! Just what expertise has the FSA shown that suggests it knows a "good" bank when it sees one? It's tried to have a good GUESS at whether or not Barclays will be undone by a worse than expected downturn. The point is it's a guesstimate, not a guaranteed (written by the hand of God) assurance! If things do turn bad the FSA WILL be able to wriggle and used weasel words to get out of the mire by saying things like, we looked at the worst type of scenario's banks would face, we just guessed wrong! Great, then what?

    People should just be a bit more circumspect about what IS being said. Namely that the FSA thinks Barclays will be able to avoid going bust if the economy gets really bad. And that's about it, it is not saying Barclays will return to the galactic profit levels of a year ago. In theory with more banking regualtion and slower growth all round this will be impossible in future anyway - even in good times???

  • Comment number 44.

    I'll huff and I'll puff and I'll ....

    Well, we won't. The banking system, that is. Nor can we change it much while our whole economic existence is predicated on growth.

    Save your breath everyone. The market itself is resolving the problem for us as we cogitate. It is doing this in the way it has always done it - and always will.

    As water always finds it's level, so does the market balance supply and demand. There's a considerable further distance to fall until we hit bottom then up we go again. Calm down, everone, its only economics.

    But it's fun to think we can change things for more than just a few special interest groups - even if we really know that the forces at play are just too strong to influence significantly. And it is deliciously picquant to see fortunes being lost and made - and rogues and fools exposed. Oh, still my heart.

    By the way, how clever of the BoE pension fund to get out of equities and into index-linked gilts just before the bubble burst. They're obviously sharp. Pity they didn't let a few others in on the importance of timing in such matters. Still, only punters got burned.


  • Comment number 45.

    Robert
    I'm afraid I do belive that the FSA is staffed by Numpties and therefore do not acribe any relevance to their judgements or pronouncements. Despite that, Barclays do seem to have been the one bank that hasn't got carried away with 'innovative' instruments and in particualr has not listened like an entranced child to Mr Brown about what they should do (see Vcitor Blank for an alternative approach!). It has semed to em for many years that we are basically bankrupt as a country anyway. We donlt make anything, we sell services to each other (no, after you....no, after you)and have reiled on earnings from the City 'innovators' to disguise the fact that we borrow huge amounts to subsidise an inefficient public sector and to buy the cheap 'it'll make you feel better' goods from overseas. As a life long Labour supporter it pains me to see the current lot, make a huge ricket of the whole thing (dating back to day 1). I think I'll go back to my 1976 leanings and become an Anarchist. Martin

  • Comment number 46.

    "the financial price paid by Lloyds Banking Group and Royal Bank for the cover looks exceedingly high to Barclays;"

    Robert,

    It is quite obvious that Lloyds Banking Group and Royal Bank do not have either Intellectually Competent Leadership nor an Asset/Customer Base which they can rely on for Profits Generation. In fact it is more than Likely that their Books are crammed full with Liabilities/Duds. However given the Government's lamentable IP Portfolio too, entrusting Care and Attention/Maintenance and Solutions with them, unless they have some Wild Joker Card Rogue Schemes, which are going to Quietly Gamble on, will the sorry state of affairs soon become very apparent..... proving that the Government itself is Bankrupt and Naked/Out of Novel Ideas which they can Deliver and Driver ..... although that would hardly be a surprise to anybody, I'm sure.

    The interesting thing will be when the new lot take over power and get to have a look at the cooked books and then there will be some real trouble methinks with many lengthy spells at HM Pleasure, for there will be no place to Hide anywhere in the world for those who are involved.

    And as for George Soros, it would be much more impressive from him if he had a viable solution to financial difficulties rather than ambulance chasing them after them as if some sort of super hero. Everyone is smart after the fact, but it takes a certain kind of genius to be smarter before it, and to share the smarts to create something spectacular rather than destructive. Although there would be that well worn old excuse about old dogs and new tricks though.

  • Comment number 47.

    Barclays have £2 trillion in assets?
    Is the figure £2006 billion correct or a typo?

  • Comment number 48.

    We cannot trust bankers of any ilk. Peter Oborne reveals in today's Daily Mail that at the end of 2006 the Bank of England Pension Fund made a sudden and very extraordinary decision to sell the equities in their portfolio and invested the proceeds in index-linked gilts. They said at the time they were doing so because of concerns about an unsustainable position in credit markets and the consequences of a possible credit crunch. The move was brilliant and means that the BoEPF lost nothing when the shares that had been in their portfolio plunged by 50% as a result of the economic crisis.

