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Lloyds: Black is the colour of spring

Robert Peston | 08:30 UK time, Tuesday, 27 April 2010

Big banks find it immensely difficult to buck the general economic trends.

LloydsSo many will see it as firm evidence of better times that Lloyds says it was in profit during the first three months of the year - and expects to be in profit for the remainder of 2010 too.

This represents a remarkable turnaround - from losses of more than £6bn in 2008 and in 2009 for the two banks, Lloyds TSB and HBOS, which came together in a controversial marriage to form the Lloyds Banking Group we know today.

And it's a better performance than Lloyds expected even a month ago, when it predicted that for the whole of the current year it would return to the black.

There have been two significant contributors to the recovery - a sharp fall in the losses on loans going bad, and a pronounced widening in the gap between what Lloyds charges for loans and what it pays depositors. Which may stoke complaints that banks are paying too little to savers and charging too much to borrowers.

There is also growing evidence that taxpayers will emerge with a profit, perhaps a significant one, on the emergency investment the state pumped into Lloyds and Royal Bank of Scotland, to prevent them collapsing.

At their current share prices, taxpayers are a few billion pounds up on the £66bn we paid in aggregate for our stakes in those two banks (on this morning's share price, Lloyds remains a smidgeon below the 73.6p we paid for our 41% stake, and RBS shares are well clear of taxpayers' 50.2p average purchase price).

That's not to say that everything in Lloyds' garden is spring-like and rosy.

The bank still faces a formidable challenge to reduce its dependence on loans and guarantees provided by British and overseas taxpayers, that totalled some £157bn last year.

And some will fear that Lloyds and other banks are not yet providing the credit to viable borrowers that a growing economy requires - as indicated by Lloyds remarks that its lending balances remain flat.

But back to that question of whether and when we might pocket a real, cash profit on our holdings in Lloyds and Royal Bank of Scotland. Here are a couple of points to consider.

First, that the initial mechanism for liquidating the stakes will probably involve selling a portion in the form of convertible government bonds (or government bonds convertible at a future date into shares of RBS or Lloyds at a pre-determined price).

This would allow the government - in theory - to borrow a few tens of billions of pounds relatively cheaply, at a time (no secret here) when it has quite a large borrowing appetite.

Second, even if we do emerge with a profit on the rescues of Lloyds and Royal Bank of Scotland, no one - I assume - would believe that represents adequate compensation for the role played by banks in causing the worst recession since the 1930s (which in turn is causing the worst crisis of confidence in sovereign borrowers for several decades too).

Comments

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  • Comment number 1.

    Ohh what can we buy with our cash when it gets paid back?
    Its just like a christmas club for the country. Is this how the government plans to sort things out?

    Not that we trust the banks to pay any back, I am sure they will find a loophole somewhere to delay any payment and then charge for cheque. It would be a big charge as well going on the charges I get hammered with.

  • Comment number 2.

    The question never answered by politicians is just who are we in debt to and what are the terms of repayment. Speculation is we have borrowed from the Middle east and/or China. How is the borrowing done; bonds?
    Clearly the UK can't generate funding from within its own borders.
    Can Robert Peston give the public a lead on this question which is fundamental to how we recover? Thanks
    Alan Lewin

  • Comment number 3.

    These people are cheeky monkeys! They are conning their own customers.

    Any fool, even a banker, can make money if you borrow at 0% and lend at 4%. The trick is to make money when we've broken them up to make them compete.

    Once there are dozen of banks, they won't find it so easy to con people into paying 4% when the bank next door offers 1.5%.

  • Comment number 4.

    Yes we can generate funding in our own borders - the private sector/individuals lend to the state. And as individuals are the owners of the state we have lent money to ourselves. Some money may come in from abroad, just as a Briton might buy Greek Bonds, but that is a separate issue and a separate balance. We don't owe the National Debt to foreigners.

  • Comment number 5.

    I do wish commentators would put more details on these lending figures.

    It is so easy to trawl out negative sounding headlines about flat lending etc...I mean flat to what ??

    Is it new lending , net lending and when are the figures drawn , last week, last month, last year.

    There are so many factors that impact overall lending book.

    The huge billion £ write offs in the last two years would have shrunk the overall lending book significantly. To restore to that parity when every one has been reducing demand and being cautious would be a task indeed.

    Alongside that there are loan repayments, much of the small business world borrow on loans of less than 10 years , unless for property, so the capital repayment on that in that sector would reduce borrowing by as much as 10% or even more depending on the makeup of the lending book.

    Businesses reducing borrowings to be cautious in recessionary times is just a simple explanation of the book narrowing.

    All these need to be replaced just to stand still.

    No-one has ever made comment on this despite the glaring headlines of businesses suffering in the face of denied lending - which makes a great headline.

    Too often those whose business models are inadequate are given a run in the popular press generating headlines, but if you put yourself in the risky position of lender you wouldn't commit money on a personal basis.

    Heavily geared businesses are generally living on a knife edge. At least the word "viable" has at last crept in to an RP comment.






  • Comment number 6.

    Jaques Cartier ...simplistic economics clearly your strength.

    I'm guessing your cost of the infrastructure to support all the activity would be Nil or close to it, either that or thee is a magical society where the lending is just one man and no one else is employed.

  • Comment number 7.

    So the banks are recovering courtesy of an interest rate regime designed specifically to make them hugely profitable - if this is true that we are recovering - isn't it now time for the investors and savers who have been the source of this profit to be repaid too....

    There is a terrible hypocrisy about politicians saying that they will ensure perpetually low interest rates and at the same time looking to rebuild a sound economy when we still have interest rates at a 350 year low. That is when the economy is at its lowest point in 350 years and savers are being treated the worst they have been in 350 years. This is not a sound economy it is one on the floor - nearly on its death bed. The idiocy of the present situation is that interest rates at these levels are an insane way to run an economy and particularly for small savers it cannot go on. (ps Greek bonds at 13 percent and pressure on other similar economies.)

    Perhaps the worst aspect of these ultra-low rates is the impression that it gives to borrowers (and lenders) that they can 'afford' absurd and unsustainable multiples of income as mortgages - it must end in tears for them and indeed the lenders to such borrowers - oops these are the banks - this is the precise problem with the present bubble economy - it is being designed to end in a crash - and quite soon too!

    When interest rates go up to sane long term levels and money is properly priced then and only then can we think we are recovering - presently, although no more losses on the grand scale is a nice indicator, it is not sufficient.

  • Comment number 8.

    "Second, even if we do emerge with a profit on the rescues of Lloyds and Royal Bank of Scotland, no one - I assume - would believe that represents adequate compensation for the role played by banks in causing the worst recession since the 1930s "

    Robert as far as RBS is concerned I totally agree with you but where Lloyds is concerned their problems are entirely caused by the HBOS acquisition which was engineered (some might say forced through) by Gordon Brown. So who should we blame for Lloyds?

  • Comment number 9.

    @ Barry White:

    Not sure what your thinking is, but in the case of Lloyds & RBS above, the government holds shares, the price of which the banks don't control, and which can be sold to a third party hopefully at a higher price than Hedge fund Gordon bought them at (although in light of his track record with our gold reserves I wouldn't be too sure). The third party is the person providing the cash (and will probably be your pension fund - so you really).

  • Comment number 10.

    How fortuitous for the incumbent govt just before an election.

    Looks like Lloyds/HBOS, RBS and the rest can now cover the compensation due for mis-selling mortgages for the last 10 years. Now that is their real problem. If the credit crisis on UK mortgages wasn't fraud then it must have been mis-selling, not just to us but to those who bought the MBSs as well. LOL.

  • Comment number 11.

    # 6. At 09:32am on 27 Apr 2010, wholistens wrote:

    > Jaques Cartier ...simplistic economics clearly your strength.

    French is clearly not your strength. If you want to be horrid,
    you'll have to spell my name properly ...

    > I'm guessing your cost of the infrastructure to support all the
    > activity would be Nil or close to it,

    We make the computers do the work nowadays. They make a better job of it
    than gormless bankers. The main cost is waste, caused bonuses and opaque
    derivatives that are too difficult for our dull bankers to manage.

  • Comment number 12.

    # 8. At 09:49am on 27 Apr 2010, Justin150 wrote:

    > So who should we blame for Lloyds?

    Gormless shareholders, or gormless bankers - tough choice, eh?


  • Comment number 13.

    We shouldn't be too surprised. I suspect that Lloyds would have weathered the storm better had Gordon Brown not encouraged them to take on HBOS. Liquidating the equity by issuing convertible bonds sounds rather bizarre. The government would have to service the interest payments. Surely the quickest exit is selling the equity?

    On Robert's second point - we are where we are - supporting the banks prevented untold damage elsewhere in the economy and was unavoidable. There were other guilty parties as we have rehearsed before - FSA - Bank of England - the First Lord of the Treasury etc etc.

  • Comment number 14.

    Beware the circular argument: One of the principal reason that Lloyds have reported a profit is because impairments have fallen; the reason impairments have fallen is because property prices have risen; the reason property prices have risen is because the government has kept interest rates unrealistically low and put pressure on state owned banks in particular to lend money, using money, which has effectively been printed; if therefore the government goes on printing money and property prices go on rising forever and interest never go up then we will all make a profit when Lloyds is sold - or was that a pig past my window?

  • Comment number 15.

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

  • Comment number 16.

    It is pointless complaining about the wide gap between the deposit rates and lending rates charged by banks, when all that they and Lloyds, in particular, have been doing is responding to the state of the market. There is a shortage of credit, due to the natural desire of banks to increase their reserve ratios, now that they have learned that they cannot rely on the wholesale money market to maintain their liquidity, as they did before the crunch. Banks are likely to continue to behave in this way, even if stricter regulation does not require them to do so.

    It is the combination of the money and credit supplies which is critical for the health of the economy. So the shortage of credit must be compensated for, by keeping the money supply higher, by means of larger than usual unfunded public deficits, for some time into the future. This is why the present hysteria among politicians and in the media over the government's deficit is so ominous.

  • Comment number 17.

    So those nasty bankers are making profits and it looks as if the british taxpayers may turn a decent profit on the cash they invested to save the banks. Boo hiss!! lets hit the bankers, prevent them from yurning their businesses round. After all, we're the ones who will suffer so if we want to kick ourselves, why not?

    Get real everyone. Yes the banks got us into a mess, no we didnt like bailing them out, but the reality is we now have a huge investment in the sector and we should make it successful not attack it at every opportunity.

  • Comment number 18.

    How heart warming, our banks start making profits while the rest of industry is going to hell in a hand cart.
    I own an SME, in the real world and see at first hand that company’s I have dealt with for many years are going to the wall as banks refuse to help them financially and withdraw overdraft facilities at a drop of the hat.
    Should we rejoice that the banks are now profitable again? How have they managed it? By calling in loans and grabbing all the security they have on them. House price rises are making the banking sector salivate at the money they can now cash in on. Who care who loses their house the banks are back in profit. Hurrah

  • Comment number 19.

    Wasn't this deficit thingy the politicians seem so anxious about caused mostly by letting these banks have a load of our money?
    If the money is back there again, doesn't it mean the deficit thingy can be reduced quite a lot, by the banks giving it back to us?
    I suppose there are some complicated twiddly bits but there shouldn't be any complicated fiddly bits.

  • Comment number 20.

    Good news: the Government will make some money back off its stake in banks, reducing the national debt.

    Bad news: the banks are only worth more because they are now making massive profits by ripping off consumers.

    The Lloyds giveth, and the Lloyds taketh away.

  • Comment number 21.

    "This represents a remarkable turnaround "

    Does it? - in a QE powered environment with historically low interest rates? - does it really?

    "There have been two significant contributors to the recovery - a sharp fall in the losses on loans going bad"

    Ah, and what do higher interest rates do for the volumne of bad loans?
    a) Reduce them?
    b) Increase them?


    Reconcile these two statements:

    "a pronounced widening in the gap between what Lloyds charges for loans and what it pays depositors."

    "There is also growing evidence that taxpayers will emerge with a profit, perhaps a significant one"

    ...so the consumer is now footing the bill to produce the taxpayer 'profit' (ignoring opportunity cost as we don't like to remind ourselves of how profit is measured in the REAL world).
    Isn't it lucky that taxpayers are independent of consumers - WHAT DO YOU MEAN THEY'RE THE SAME THING!!!

    I am disappointed that Robert seems to have forgotten all principles of investment in order to clutch onto the very narrow straw of 'Lloyds bank produces profit for taxpayer'

    - I'm a little embarrassed for you and your journalistic integrity.

    Never mind - at least the bank apologists will have their day - they can crow about the profit here as much as they like, until it's deposited in Treasury coffers it's totally meaningless - as any good investor knows.

    This presumed profit doesn't prove anything, the stock market is still a bubble, the bond markets are an extreme bubble and the housing market is starting to wane now it's not being driven by Government stimulus (and that's on both sides of the pond) - and of course there is a little matter of sovereign default.

    Lets hope Lloyds aren't exposed to any Greek debt....or German bank debt...or Irish, Italian or Portugeuse debt.....or Spanish debt.......or Spanish banks....or Greek banks......or Goldman Sachs.

    If they avoid that lot then we should see a profit in 2014 - just in time to pay off the Olympics creditors!

  • Comment number 22.

    A bit too simplistic to say we will get our money back, and make a profit.
    Until you break up these banks, they are going to remain a very cosy cartel, over-charging fees, skimming some extra cream on the interest rate-charges, and giving the savers a lousy deal on their money.

    They are not actually re-paying anything. Share-price recovery is not down to anything they have done, more than a healthy chunk of Mervyn's £200 billion freshly printed money got diverted their way in commission.
    That and a fraudulent resistance to value their assets and collateral properly.

    When are we going to see some serious action by the regulators?

  • Comment number 23.

    There is a ridiculous argument, endlessly recycled whenever Lloyds get mentioned on Robert's blog, that Gordon "forced" Lloyds to take on HBOS. Nonsense. True, he shamelessly greased the wheels by promising them a potentially abusively large market share not subject to scrutiny by the Monopolies Commission. However, this is bribery, not coercion. The reasons Lloyds bought HBOS were two-fold: greed and hubris.

    The idea that the banks, who refuse to lend at the Government's request even when the latter is a majority shareholder, would simply roll over and accept 11-figure liabilities on the PM's say-so is utterly laughable.

    caveat emptor is the phrase that springs to mind.

  • Comment number 24.