    More to the point is that it indicates that those clever bankers knew much more than they were telling us about the state of the nation's finances. Why then did they not share that with us? Some of us knew that things were really bad, but we did not know quite how bad because of the secrecy that pervades national accounts, banks' balance sheets, and national statistics. If any of them is ever challenged they can say that all the information is made available in the Pink Book the Red Book the Blue Book and the reams of documents emanating from the ONS and the BoE. True, they may all be there, but if you do not work in the field, do not have at least a degree in statistics and economics/accountancy, and have not endless time to devote to a study of the subject, you will never piece the jigsaw together. They know that and want it that way because it keeps their dark deeds from the light and from public scrutiny.

    None of the essential economic and statistical data is ever presented in an easy to read and assimilable report. The media, who trumpet their guardianship of the public interest, and use it to justify their invasion of people's privacy, are perhaps most culpable of all. They should know better. Very often they do know better. But they are too lazy and indifferent to tell it all, to tell it like it is. A quick moment of public adulation, 5 minutes of glory for a scoop, and they are contented. Why bother with really difficult facts that would give a total picture, especially if those unpleasant facts emerge at a time of apparent prosperity. Are they really going to prick the bubble of contented guzzling of profits to tell a sad tale? Not on your life.

    If you want an example of journalistic incompetence, just look at the way government debt is presented to us. Almost without exception it is told to us in terms of spending on the current account. They never tell us of what is piled up from the past, and they never tell us the exposure to debt in the form of various contracts undertaken by the government in, say, hospital building. If I am asked to fill in a credit form and state my debt I would be charged with fraud if I said that my debt was £500 based on the fact that I spend that much more than my annual salary when in fact I had accumulated past debts of £15,000 and had a £250,000 mortgage, and a car purchase agreement with £16,000 outstanding. Yet that is precisely what is done when bankers and politicians tell us about their debt. We want the truth; we just cannot get it.

    The existing politicians have failed, the bankers and banks have failed, and the country is effectively insolvent. But Gordon Brown's chief concern at the moment is that it is just not fair some unnamed and unknown Catholic cannot become queen of this fair realm. We need to begin all over again , with new faces, new ideas, and absolute honesty and truthfulness. And above all we need someone with the courage to endure the hatred of those he seeks to serve by having the steely nerve to carry through the terrifying and painful reforms that will be necessary to restore the country to economic, moral and political health.

  • Comment number 49.

    43 spareusthelies and the comment in there about the real economy feeding into the Banks (and indeed the Government's) financial positions.....is just the sort of ordinary, common-sense, plain fact type analysis that we don't get from the Govt and a lot of partisan professional commentators....

    As Ken Rogoff said (about Barrack Obama's toxic debt 'everything must go ---93% off' plan) what has happened and is now beginning to happen in 'the real world' can't be wished away by confidence building PR spin---it would be nice for all of us if it could, but it can't ---and the people who know this are the people on the receiving end of it...ie 'we the people'.

    We also knew the 125% Mortages couldn't go on, and the debt fuelled boom 'wasn't right...couldn't last'. They didn't--it was a new paridigm and old fashioned thrift ideas were out of date.

    It's 'they' who messed up keeping an unsustainable boom going because 'until the music stops' you keep dancing (especially on £500,000 K a year plus £1.25M bonus...plus £750,000 share options plus......)

    It's 'them' telling us it's okay now or will be soon---and it's us who know it isn't okay now--and won't be okay soon.




  • Comment number 50.

    I still think things are not going to be as bad as some of you make out, yes there will be high unemployment, but there isn't going to be any Civil Unrest on any large scale..try getting more than a few thousand people out on the streets to protest about anything,it just doesn't happen in this country (unless you want to complain about the fox hunting ban of course, strange that that particular issue got 400,000 people out on the march, but there you go, shows where the priorities are in this country).

    Things were much worse in the early eighties - mass unemploymet PLUS high interest rates - but there was no revolution and people just got on with their lives, the same thing will happen this time. The country will not go bankrupt because there is a never ending stream of tax revenue to cover our IOU's. The toxic assets will magically be made to disappear once the US and UK goverments have removed them from the banks balance sheets, the only price for the banks to pay will be tougher regulations but thats a good thing anyway.

    Aparently there was a recession in the 1990's as well, can anyone here remember what effect it had on them..thought not.

    This is not meant to be a defence of GB or any other government around the world, its just that their actions are all cynically designed to avoid financial meltdown purely so that they can be re-elected and THAT is what politicians understand and strive for with all their will, so it will probably happen.

  • Comment number 51.

    "would give the Treasury a further mandate to meddle in Barclays' affairs"

    Yes indeed, but you are being a bit coy here, Robert: you could be a little more specific about what form the meddling would take - calling time on those profitable tax schemes...

    which explains the extreme lengths Barclays have gone to avoid HMG's largesse

  • Comment number 52.