    As I said Jaques, my minimalist use of your name follows the the track of your understandings.

    If you apply your suggested theory to Banks , why not every other industry, to everything in fact and then we could all enjoy a jolly.

    No your observations are nothing more than fuelled by the paper headlines,or bad experience. I would guess you have no real knowledge of the industry or its people.

    Your stereo typical use of cliches , or should that be "Clichet" demonstrates above all else the little value any one should place on your mutterings, which contained not one piece of sound economic thinking.

  • Comment number 25.

    17. At 10:37am on 27 Apr 2010, smell the coffee wrote:

    "Get real everyone. Yes the banks got us into a mess, no we didnt like bailing them out, but the reality is we now have a huge investment in the sector and we should make it successful not attack it at every opportunity."

    Castles made of stone and steel can repel any attack from any quarter - castles made of sand do not.

    It's clear from your concern that you believe Lloyds is in fact a castle of sand - which is probably quite accurate - and therefore we should treat it with kid gloves, but it's not talk from us that will damage Lloyds - it will be the markets when they stop creating bubbles - from which Lloyds is a current benefactor.

  • Comment number 26.

    "Big banks find it immensely difficult to buck the general economic trends."

    - Yes, but with free money and mark to fantasy, those brainy bankers just about win through!

  • Comment number 27.

    As someone who is in dispute with Lloyd's TSB at the moment. I am pleased they are 'on the up'. Their mis selling of loan insurance hurt their customer base really bad. ( they charged interest not only on the loans but on the insurance as well...(makes you weep at the underhand dealings of these people ) Lets hope they can move forward and become an honest bank again.

  • Comment number 28.

    At least we are getting something back from our investment not debt as CAMERON states,seeing he does not know the difference between debt and investment. GORDON BROWN should make the most of this good news, and shout it from the roof tops, I know that is what the tories would do. LLOYDS IN THE BLACK GOOD NEWS FOR THE TAX PAYER BAD NEWS FOR cameron.

  • Comment number 29.

    Lloyds back in profit and may even be able to re-pay the Taxpayer soon. So that means it will legitimately be able to ignore it's part in the financial carnage, of the last two years and walk away, perhaps even with its head held high? Probably even denying those problems were anything to do with it?

    How long before we're all being told (bullied?) into ignoring the recent past in banking and ONLY look to the future? Lloyds has been handed a virtual monopoly in personal and small business banking. This should be broken up, not applauded.

    But what really reflects the complete mess in our National finances is the likelihood that the Government will have to borrow against the equity in these banks. Many people I think are simply expecting the shares to all be sold at a profit, unaware of the value destruction that would be caused by dumping several billion bank shares onto the stock market in one go.

  • Comment number 30.

    Not surprising really given Lloyds' dominance in the market place and the astonishing lack of competition and level of cartel behaviour we allow in our financial services industry.

    The only surprising thing perhaps is that we haven't heard from the good spokesperson of the British Bankers Association, who I am sure believes that:

    "There is absolutely no relationship between a banks profit margins and the level of competition it faces in the market place. It really is just down to talent and hard work".





  • Comment number 31.

    cameron would have sacked the people in lloyds and rsb where would he get the money from to keep them on the dole. If that is not increase government debt and no chance of getting your money back, then what is. NB# 2million people on the dole costs £200.00 per week. 2 million multiplied by 200 equals 200 million pounds per week. In ten weeks £1 billion poundsand in one year £54 billion pounds and no chance of getting your money back. So much for tory economics

  • Comment number 32.

    nobody has said how they would finance the unemployed that closing down the banks in question would cost. Also would they say the same if their money was in the banks that would have been closed and leaving them penniless. I doubt it, would they like CAMERON TO SAY TO THEM SORRY but the tory government is not prepared to get itself into debt so your money is gone HARD LUCK. they do not mind seeing people losing their savings, jobs and conscquently their homes and put on the street with their children, what sort of people are these. GORDON BROWN SHOULD CRY THIS FROM THE ROOF TOPS AND LET PEOPLE KNOW WHAT THE TORIES WOULD DO.

  • Comment number 33.

    #3 Jacques Cartier

    "Once there are dozen of banks, they won't find it so easy to con people into paying 4% when the bank next door offers 1.5%."

    And this is part of the cause that got us here. With high competition reducing margins to unsustainable levels, then banks had to look at other ways of maintaining liquidity such as RMBS.

    So you are, perhaps inadvertently, advocating a return to pre '07.

  • Comment number 34.

    A lot of people here seem to be under the impression that Lloyds are giving savers a raw deal. However I've got 3 current accounts (two of them being free accounts) with Lloyds and they all pay 4% before tax on balances up to £7k. Restrictions are not onerous either. Does not seem that bad a deal to me.

  • Comment number 35.

    # 11 Jacques Cartier

    congratulations on the retort.

    i along with others do agree that the idea of a profit is far too simplistic here.
    Profit is not the same as benefit to the public, as WOTW says an increase in the difference between savings and lending rates is being paid for by the public, the £200bn of QE to keep the economy begine is clearly a major factor which has helped the banks cause. I also strongly suspect that "the sharp fall in losses from debts going bad" haven't actually been in the first quarter but a recalculation of provision required for debts going bad.

    A "true" profit is of course impossible to calculate, the banks will argue that their tax bills and employees tax bills over the last 10 years need to be taken into account and future tax bills from recovery. i am only guessing, but i suspect the corporation tax alone for the two banks over the last ten years could exceed the £66bn paid for our aggregate stakes in the company.

    Similarly was the "investment" of £66bn worth it can never really be answered, as with many situations we will never know the "what if scenario if the stake purchases did not take place.

    As RP correctly says, IMO, banks bringing on the worst economic crisis since 1930's is a far greater issue than LloydsTSB and RBS

    However, for Lloyds / RBS it does seem indicative that the stake holding is paying itself back, plus a little, and almost certainly proving the gloom and doom forecasters wrong



  • Comment number 36.

    "(take our money)...and a pronounced widening in the gap between what Lloyds charges for loans and what it pays depositors".

    Haven't looked at this blog for some time too busy trying to make a living. But RP's cheery report on BBC this morning made me wonder what real people might think. Even in my low financially scholarly handbag it would seem the report should have been focused on the "Recession is over for the banks".

    Are you working for the Gordon now RP? Just paid my TV licence today. Can the BBC now produce something to watch please.

  • Comment number 37.

    In a totally artificial market, created because of the financial mess mostly caused by the banks themselves, a bank is now starting to make a profit. Wow, if a bank can't make a profit when the risks are reduced substantially, when their lending portfolio has been substantially cleansed, when the rates of return to lenders is an all time low; then not only is this not good news its pathetic news. Perhaps they should start considering the following: No bonuses as they have underperformed in a market constructed to help them (taxpayer support and quantitive easing).
    Start becoming bankers again i.e. lend money and stopp grubbing around in mortgages, insurances, holiday travel, derivatives, offering investment advice (that's a ;augh coming from a bank) pensions and anything else which on the face of it is a rip off for the banks customers. Get rid of suspect intelligent banking algorithm software which not only do bankers not understand but neither do the dealers or the failed whizz kids who wrote the software code.
    Go back to customer face to face meetings. Don,t just trot out some office junior and call them a personal finance advisor, half of them have only recently left school! Return to using a bank manager, someone with financial intelligence, someone who knows his customers, someone who understands personal finance. Until then stop calling yourselves bankers, you're not, you're just overpaid back street moneylenders.

  • Comment number 38.

    23. At 10:58am on 27 Apr 2010, Tim wrote:

    "There is a ridiculous argument, endlessly recycled whenever Lloyds get mentioned on Robert's blog, that Gordon "forced" Lloyds to take on HBOS. Nonsense. True, he shamelessly greased the wheels by promising them a potentially abusively large market share not subject to scrutiny by the Monopolies Commission. However, this is bribery, not coercion. The reasons Lloyds bought HBOS were two-fold: greed and hubris."

    It's only Lloyds shareholders who believe that - merely because they feel impotent upon the realisation that just because you're a 'shareholder' doesn't mean you get a say - the rest of us are used to this feeling as voter - we don't get a say either!

    It's a bitter pill to swallow that you invest a lot of your wealth in a company and if the directors want to take risks to sink the ship - there is nothing you can do about it.

    Never mind shareholders - maybe you need to read the small print and realise what you're getting into before you start investing. Only the majority shareholders have any say - and they will trust the board - unless there are exceptional circumstances - as has been proved with the Lloyds takeover of HBOS.

  • Comment number 39.

    24. At 11:17am on 27 Apr 2010, wholistens wrote:

    "Your stereo typical use of cliches , or should that be "Clichet" demonstrates above all else the little value any one should place on your mutterings, which contained not one piece of sound economic thinking. "

    Ah ha - a challenger.

    Care to enlighten us - oh great sage of Economics?

    Can you explain a simple question the other greats have failed to do?

    "Where does profit come from"

    No need to be simplistic for my sake - I will be able to keep up.

    It's time to put your money where you mouth clearly is.

  • Comment number 40.

    # 24. At 11:17am on 27 Apr 2010, wholistens wrote:
    > If you apply your suggested theory to Banks , why not every
    > other industry

    Other industries do “something useful” with “things”, and create wealth. Banks just shuffle figures around, and computers do that nowadays. The only skill is in programming computers, which is way, way beyond any banker, that's for sure.

    > I would guess you have no real knowledge of the industry or its people.

    On the contrary – we've all heard of Sir Greedie and his dabbling in high finance. The whole problem was caused by numbskulled bankers making “guesses”, but not with their own money, of course.

    > not one piece of sound economic thinking

    Was it Sir Greedie's “sound economic thinking” that caused this unholy mess that we are in? Or yours? Just asking....

  • Comment number 41.

    Typical, Bank's borrowed from us @ 0% and then if we were lucky to get a loan approved we were being charged in some instances >10%...I know I was, perhaps others were a lot worse off? Now when the UK Guv decides to off-load whats the chances they'll sell off at a loss, h'mmm I'm thinking the Banks will have a cunning plan for that one!!

  • Comment number 42.

    29. At 11:30am on 27 Apr 2010, spareusthelies wrote:

    "But what really reflects the complete mess in our National finances is the likelihood that the Government will have to borrow against the equity in these banks. Many people I think are simply expecting the shares to all be sold at a profit, unaware of the value destruction that would be caused by dumping several billion bank shares onto the stock market in one go. "

    I don't anyone actually believes that - only the banking apologists are trying to convince us this is the case - and we all know they know better.

    I wonder if Lloyds will become a large purchaser of UK Government debt? - This would complete the loop of QE nicely.

    Banks crash
    BoE prints money and lends it to banks through asset purchase
    Banks lend money to Treasury by purchasing Gilts
    Banks pay taxes on 'profits' to Government in tax receipts
    Governments reduce deficit by paying back bondholders....banks.
    Banks profit increases
    Banks pay more tax to Government
    Governments reduce the deficit

    Monetarism 101 - what is happening here?

    The money supply is increasing - but there is no production going on. Monetarists will claim the recession is over - the rest of us will realise it's one big unsustainable bubble.

    This is monetarisation of debt.

  • Comment number 43.

    # 20. At 10:45am on 27 Apr 2010, Tim wrote:

    > Good news: the Government will make some money back off its stake in banks,
    > reducing the national debt. Bad news: the banks are only worth more because
    > they are now making massive profits by ripping off consumers.

    Spot on. The twisters screwed up their own concerns, and now they want to
    screw us to get their bonus pots. We can't have greedy people in
    charge of important institutions, because they screw things up.

    So, we either have to tax bankers to death, or break up the banks.
    Otherwise, expect a repeat performance in a few years. Let's
    put a stop to this now.

  • Comment number 44.

    # 33. At 11:48am on 27 Apr 2010, yam yzf wrote:

    >> #3 Jacques Cartier
    >> "Once there are dozen of banks, they won't find it so easy to con
    >> people into paying 4% when the bank next door offers 1.5%."

    > banks had to look at other ways of maintaining liquidity such as RMBS.

    RMBSs are definitely not on their whitelists, you can be certain of that.

  • Comment number 45.

    #34 Stephen Lawrence

    "A lot of people here seem to be under the impression that Lloyds are giving savers a raw deal. However I've got 3 current accounts (two of them being free accounts) with Lloyds and they all pay 4% before tax on balances up to £7k. Restrictions are not onerous either. Does not seem that bad a deal to me".

    me neither, perhaps lloyds could treat everybody the same and just automatically place them on the good deals rather than having to go through all the other products they wish to sell to you first and waiting to be asked

  • Comment number 46.

    29. At 11:30am on 27 Apr 2010, spareusthelies

    Why would they have to do it in one go?

  • Comment number 47.

    Hmmm. Basic lesson on the Stock Market missing here. Trading prices represent underlying value, to be sure, but are also driven by supply and demand. "Dumping" a significant percentage of a company's shares in the hope that eager buyers will be found, rather tends to depress the sale price of those shares.

    Let me illustrate this. Suppose you had a large quantity of gold...

  • Comment number 48.

    Big banks find it immensely difficult to buck the general economic trends.

    So get some whizz kids, put them in a room and let them play away.

    Get some barrow boys and tell them to come up with something fast. barrow boys do, creating the usual mirage of quality. Just like buying cat urine aftershave at Christmas down the local car boot sale.

    This is the pantomine: Hey everybody, get in the festive spirit, celebrate the birth of imaginary boys, and pretend you've got great pressies too. The barrow boys are long gone so no, there will be no refund!

    Robert, we've all grown up now, got some experience and don't like it when rich gits pretend we are all dumb - we're not so kindly pass the message on to those who employ the barrow boys and whizz kids.

    As WOTW says, Taxpayer = consumer. Weren't we supposed to know that?

  • Comment number 49.

    edward @31

    At least check your maths before you post such nonsense: 200 x 2 million = 400 million.

  • Comment number 50.


    These banks should have been allowed to go to the wall as I have been saying since day one.

    The only reason these banks are making a profits now is because the taxpayers of this country have been shovelling money into the black hole the banks created for many months now. Even the market conditions have been 'fixed' to ensure a seeming return to profit. But at what cost?

    Who are the winners? Bankers, rich shareholders and a whole industry of con-men and crooks...

    Who are the losers? The hard working man in the street who will be paying this debt off for many years to come.

  • Comment number 51.