    Smart? Or just lucky? Let us not forget that Barclays were just as gung ho for buying ABN Amro as RBS. OK they were offering a bigger proportion of the deal in shares rather than cash and that's why they didn't succeed. Imagine if they had won that particular battle. Would we be saluting Varley today? Or throwing stones through his windows? My company banked with Barclays for 20 years. I'v ebanked with Halifax, Natwest, Lloyds et al. All seem pretty much the same to me.

  • Comment number 53.

    #40 "One thing puzzles me.......at the start of the year the banks were basically bankrupt, the taxpayer threw huge amounts of cash at them, but still apparently they refuse to lend... As the only way a bank can make money is by lending, how come banks are now "profitable"?"

    Simple really. All that "refuse to lend" business is political spin to make the banks look like the villians while the real villians try to squirm out of their villiany. The banks do not cease to lend simply because they are not making *NEW* loans !! They still have existing *OLD* loans that have been lent and have not been repaid !! Interests on those loans are still counted as income/profit !!

    It seems to me that you, like many, have bought into the political spin of "not lending" and have your attention misdirected as was hoped by the spinners/spin doctors !! I'm sure you can now decide who these spinners/spin doctors are !!

  • Comment number 54.

    I actually DO believe that the FSA is run by reckless numpties. They presided over the mess we are in now...

    And the Equitable Life (continuing) fiasco.

  • Comment number 55.

    The best we can ever hope for is the right kind of regulation. The right framework in which we can let the banks carry on their business whilst also ENSURING that the banks don't come begging for Taxpayer bailout again.

    One issue that became prevalent and which masked the recent problems was the assumption that, "banks were too big to fail?"

    That might imply, we must have smaller banks, but does it mean we should? Even if it does, will those empowered to sort the mess out have either the remit, the imagination or the wit to actually achieve this? I reckon they will "bottle it" and leave us with some half-way, mish-mash, waste of time affair, that only (bad) politicians can deliver. Reason? Our politicians are loathe to be the ones who could be blamed for falling bank profits (and putting more jobs at risk,)slower growth and having to cut services because of lower tax receipts.

    So what I really want to know, before we have new regulation is, where is the Leadership? And not just any old leadership, but one that has recognised the perversity and vulgarity and the monumental mistakes of what went before and also has the drive to prevent it happening again?

    The final piece of this jigsaw is you the people. Do you really want this regulation, which will almost certainly deliver slower, much slower growth, less profit and make us that bit poorer? You may feel poorer just by virtue of having to save up, because the credit may not be there.

    For us, the increasing selfishness of our society, the constant need for instant gratification and the thought of having less money will mean you won't have the guts to vote for it. Who can blame you if you did this? Well your grandchildren, for starters. If you think they don't really matter, then fine, just make sure you can't have any?

  • Comment number 56.

    Unless you believe that the FSA is run and staffed by reckless numpties..nuff said

  • Comment number 57.

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

  • Comment number 58.

    oh and robert leave the decision on what barclays do with their money from ishares to the board of directors.

    you have no say whatsoever in the matter unless you are a board member or shareholder and to be quite honest,

    id be very frightened if someone with your attiude and negative outlook on life had anything to with banking as a job or shareholder with mass voting power.

    banks/insurnace companies/energy companies and pertoleum companies are only charged with excessive profit taking,because they were always treated like public sector businesses even before the first % of northern rock was taken into state ownership.

    all off the above are private companys with a private business ethic and are basically there to make profit from customers same way as a retail outlet as many of them technically are in some forms of their individual businesses

    employees of the banks and the other businesses mentioned are deemed to be easy targets for all sorts of accusations like public sector workers are and treated in the same way as, nhs council owned housing assoications royal mail and the railway state companies.



  • Comment number 59.

    How's about a positive stance on the banks for a change Mr Peston?
    Looks like many RBS investors will be taking up the latest share offer regardless of the current price :
    http://finance.google.com/group/google.finance.14323395/browse_thread/thread/ffe2ad8bad60f3d6

  • Comment number 60.

    .......and the FSA has never got it wrong before!

    http://ethicaleconomy.blogspot.com/

  • Comment number 61.

    * 48 newProtectorCromwell "None of the essential economic and statistical data is ever presented in an easy to read and assimilable report."

    Transparency is never going to be a priority with the banks or the regulators as you say, but couldn't there be a publication that makes it its business to do this? What would it take for a consumer guide to give people an independent, clear report on economic data? Who could supply this?

    The total lack of independence of the media, government and big business, strangling on incestuous relationships, needs addressing once and for all. No matter how brilliant a new idea is, it won't make any difference while the network of liars is so closely intertwined in the system.

  • Comment number 62.

    Meanwhile another building society goes on the blocks.

    Any truth in the fact that it was made insoluble by the levy imposed by Crash and Burn to bail out the banks? Did they ask for some of it back to keep their business afloat?