    #38 and #23

    I actually agree with tim on this one. There is no evidence as far as i'm aware that GB forced the deal or that the directors of lloyds approved the deal for anything other than "greed and hubris". British Directors can and do stand up against GB when its in their interest to do so. Yes GB wanted the deal to go ahead, so did the FSA, yep a phone call took place between sir victor and GB, it would have been astonishing if it had not, a call to discuss a matter in both your interests and trying to get out of it what you can is far from being forced

  • Comment number 52.

    Unless we restrict and break up these institutions, banking can never be part of the wealth creating sector. Reinforced by reported comments of Tourre yesterday, I'd suggest that we all knew this was coming, that it couldn't last for ever. The term Casino Banking doesn't do it justice, and it was more like a case of Playing Chicken, Russian Roulette or Last Man Standing. It's gonna crash, and when it does, I'm gonna clean up. This is why Goldmans and Barclays people are so excited. They won, and the world belongs to them. The collateral damage to everyone else is incidental. Break them up, cut them down. Getting our money back has to take second place to ridding ourselves of this plague.

  • Comment number 53.

    Oh good, Lloyds is back in profit (although they're being a little bit coy about how much). One hopes that all of that profit will be paid directly back to UKLtd.
    Why can I hear screams of laughter?

    The real laugh is: Why weren't they allowed to go under, like all of the UK's manufacturing industries? Their total assets and liabilities could have been transferred to Barclays... they seem to know how to make a profit without ripping off the taxpayer.

  • Comment number 54.

    35. At 12:02pm on 27 Apr 2010, Kudospeter

    Oh I agree - we could spend all day pointing out the items missed off this proclomation of 'profit'.

    It wouldn't be so hard to take if it weren't for the fact that the banjks are the masters of encompassing every aspect before announcing 'profits' - I mean when they decide to lend a business money they take into account the opportunity cost of doing so - usually above the risk free rate.

    It's a 2 rule system they are trying to play out through the ill-informed media.

  • Comment number 55.

    edward @28

    One of the problems behind the "Dot Com Bubble" - remember that, it was on Gordon's watch (next to Mickey) - was people borrowing to "invest" in technoshares. When the "investor" borrows beyond their ability to repay, is it an "investment" or a "debt"?

    Herein is the problem. Even if we were to return a book profit on the differential share prices at which UK plc bought and sold these banks, in the meantime we're taking a loss through inflation and having the service the debt we've taken on to afford it. Far from being trivial, that's 43bn this year (according to figures elsewhere on BBC News), but set to increase sharply if ever the bond market and rating agencies decides we've bitten off more than we can chew.

  • Comment number 56.

    Sorry to be sceptical but this looks like a very political statement.

    Debate on economy on Thursday night.
    Returned to profit but no details - why not release figure unless it is absolutely minimal??
    Could it be caused by a write back of debts previously written off ie overprovided at end of 2009 to artificially 'create' a profit in 2010 first three months??

    It is interesting that by the afternoon Lloyds shares have actually fallen on this news!

  • Comment number 57.

    @1. At 08:59am on 27 Apr 2010, barry white wrote:

    > Ohh what can we buy with our cash when it gets paid back?
    > Its just like a christmas club for the country

    yeah.. like Farepak.

  • Comment number 58.

    If the non-profit making retail side of the banks is separated then this can only result in branch closures as the major costs are the buildings and the staff. You could not expect a business to run at a loss even if it does provide a service to its community

    I know that a lot of people would be happy with the closures as they do not use a branch however there are also a lot of people that still do(hence the long queues that I have heard people complain about).

    I am curious to know how the retailers that deal in cash will pay their money in if there are no branch services available.

  • Comment number 59.

    Meanwhile earlier on today there was an article on BBC that more firms were reaching crisis point from a funding point of view - about 161,000 from memory - I can't find this article on BBC now?

  • Comment number 60.

    What's this? - the markets disagreeing with the BEEBs propaganda machine?

    LLOY 69.55 -0.69 -0.98%

    ...but I thought everything was rosy in the Lloyds world - could this be insiders buying before the good news was released?

    Do people still honestly believe all markets aren't rigged for the benefit of the few?

    For every rich man - there are 100,000 suckers - all hoping to be rich men.

    Sshhhhh - never talk about your losses - only your gains - it's not good for credibility.

    Sell in May go away could be what we see. The signs are bearish as institutional money is pulled out on high volumne falls recently - and the bubble is perpretuated by the 'ordinary man', thinking he's onto a winner - indicated by small volume buying on consecutive days producing uplift and false hope for the little man that this thing is all over.

  • Comment number 61.

    49. At 1:26pm on 27 Apr 2010, fairlopian_tubester1 wrote:

    "edward @31

    At least check your maths before you post such nonsense: 200 x 2 million = 400 million."


    ...must have 'escaped' from Labour central office again!

    It's good to see Cameron get exposed, but this is plain partizan politicking.

    Coming from me - it must be true, and painful to write.

  • Comment number 62.


    12:33pm on 27 Apr 2010
    24. At 11:17am on 27 Apr 2010, wholistens wrote:

    "Your stereo typical use of cliches , or should that be "Clichet" demonstrates above all else the little value any one should place on your mutterings, which contained not one piece of sound economic thinking. "

    Ah ha - a challenger.

    Care to enlighten us - oh great sage of Economics?

    Can you explain a simple question the other greats have failed to do?

    "Where does profit come from"

    No need to be simplistic for my sake - I will be able to keep up.

    It's time to put your money where you mouth clearly is.

    I wait eagerly for the reply to this one WOTW. This should be a laugh.

  • Comment number 63.

    This vindicates the decision made by LTSB and the goverment in September 2008 and sensible proactive management since. Over this time, there have been ludricous proposals to consider the breakup of Lloyds Group to appease public opinion, when LBG are already deeply committed to integration between LTSB and HBOS with full time staff deployment and budgeting. We have also seen a refusal to back financial stimulus package to fend off the recession into becoming depression such as that experienced in Ireland who have been locked into the Euro and HBOS impairments continue at high level

    Thankfully we now have more benign economic conditions in UK and we should continue to see impairments drop
    Economic conditions are still fragile but this outlook can only help increase the lending and support to businesses that deserve it.

  • Comment number 64.

    50. At 1:28pm on 27 Apr 2010, James wrote:

    "These banks should have been allowed to go to the wall as I have been saying since day one."

    That's like splitting hairs now, I mean which would the public prefer?

    1) Banks failing, savings lost*, pensions diminished**, growth hampered

    2) Banks saved, taxes hammered, public spending cut, growth hampered

    There is no good solution to this mess - which is why the core reasons need to be tackled - and not one party I am aware of has indicated where this failure started.

    *The Government would only be able to cover up to £25k loss of savings for a while - they would have the same problem as the Fed is having now after having seen 58 fail this year already.

    http://en.wikipedia.org/wiki/2008-2009_bank_failures_in_the_United_States

    **Most pension funds had large investments in finance - always seen a 'safe' compared to every other sector, except utilities and Government debt.

    The fact of the matter is that ultimately you pay - which applies to anyone reading this who either:
    a) Pays taxes
    b) Uses a public service
    c) Has savings
    d) Has a pension
    e) Is a consumer

    ...which is just about everyone, except non-tax paying offshore money holding scumbags who's wealth negates the need for a pension and who has the ability to 'head elsewhere' if the consumption taxes begin to rise.