  • Comment number 63.

    Things must be much better over there than here in the States.

    And, here is Dr. Doom's latest prediction.

  • Comment number 64.

    'Until total transparency and full disclosure is forced on all banks, I don't believe we will ever know the true picture of banking.'

    Arguably the banks have suffered from too much transparency. IFRS insists bank assets are marked to fair value, in the absence of a free market that means mark to model. The problem is that bank assets like all financial assets are very difficult to value...all we can see is that Barclays, like many of the other banks are generating cash at the operating level. Those self same toxic assets are generating cash and yet banks are finding themselves under pressure to devalue those cash generating assets to absurdly low levels.

    True the banks have not done themselves any favours but it is worth remembering that this started with a collapse in confidence in the housing market in the US. But who inflated the house price bubble in the first place? Politicians - Clinton's attempt to socially engineer by forcing banks via the Community Reinvestment Act to lend to people who had virtually no chance of paying their loans back. Thatcher/Major/Blair and their aim of creating a home owning democracy piling pressure on financial institutions to lend to all comers and so it goes on....

    But, the problem has been made far worse by barmy accounting. A banks capital is what the market prices the equity at - not what the accountants add up and put in the balance sheet. The share price of the banks crashed (and their chances of raising new capital went with it) when the spectre of nationalisation was first raised. Northern Rock's share price stood at £5 in late August 2007 even though its balance sheet had been published 6 months before. BY Christmas the shares were worthless - driven to zero by speculation about nationalisation. What, as Mervyn King said, had been a relatively easy liquidity problem to fix, became a financial disaster as your good self, Vince Cable and others got the bit between your teeth and decided to make journalistic or political mileage out of the bank's problems.

  • Comment number 65.

    Well as a Business IFA for 33 years, I can say that the Banks HAVE money to lend (according to one senior manager that I spoke with last week) BUT . . . they have a problem because borrowers have no security!
    Sound familiar? Unless you have an unencumbered house to pledge (No NOT the one with 110% mortgage!), forget it.
    And of course the Loan Guarantee Schemes are also bound to fail because the Banks want security on the 25% that the Government do NOT guarantee!
    Now, my company need £500k - the LGS provides a guarantee for £375k, but the Bank need £250k unencumbered security BEFORE they'll lend.
    MADNESS???
    How does one contact Robert Peston with a scoop?

  • Comment number 66.


    We are all being softened up so that our dear Prime minster can have a nice time at his G20. Peston is Brown's poodle these days.

  • Comment number 67.

    IMHO: Why there has to be extreme human suffering in the Anglo-American world before the scales fall from our eyes and those in power can clearly see the way forward.

    A picture is worth a thousand words, so I refer to:

    http://tiny.cc/3LbFO

    What this picture says to me, is that Gordon Brown is expressing:

    "Look at me, people of Britain (who are the envy of the world), I'm touring the globe teaching all these foreign Johnies how to conduct themselves in the financial world, so that they can be saved from the effects of their financial incompetencies".

    My interpretation of what Chilean, Michelle Bachelet's face is expressing is:

    "Who is this megalomaniac, financial basket case trying to kid with this desperate photo-shoot".


    Part of the same psychological dash for Cloud-Cuckoo land was seen in a recent TV interview where some Military Officer, dressed comfortably in civvies, explained how the photographs of Robert Wilson, taken in Afghanistan, depict the fine upstanding heroism and optimism of British Forces sent there:
    One of the photos can be seem here.

    http://tiny.cc/diDj6

    Does this picture say to you, what it says to the MOD representative?

    Some people are very good at kidding themselves.

  • Comment number 68.

    It is amazing to read some of the comments before mine.
    Do you not believe that in 9-12 months things will start to go back to normal & Robert will revert to being somebody you hear from every now & again on Radio 4!
    Are you not buying shares & making money (short term & long term) because it will be many years before this opportunity arises again - I am & doing very well.
    Stop moaning & buy - it will shorten the depression!

  • Comment number 69.

    #18 You are either very ignorant or very stupid!

    1) Barclays was not paying for ABN Amro in cash as RBS but in shares!
    2) Barclays put risk at the core of his performamnce measures in contrast to RBS or Lloyds. Economic Profit has been a core target and is well described in its annual account.

    What made the difference with Barclays is that they looked at risk...doh!

  • Comment number 70.

    What about the 'quite-Armaggedon scenarios'? I don't think the FSA has done a very good job up until now predicting the future, do you? A couple of years ago, our current predicament would have been dismissed as an impossibility by most, described as a ridiculous, apocalyptic, never-gonna-happen scenario. What do you mean Lehman Brothers, AIG and RBS will be bankrupt?! The fact is, we don't know where we'll be in 2 months, never mind 2 years!