  • Comment number 65.

    Real cash profit on holdings in Lloyds and Royal Bank of Scotland.
    There is an accusation that Goldman-Sachs ripped off its British clients; this accusation comes one week after Goldman-Sachs was charged with fraud. If true, the reach of Goldman-Sachs was/is wide & far indeed.
    It has emerged that Goldman acted on two sides of a £23.5bn fund-raising deal in order to put Lloyds on a firm financial footing last autumn. Lloyds apparently did not know about the double-dealing. Goldman was helping Lloyds to raise fresh funds from its shareholders, including the British Government, which owned a 41% stake in the bank. BUT, at the same time (as advising Lloyds on restructuring), Goldman was allegedly using its influence to persuade the bank to pay extra cash to the investors holding its debt. What’s wrong with that?
    Goldman was holding a huge piece of the debt; so, Goldman had placed itself in a lucrative win-win position.
    Financial Services Authority (FSA) has already announced a formal probe into Goldman Sach's activities in the UK.
    Goldman Sachs claims: 'There was no conflict of interest. Our position has been seriously misrepresented.'
    LibDem, Lord Oakeshott said that if this allegation is true, it highlights Goldman Sach's potential conflicts of interest. “We” have demanded that Goldman to be suspended from any government advisory work because they have been charged with fraud.
    Goldman has provided advice to Labour since Labour came to power.
    Treasury recently let it be known that Chancellor Alistair Darling held private meetings with Goldman's most senior London Banker, Richard Gnodde in the final quarter of last year. Hmmmm…
    Goldman received £4.5m in fees acting as the Treasury's lead adviser during its difficult search for a buyer in the attempt to rescue Northern Rock. Government had to nationalise Northern Rock instead.
    For years and tears, there has been financial gossip that Goldman profited because it bet against its own clients. Goldman rejects the allegation; Goldman says it has 'Chinese walls' in place to prevent these potential conflicts of interest.
    During the week, Goldman revealed a £3.6bn pay/bonus pool for its bankers for three month's work. This puts its 33,100 staff on course to receive an annual pay package worth an average of £430,000 - a 33% rise on last year. Oh and Goldman’s profits practically doubled to £2.2bn.
    Shares in Lloyds Bank (41% owned by the taxpayer), have inched up by 4% - rising 3.25p to a mighty 73.49p.
    No profit figure has been released, but a statement on trading makes it clear that Lloyds expects to stay profitable throughout the year. The taxpayer has already recouped much of the paper loss in recent weeks. The Government took stake when Lloyds shares were trading at 63.2p. They have since climbed by around 26% and have hit 73.49 this week.
    Since the 2009 losses, many of the bad debts that Lloyds had expected to turn into true losses have proved to be less toxic than thought. Also helping was an increase in customer savings deposits, which grew by more than £5bn in the first quarter. Lloyds said that it was LENDING LESS overall as it felt its way through the riskier areas of the banking market. Hoarding? Credit Crunch?
    The Government has set lending targets for bailed out banks. On this measure Lloyds has failed to lend the required amount to businesses, though it did exceed it's target for lending on mortgages to home buyers.
    Since the bailouts in 2008 and 2009, profits have spruing back like supressed recoil. Why?
    Competition, lack thereof?
    Santander (bought Alliance & Leicester & most of Bradford & Bingley) now has about 23M customers in the UK; Lloyds joined with Halifax owner HBOS and now has about 30M customers. So where oh where is the competition to come from?
    European Commission Consumer Commissioner, John Dalli wants to provide the means for consumers to compare bank accounts (all bank fees included). This is usually called "transparency". But the EC's own study of the COST OF BANKING in countries ranked the UK 17th – that’s 17th!
    And consider: the UK already has one of the oldest markets in Europe for comparing banking services.
    Transparency therefore all by itself cannot be the cure-all.
    Meanwhile British politicians are coming under increasing pressure to fix this thing, please!
    The Lib Dems have suggested cutting banks down to size, by breaking them up. I agree. Too big to fail is nonsence! No bank should be too big to fail.
    The Tories would change the regulatory system, passing bank policing back to the Bank of England. I don’t like this. Sounds too much like the US Fed.
    Labour seems to back a plan from the IMF to create a 'financial activity tax' on profits and remuneration and a 'financial stability contribution'. I like this, but since Gordon Brown talked about a Tobin Tax at the last G-20, I have to believe that Tobin Tax is where his true intellect rests. I myself would like to see a Tobin Tax (a tax on all foreign transactions, mainly for the revenue AND ESPECIALLY FOR THE AUDIT TRAILS.)
    After being shot down last time, it will take a brave Gordon Brown to raise Tobin once more from his grave.

  • Comment number 66.

    ....and here we have some more evidence of the 'fairness of Capitalism'

    Airlines (allegedly) collude to fix airline prices intending to rip off customers
    http://news.bbc.co.uk/1/hi/business/8643397.stm

    Airlines ask for taxpayer bailout (remember taxpayer = consumer) when the volcano erupted - and they want to get out of their commitments to pay refunds.

    http://news.bbc.co.uk/1/hi/business/8645981.stm

    ...as someone pointed out quite elloquently on Radio 4 - "Did the airlines not read the small print and see the hidden costs?"

    Total hypocriscy.

  • Comment number 67.

    # 11 Jacques Cartier

    > i am only guessing, but i suspect the corporation tax alone for the two banks
    > over the last ten years could exceed the £66bn paid for our aggregate stakes
    > in the company.

    Thanks for your complement - I can't stand pomposity.

    The banks paid zero in tax – it all came from wealth that we created and paid to them for their very simple services. By your figures, that makes £66,000,000,000 - or grand from each person in Britain. For what? For shuffling money around in spreadsheets. What a fiddle, eh? We have quite enough “middlemen” in Britain, thanks.

  • Comment number 68.

    58. At 1:45pm on 27 Apr 2010, sausagesforall wrote:

    If the non-profit making retail side of the banks...

    Prise banking exclusivity from the hands of the greasy pole climbing bean counters and the market place will fill the demand. Who knows? Post Offices, Credit Unions, new startups, Supermarkets ... you name it. Fundamentally, Joe Soap is a wealth creator and will find a way. Besides, the term "non-profit making" is a ruse. It's all smoke and mirrors.

  • Comment number 69.

    58. At 1:45pm on 27 Apr 2010, sausagesforall wrote:
    If the non-profit making retail side of the banks is separated then this can only result in branch closures as the major costs are the buildings and the staff. You could not expect a business to run at a loss even if it does provide a service to its community


    There were six bank branches in my residential area in the 1970s so presumably they were making enough profit to stay open. What's changed? I think this sounds like the market traders claiming they will leave if they can't rip us off. It's a matter of how much profit do you need... the greedy kind will bring about closures.

    Well, we can al stick with local credit unions - we've got nothing to worry about.

  • Comment number 70.

    Seems the car manufactuers are just as bad as the banks. Hope they'll be paying back now that they're in profit. That way we'll all be hunky dorey and won't see our jobs whipped away, pay cuts....

    It's a greedy game of ripping of ordinary jo and josie.

    http://news.bbc.co.uk/1/hi/business/8646941.stm

  • Comment number 71.

    I am not surprised Lloyds are back in profit. I went over my over draft limit by £45 for 2 days and have been charged £60 for the pleasure, despite the fact that I had £1,000 in a cash ISA at the time attached to the account. Needless to say I telephoned and wrote a letter of complaint, but have been advised the charges were "all proper". I will be closing my account and moving elsewhere although I feel that they are all as bad as each other.

  • Comment number 72.

    46. At 1:03pm on 27 Apr 2010, Squarepeg wrote:

    29. At 11:30am on 27 Apr 2010, spareusthelies

    Why would they have to do it in one go?

    _________________________________________________

    They would not have to. My purely anecdotal impression of comments made in the media or in conversations suggests this is how the wider public assume it will happen. Those on this blog know otherwise.

    However, if the wider public stick with their straightforward expectation of how the stakes in the banks will be sold, I think many will be quite surprised at the idea of shares being converted to Government debt, maybe not, we'll see.

  • Comment number 73.

    My earlier comment (number 27) was 'jocked off' it seemed quite innocuous to me. I was just telling the truth. I did not advocate the end of western civilisation. I just pointed out that Lloyd's TSB haven't been without sin over the years.

  • Comment number 74.

    a) If the banks make a profit but charge a lot to Industry in interest causing them to make a loss then "Hurray the banks are making a profit" is little different
    from saying "Hurray the bump in the carpet disappeared when I stood on it" - have another look there will be a new bump next to your foot. Tell me Commercial Business in this country is overall is in healthy profit and you are starting to say something, tell me the banks are using their monopolistic power to reclaim their losses from the non-Banking sector in high interest charges : "Flash Harry and Hurray Henry mug Bob the Builder" and I'm not sure you are saying much other than "How much more proof do you need that we need more competition in the banking sector"

    b) In any event, given we live under the Sisyphus Formula : 'Profit = Fixed Assets + Debt' - a New Theory I developed - the more Profit for either Business or the Banking World means more Debt for Government or Consumers (assuming a stable fixed Asset programme). So even if Commercial Business in this country is moving into overall healthy profit, without using NEFS - Net Export Financial Simulation - all this means is that we directly - consumer debt, or we collectively - the Government on our behalf, are taking on more and more debt to the Banking World ... the "better times ahead... for Business, the worse times for us"

  • Comment number 75.

    42. At 12:42pm on 27 Apr 2010, writingsonthewall wrote:

    The money supply is increasing - but there is no production going on. Monetarists will claim the recession is over - the rest of us will realise it's one big unsustainable bubble.

    This is monetarisation of debt.
    ______________________________________________________________________

    Yes it undoubtedly is and the eventual deflationary medicine will be an awful period for the vast majority. But my expectation is the worst of this won't manifest itself for perhaps another 2-3 years and that's only if the politicians are forced to tackle it. But if it does become reality who knows how long it will then last for. There are predictions of 15 years or more.

    In the meantime the politicians would argue they have stabilised the economy and returned it to growth. (Many would beg to differ about who it was that returned the economy to growth.) However, a big difference between bloggers on this site seems to be between those who see asset bubbles (in shares or house prices,) as being genuine growth and those who see it as being ultimately illusory. The problem is those at the top, perpetuating the mother of all Ponzi schemes, won't be obliged to spend time behind bars when it all finally unravels.

  • Comment number 76.

    The money should be used to help the deficit or increase lending support for business that deserve it.

  • Comment number 77.

    Public sector debt = £165Bn
    Bank bail out = £200bn

    Any correlation here?

    I certainly wouldnt mind some of my money back. Amazing that none of the political parties are mentioning this especially the Tories who seem to see the deficit as wholly created by the present government.

  • Comment number 78.

    The retail banking operations actually make a profit for most of the big banks. The profit is regular and predictable though, so a few Banks tried to 'turbo-charge' these profits by diversifying, no doubt taking expensive MBA style advice from the wonderful 'Consulting' industry. These Banks also had to service large Glazer-style loans that financed takeovers (RBS bought NatWest with borrowed money, Bank of Scotland similarly with Halifax). Inevitably, these Banks got in trouble taking unhealthy risks in markets they did not properly understand.

    But surely its a step too far if, like PacketRat at no68, we take to trusting Supermarkets or vague, novice "start-ups" to do our banking for us?

  • Comment number 79.

    Greece's debt officially junk - Portugal's drops two points.

    Germany had better get their hand in their pocket fast becuase the system is starting to implode.

    WOTW - your time has come.

  • Comment number 80.

    The bank still faces a formidable challenge to reduce its dependence on loans and guarantees provided by British and overseas taxpayers, that totalled some £157bn last year.

    This would allow the government - in theory - to borrow a few tens of billions of pounds relatively cheaply, at a time (no secret here) when it has quite a large borrowing appetite.

    So the government gives the banks the money at no cost and the bank repays by lending the money back to the government with interest...I don't see anything like that in the offers the banks make to the public for loans. Maybe the bank could give me money that I could invest and pay them back with the money I make on their interest free loan. If not I would need the authority to tax to make sure I can cover it, or maybe reduce the staff at the bank to reduce overhead and services. Seems very workable.
    How stupid do we have to be to allow this to continue?

  • Comment number 81.

    I agree with comment 3 any fool can make money when the base rate is so low and they are charging 4.5% for mortgages(indications they want to charge more) and credit cards charge 19-25%.
    Add on top of this fees for this and that and you have a license to print money, fine all of this is coming back into the coffers to make them solvent again.
    But ask yourself this how much money is being sucked out of the real economy and making things worse for every person or family in the country?
    Its a slight of hand like a magician, the government cash has to come back but its the effect on the bigger economy its a complete and utter con.Somebody has to pay for all of the bad debt which drove loads of western banks into this situation, sadly its all of us !

  • Comment number 82.

    #67 Jacques Cartier

    These banks certainly have paid corporation tax at c30%, but after doing a sensibility test i would now halve my original guess of the amount of tax paid by Lloyds RBS over the past 10 years.

    In fairness to myself i did say this would be the banks arguement, but to answer your question i would imagine that the banks would classify their services as wealth management.

    In order to try and be fair to the banks, i took the decision 20 years ago to buy my home rather than rent, the only way i could do this was to borrow, i and i suspect many people from this tme have done very well out of taking out mortgages, we have not created the wealth and imo i would put the cause of unaffordable housing today for anyone wishing to have the same choice as being primarily the lack of social housing rather than the availablitly to borrow.

    When i was younger i also borrowed for a combination of: paying for my study towards a qualification, being a little irresposible with money as a young man, and estimating that over my life cycle i would earn more in later life. Thankfully today i have some money to invest for a pension and enjoy a return on that money. The bank also carries out a necessary admin function at least for my business account.

    In terms of casino (investment banking) a fair theoretical assesment would have to be a net loss position imo.

    I cant agree that any profit is being exploitive or the income genrating areas of banks are far from purely UK individuals

    If you are arguing all profit or return on capital are unearned then maybe this rationale should apply to everyone andall businesses not just banks.

    I can sence i am going to be shot down with these arguements but i don't want to bash the banks for bashing's sake. What i would like is that they opperate in a regulated environment and not have the power to bring the world to its knees

  • Comment number 83.

    I would love to see credit unions taking off in a big way and get rid of all these parasites that do nothing but ride on the back of the ordinary person.
    They charge us a fortune for borrowing our own cash (collective cash) and make a fortune out of doing nothing more than organizing it and then selling us insurance products to push profits up even more!
    At least with a credit union or the old style building societies it was the general public that got the returns. Now its all going to shareholders.