    Mods: thank the Dev people for the Preview button. It is a nice touch.

  • Comment number 71.

    I don't know why that link didn't work, but if you google for:

    "Roubini says stocks will drop as banks go 'Belly Up'

    you'll see an interesting article.

  • Comment number 72.

    "and no banks are keen to lend to business."... #43 spareusthelies

    There is an unpleasant arrogance in that stance whenever one considers that it is a personal subjective human decision, one man or woman deciding on whether credit is to made freely available to another ....... and especially perverse whenever one considers that they have been freely* credited with billions of funds for the task [*as any charge for the pleasure is another parasitic perversion which we can all do without] whenever they know fine well that it will always end up back with them, having done its thing and energised whatever industries its use for purchases has delivered.

    And it is pretty logical that any novel, unheard of before business, is a prime intelligent candidate for this new business credit/Queasy Funding, as it does not suffer from the failure of past market models/finance considerations, and if Banks and Bankers, [and one has to consider that some Banks have been very easily taken over by Governments, via the Simple Expedient of Indebting Future Generation and Inventing Wealth from Thin Air and just Adding some Right Astronomical Figures to a Perceived Balance Sheet, and therefore Government Ministers and/or Civil Servants are effectively Proxy Bankers (and how convenient is that laundry facility)] are not Intelligent enough to understand the true Potential of a new Venture, or are pre-disposed or rewarded not to understand and support it, is there a Problem in the Making, which will haunt them until it is Resolved to Flow as Intelligence would have Designed it ..... and which would have Outed Inherent Systemic Flaws and its Human Supporters/Viral Bugs in the Cancerous System, with its BetaTesting/Novel Astute Submission?

    Or would you Disagree and Care to just clearly point out the Argumentative Flaw?

    "We need to begin all over again , with new faces, new ideas, and absolute honesty and truthfulness. And above all we need someone with the courage to endure the hatred of those he seeks to serve by having the steely nerve to carry through the terrifying and painful reforms that will be necessary to restore the country to economic, moral and political health." ... #48. newProtectorCromwell

    Amen to that, newProtectorCromwell, and Seconded.

  • Comment number 73.

    Reading between the lines - Barclays receives significant amount of American TARP money! Wonder if the American taxpayer knows about this?

  • Comment number 74.

    BANKER LOVE

    With this pro-Barclay's whitewash, Peston yet again proves where his loyalties lie; same as Brown; same as the Tories; whatever the City wants the City gets

    This is perhaps the worst bit of biased and incomplete reporting that I've seen from Peston yet, though

    It's hard to believe that anyone could write this story and completely omit to mention the obvious reason why Barclays are desperate to avoid accepting the govt shilling: there extensive involvement in tax havens and tax avoidance deals, which earn them several 100 million a year; all recorded in great detail over several days by the Guardian

    These deals, which are run through Barclays Structured Capital Management (SCM or SCAM for short) make Barclays one of the world's leading experts in this area, which is hugely profitable and removes billions from the reach of the British taxpayer. If Barclays had to join the govt scheme then they would almost certainly have to close the SCM department down - as RBS had to do for their similar scheme

    This is why Barclays would rather get their shareholders a very bad deal from Qatar and why they are willing to conduct a firesale of their iShares division

    Also remember that Barclays wanted to by ABN Amro but were eventually outbid by RBS

    Reckless runs through them like 'Blackpool' on a stick of rock

    As for the FSA and their stress test - you must be joking!

    If any of you think that Barclays is a safe bet for the next 2 or 3 years of upheaval then get out there and buy up their shares; more fool you

  • Comment number 75.

    Anyone who is interested can now access the Barclays SCM memos and letters detailing some of their tax avoidance schemes.

    These were initially removed from the Guardian website because of the Barclays injunction but remained available through Wikileaks.

    The letters were then raised in parliament under privilege and can now be accessed at a variety of websites, including this one at Wikileaks:
    http://wikileaks.org/wiki/The_Guardian:_Censored_Barclays_tax_avoidance_leaked_memos,_16_Mar_2009

    If you aren't hopping mad after reading these then I can only assume that you are not a taxpayer but a tax avoider

    PS: the Put People First march this afternoon was excellent and I suspect other Pestonites were there but not recognisable; I was marching under my Put Pirates First banner; excellent atmosphere; 40,000+ turnout; all peaceful and positive; it helps restore one's faith in human nature just a bit

  • Comment number 76.

    it's coming up to 8.30pm GMT so I'd like to remind all Pestonites that it's time to turn off your lights, computers etc for 1 hour as part of Earth Hour

    http://news.bbc.co.uk/1/hi/world/7969515.stm

    whilst sitting in the dark for an hour, just imagine how our Glorious Leader must feel all day, every day

  • Comment number 77.

    Off topic I know but all the lights have just gone off in the Canary Wharf banks. If they can do it for one hour, tonight, why not every night. If you are logged on here tonight go turn off your lights too. What the hell, it oculd make a difference. Suppose I should turn off the computer too to be really sound, but no lights is a lot easier to cope with than no internet

  • Comment number 78.

    I am a very long-term holder of Lloyds and Barclays shares, and have been relying on their dividends as a significant part of my retirement income. There is no doubt that much of this income has now dried up and may not reappear in the foreseeable future. Lloyds has been part nationalised, and will not restart paying dividends until taxpayers' money has been repaid. My holding in Barclays has been diluted by an injection of mid-east finance. It is some comfort that Barclays has so far managed to stay out of Government clutches. If they manage to stay that way, it is possible that a small part of my income may return.
    I also held a few HBOS shares, and to add to my misery I am now getting negligible income on cash in a deposit account.
    Meanwhile the next generation of my family (forty-somethings) are all employed and are feeling comfortable because their mortgage repayments have been slashed.
    It would be nice to think that this government or the next would have some sympathy for people in my position.
    I have always believed in the importance of self-reliance. In all my working life my only loan was a mortgage that in those days was strictly constrained in terms of a 3X multiple of my salary and a ceiling limited at 80% of valuation. I feel that my long term “prudence” has not paid off!

  • Comment number 79.

    Just so I'm completely clear Robert, did you say the FSA and the BOE are stress testing a bank NOW?

    Don't you think it's a little late for that! Could they be more Johnny-come-lately?

    Once again the stable door thuds against it housing while the horse thunders over the horizon...

  • Comment number 80.

    Robert

    I cannot help feeling that you have got it wrong this time. Your tone seems far too optimistic. There is an awful lot of stuff yet to hit the fan!

  • Comment number 81.

    Here's a thought, how is an underfunded pension, which is making full payments to retired members, not a Ponzi scheme?

  • Comment number 82.

    And I quote from the top right hand corner of Mr Pestons blog page - the page we are all reading now.

    'I'm Robert Peston, the BBC's business editor. This blog is my take on the business stories and issues that matter'

    For 'business' read either 'Banking' or 'City'. I am disgusted by the BBC Business Editor's extremely restricted view on the business issues currently going on in this once great country of Britain which includes the Midlands, North West, North East, Scotland, Wales, Northern Ireland AND NOT JUST THE CITY OF LONDON.

    I am equally disgusted by the BBC Business Editors extremely restricted view on the business issues currently going on in this once great country which includes Manufacturing, Engineering, Farming, Retail, Tourism, Haulage and many more industries AND NOT JUST BANKING AND FIDDLING ABOUT WITH BITS OF PAPER.

    'Business stories and issues that matter' - how about 'Business stories and issues that matter to the people of London'. PATHETIC!

  • Comment number 83.

    It could be that the immediate banking crisis may have been resolved, and that major UK banks are not going collapse, which despite some of the commentators in this blog thirst for revenge is a good thing. There will however be consequences which include government ownership of a substantial part of the sector, long term reduction in the value of banking shares, continuing credit difficulties and a permanent increase in regulation.

    Barclays priority has been to avoid partial government ownership but have done so partly through good fortune in that it was RBS which ended up ABN Amro not them, and partly by screwing their existing shareholders with the Qatar deal.



  • Comment number 84.

    I can't help but think that we're seeing the reality of how the banks are going to behave 'post-crisis' towards customers and depositors and investors.

    Pretty much the way they always have done - loud about how quickly they'll make people wealthy and rather quite on the nitty-gritty details.

    Have you noticed these current accounts being offered to people? Big snazzy, razz-ma-tazz TV adverts about how they'll give you a fiver a month, but no mention of the fact that the overdraft facilities will cost you an 'arm and a leg' - yes, even the pre-arranged ones. Many commentators are speculating that they are lining up to make monthly charging the norm and to kill of "free banking".

    Alastair Darling clearly won't get his wish that banks regain the trust of ordinary people. Most people, I guess, will continue to perceive them as two-faced, dodgy-dealing, money-snatching sharks.

    What we need is a Minister for Banks. And I propose Derek (Del Boy) Trotter, on the grounds that most people would find him more trustworthy than most of current bank CEO's, Heads of Marketing, Bank Company Secretaries, etc., etc.

    (Apologies to the few banks, e.g. the Co-op, who do seem to listen to and understand their customers. If they had a branch anywhere near me, I'd take all my business to it. I can't do 'internet banking' to any serious degree because my other, i.e. better, half is paranoid about it).

  • Comment number 85.

    #82 GRIMUPNORTH77

    You make an accurate comment about the very restricted focus of Mr Pestons blog in recent months.

    I'm not big into conspiracy theories but it does make one wonder if some of the bloggers who suggest an external agenda writer may have a point.