  • Comment number 84.

    Ah. The banks are back in profit. What a surprise.
    What it means is that the companies that the banks own are no longer basket cases.
    Crest Nicholson and McCarthy&Stone have been nurtured by the banks back into solvency. They are no longer millstones round their neck.
    Good for them. Even better for the banks.
    But think a while.
    Is it actually good for us?
    Our wealth has been used by the banks to stoke up their troubled assets.
    For them to sell at a profit.
    Could our wealth have been better employed, used?
    You betcha!
    Just look at the industries disappearing from our shores.
    Never to return.

    But the banks are OK. Their pet companies are doing very nicely thankyou.
    Ready to be sold off no doubt.

    We have been had. Industries gone. Banks OK.
    And we paid for it.
    And we are still paying for it.
    And will continue to do so.
    And we are now being told how lucky we are.
    Did we ever get asked if we wanted bank owned companies to flourish at the expense of others?

    Could we have a vote on it?
    Could our MP make representations?
    This is important after all. Where is the accountability?

    I was at an election meeting recently. Two fresh faced MP wannabes and the present MP.
    Asked about local and national issues the incumbent freely admitted that there was actually nothing that he could do.

    Things happened. Made to do so by non accountable local and national movers and shakers. They just got on and did things. For themselves.

    But hey! There is an election.

    See the happy moron. He couldn't give a damn.
    I wish I was a moron.
    My god perhaps I am..

  • Comment number 85.

    Try this exercise.
    Multiply what you think retail savings deposits are held with banks by the increased differential of loan rates to the banks with interest rates paid to savers.

    Then tell me again how talented these guys are and how the taxpayer is going to come out ahead.

    Taxpayers who are also savers will not.

  • Comment number 86.

    Writingsonthewall

    Thanks for your posts, really enjoyed them. I do not always agree with you but you are spot on today.

  • Comment number 87.

    80. At 5:16pm on 27 Apr 2010, ghostofsichuan wrote:
    The bank still faces a formidable challenge to reduce its dependence on loans and guarantees provided by British and overseas taxpayers, that totalled some £157bn last year.


    So they haven't made a real profit - just decided not to clear off the debts faster; games with columsn on a spreadsheet.

  • Comment number 88.

    78. At 4:59pm on 27 Apr 2010, IainF17 wrote:
    ... But surely its a step too far if, like PacketRat at no68, we take to trusting Supermarkets or vague, novice "start-ups" to do our banking for us? ...

    Western Union? Cash Back? Paypal? M&S Money? The suggestions are more in response to sausagesforall's comment #58 which I took to mean retail services such as paying in and withdrawal. There's plenty of scope for competition. As for not trusting such alternatives, are we forgetting the banks just went down the tubes?

  • Comment number 89.

    Robert,

    Today's issue is Greece. (Luckily for you, given the lackluster DP performance).

    Please will you or Stepanie blog about it? The GE is irrelevant given these events.

  • Comment number 90.

    Post 88
    I was referring to counter services that many retail businesses use e.g. pubs, restaurants etc. They still need to pay in cash. Can't see the likes of M & S welcoming the large amounts of cash. Especially as the cost to manage the collection, storage and transportation of cash is so costly. You are referring to those people that are happy to transact online or by telephone. As I previously said not everyone wants to do this.

    And as far as I am aware Tescos and other supermarket 'banks' currently act as agents for the big clearing banks. They do not have the infrastructure to deal with the transactions themselves. They would have to invest in the branch structure along with all the security costs involved. Not so cheap and cheerful!

  • Comment number 91.

    In Robert's blog Unstable Equilibrium in 2010 ,Comments:

    39. At 10:26am on 31 Dec 2009, onward-ho wrote:

    2010 will be the year the bank shares double and the government recovers the money it lost investing in them.


  • Comment number 92.

    You've got to love the twists of fate in a crisis....

    Before Robert has even written a new blog - Lloyds are back in the red (I believe 70p was the agreed break even price)

    LLOY 68.17 -2.07 -2.95%

    Please note the biggest volume of the day - smart money getting out see.
    Lloyds Banking Group PLC 280.57M - vol

    Haven't you 'smart investors' noticed that the big volume days tend to end in the red these days? - didn't they teach you properly in investment school?

    There's going to be a lot of flapping fish on the beach when this ide goes out....

  • Comment number 93.

    67. At 2:53pm on 27 Apr 2010, Jacques Cartier wrote:

    "The banks paid zero in tax – it all came from wealth that we created and paid to them for their very simple services. By your figures, that makes £66,000,000,000 - or grand from each person in Britain. For what? For shuffling money around in spreadsheets. What a fiddle, eh? We have quite enough “middlemen” in Britain, thanks."

    Sock it to 'em Jacques

  • Comment number 94.

    63. At 2:12pm on 27 Apr 2010, modest_mark wrote:

    "Thankfully we now have more benign economic conditions in UK and we should continue to see impairments drop"

    ....until rates are forced upwards by nervous bond markets...

    "Economic conditions are still fragile but this outlook can only help increase the lending and support to businesses that deserve it. "

    ...sorry Mark, I think the banks are going to be a little 'hard up' for the foreseable - they're just about to loose a shed load of money in the sovereign debt markets!

  • Comment number 95.

    86. At 7:12pm on 27 Apr 2010, truths33k3r wrote:

    "Thanks for your posts, really enjoyed them. I do not always agree with you but you are spot on today. "

    ...maybe the insanity all around us brings us all closer together...

    We all want the same thing after all - no Government. All 'they' want is 'their Government'.

  • Comment number 96.

    # 82. At 5:59pm on 27 Apr 2010, Kudospeter wrote:


    > I cant agree that any profit is being exploitive

    I'm fine with it, except when they pretend to be "creating
    wealth" - we can't live by only cutting each other's hair. And
    we can't live by only counting each other's money.

    It obviously makes no sense whatsoever, unless you're talking
    to a "bonkers-banker".

  • Comment number 97.

    27. At 11:23am on 27 Apr 2010, AudenGrey wrote:

    "As someone who is in dispute with Lloyd's TSB at the moment. I am pleased they are 'on the up'. Their mis selling of loan insurance hurt their customer base really bad. ( they charged interest not only on the loans but on the insurance as well...(makes you weep at the underhand dealings of these people ) Lets hope they can move forward and become an honest bank again."

    Maybe the solution is for the customers and staff to run the bank for themselves, and not for the golfing weekends of the directors.

    ...but that would be like...well like...Democratic?

  • Comment number 98.

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

  • Comment number 99.

    85. At 7:11pm on 27 Apr 2010, you wrote:
    Try this exercise.
    Multiply what you think retail savings deposits are held with banks by the increased differential of loan rates to the banks with interest rates paid to savers.

    Oops.. err that should of course be the rates at which they lend.

  • Comment number 100.

    92. At 10:50pm on 27 Apr 2010, writingsonthewall wrote:
    LLOY 68.17 -2.07 -2.95%

    'Please note the biggest volume of the day - smart money getting out see.
    Lloyds Banking Group PLC 280.57M - vol'


    I think you need to check your 'facts'. LBG is invariably the biggest volume of the day whether the price is going up or down.

 

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