  • Comment number 86.

    Mr Peston's probably some plant from "Common Purpose" - google that lot to give yourself the willies about global domination

  • Comment number 87.

    86, VentilatorBlues, are you saying Robert's posts are compromised by a conflict of interests? i.e. the requirement to report the facts fairly vs loyalty to a proto-New World Order academy?

    Interestingly, one of Common Purpose's stated objectives on their website is: 'real change doesn’t just happen: leaders need to make it happen'. Really? So the 'leaders', a self-selecting group that didn't see this financial nightmare coming, have nominated themselves as the generic solution to the world's problems? How about this - they are the problem. Really, we've been here before, have we not? Dylan sang about not following leaders and watching the parking meters in 1965!

  • Comment number 88.

    public domain


    If only we knew in advance what was coming.

    Someone did. Here is a quote from David Blunkett, from his diary of July 2004, in Cabinet, talking about Gordon Brown:

    “He painted a picture of what would happen from 2008 onwards, of 1.9% average growth, how dreadful things were going to be and how everybody needed to wind down what they wanted to do.”



    So, whilst central government has known for over four years what was coming, it did nothing to alert us, or even put in place prudent steps to avoid what had been predicted, whilst pretending all was well for as long as possible. The secrecy, deceit, arrogance, complacency, lack of openness and transparency and accountability, have all been breathtaking.


    Yet at the forthcoming G20, the brown stuff pretends to be an authority on providing a solution to the crisis

  • Comment number 89.

    It is fascination that so much column-inches have been devoted to Barclays and yet little or nothing had been said about the ones who truly and successfully got away - HSBC, Standard Chartered, Co-op, etc. !!

    And I do not understand the insistence on perpetrating the urban myth that the government has nationalised, wholly or partially, *ALL* banks without any mention or sub-clause about the ones who got away !!

    Why did the FSA not do a "stress test" on those banks ?? My feeling is that they will do a "stress test" back on the FSA and find it wanting !!

  • Comment number 90.

    #61 starry-tigger

    Yes, there is a point to saying we need some organisation to process figures for us in a comprehensible way. But the real point is that this should be part and parcel of the political agenda of the country and its politicians. That is what real transparency is about, not the fake operations we currently have in the name of transparency.

  • Comment number 91.

    #68 sivart683

    Is you comment aimed at those who have recently lost their jobs?

    .... and it depends what you mean by "normal" if you mean 2003 to 2007, then no it will never return to that.... remeber the system faled because it didn't work - partly because the financial services industry had built (right from the local Martgage Shop through to the highest paid bank execs) an infrastructure so large and so expensive it was impossile for the savers and borrows to fund......

    We are all please that you are clever enough to make some money in the sort term and that you have taken the time to tell us about it - but the world is in tansition and you would be wise to look back a number of years to look for "normal"

    We are a

  • Comment number 92.

    82 grimupnorth

    RPs background is as a banking reporter so it is a natural environment for him. However the endless bank broadcasting is mindnumbing. If I had the choice think I would report about the banks rather than failing businesses. Simply because there is very little that can be done about a business that suddenly loses its customer base. Reporting about businesses that a just getting on with things is actually pretty boring, and it is not well recieved to talk about success at the moment. I understand from your previous posts that you are having a tough time at the moment. You have my sympathy, as I have been there. It takes sustained effort for years not months to identify a new market, new technology, to develope new products and services. That time frame does not match an order book collapsing in a matter of weeks or months. The government so called intervention is actually very little help because no risks are easily taken with taxpayer money and any addittional expenditure - which is usually just budgets brought forward is focused on the usual public expenditure route. I find this sort of expenditure highly dubious as it does not reach the private sector in trouble, the public sector subcontractors know it is short term and act accordingly and it is obvious public sector budgets will have to be cut downstream. It is not a foundation for anything. BTW I applaud your posting of your problems which must be personally difficult - the more people are aware of the problems the better.

    88 doomdaybug

    It is absolutely obvious that Brown knew what was coming, even if he did not quite know the extent or shape of it. It has previously been reported on the BBC that graphs and reports at the Treasury where seen by journos in circa 2005 / 2006 which showed problems in the pipeline. However the general public just did not want to hear anything negative, quite a few tried to warn. You do not have to be a genius to work out that if a rural hovel previously used only by wildlife goes up in price 6x in 8 years with little done to it in that time that something is wrong, unsustainable. The economic downturn scenario information however had also to be available to the banks who were the ones pumping the money froth and it raises many questions about their behaviour. Is it fraudulent to sell something knowing that the value of the item securing the sale has a significant percentage chance of decline in price so that the criteria of security embedded in the product is undermined. The 1990s recession showed a 40 percent price collapse on forced sales, so it is not as if such a mechanism was new. Everytime the property market showed signs of reaching a slowing point new products, LTV++, LTI++, wher introduced to keep the upward movement. When FTBs were priced out the BTL product was pushed. These are deliberate acts and now the ingenuity goes into saying that the banks were also victims in some way. They were not..... Finally, Politicans -- when will commentators stop reporting on hero Tony Blair in such positive tone and document him for what he was. A ship jumper when trouble was approaching, a war monger, a property bubble rider, and a self confessed talker to God. In short the very sort of person who should not be a PM. With respect to those supposedly in charge of financial policy - the story is remarkably similar in that group. Lawson and Lamont 1990s - The individual is the one taking the risk - Lawson, No regrets - Lamont. Brown 2008/9, Not my fault, won't, shan't, say sorry, shan't. Okay if the job is beyond you dont pretend you can do it, dont tell everybody how well you are doing it. And when you cock it up at least leave the room.

  • Comment number 93.

    morning ..never mind the banks, the credit crunch,the saviour of the world, we have j smith(home secretary),who cant even pay for a film out of her own money, what a rag bag of a government we have....brownwatch 429 days.

  • Comment number 94.

    90 newprotectorcromwell

    Online digital solution. Be difficult to stop, just like FOI act. BO in US is the one to watch as he is intent on trying to implement it, if it works it will come here, bound to. So current MP to electorate one-way flow on policy will become 2-way. Oh dear Oh dear.

    However - Afraid whilst I am not a Royalist, I am not a supporter of Cromwell.

  • Comment number 95.

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

  • Comment number 96.

    Well, here we all are again.

    The Western Economies are built on satisfying consumer demand.

    Without Consumer demand (ie workers with cash to spend) there will continue to be economic decline.

    Fiscal stimulus packages that do not increase the spending power of ordinary workers will fail.

    Not because of limits of Bank finance, but because business will not find customers to buy the end products.

    No customers no profits, no profits no business, no business no employees.
    A simple vicious circle.

    Barclays selling its Ishares business is wise, they see the long term Ishares customer base as declining.

    The company who buys Ishares must be prepared for the fact that Uk Shareownership is going to fall as the general population becomes poorer.

    But of course they will have allowed for that, won't they?

  • Comment number 97.

    92: Shouldn't blame Tony Blair for attempting to talk to the Divine (whatever form you may believe it to take).

    Though no one asks how he earnt his job at a merchant bank, that would be a far more interesting question to have answered !

  • Comment number 98.

    And maybe one more thing. I read all these articles/comments and I wonder if it is incompetence or ignorance. It seems that nobody wants to say the truth about stress testing, capital ratios and the APS scheme. The capital ratio for Lloyds and RBS have not increased through the APS scheme, this is just a massive capital arbitrage!!! The two banks will keep a large first loss tranche (higher than their Kirb used to measure their RWA) as such the deal should not transfer any RWA(risk). However they still allocate (wrongly) all the RWA to their second tranche. This should be mitigated by a capital deduction for the first tranche. However Basel rules allow to split the capital deduction between Tier1 and Tier2 so only half of the capital will be deducted and so the capital ratio ARTIFICIALLY increased. And then I read about all these useless reports about how great the capital ration from Lloyds and RBS will be...what a joke, just using taxpayer money to cover the risk taken recklessy by some banks! Could any journalist/analyst do his/her job properly?

  • Comment number 99.

    * 90 newProtectorCromwell "But the real point is that this (transparency) should be part and parcel of the political agenda of the country and its politicians."

    I agree but how could this be achieved? It sounds idealistic given the corruption that power brings with it.

    I remember watching the Apollo 11 mission, 40 years ago this Summer. It succeeded because of one key element built into the culture at NASA, namely that honesty had to be at the centre of the whole venture because lying doesn't work! In fact, astronauts who pretended to know something were taken off the programme. A very human fear of losing face and trying to cover up uncertainty was strongly discouraged as it would have compromised the safety of the mission.

    Can we get to a culture like that in banking? Unfortunately, covering up the truth and pretending to understand something that is written in obscure financial language gets people to the top. Not only do bankers strut like peacocks, but they go unchallenged, even when it's a case of yet another stupid emperor with no clothes on!

    This G20 meeting will demonstrate why we need something outside and independent of politics to safeguard the future. Would our dear leader, for example, with his record in admitting mistakes, make it on a mission to the Moon?

  • Comment number 100.

    #94 glanafon

    In time you will realise that there are only two options on the table - Cromwell or Kruschev - the one a man who will return rule by the people to them when he has done what has to be done, the other a man who will turn this country into a socialist wasteland of political correctness ruled by the diktat of faceless bureaucrats in Brussels.

    People really do not see what is being developed under a shroud of deception.

 

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