I rarely rant here; well, thinking about it I very rarely rant at all. But today is an exception; and if you don’t like emotionally charged rants I suggest you stop reading now and move on in cyber space.
To say that the last week has not been a good week for banking in the UK would be the understatement of the century – in fact, it has been closer to a disaster.
To begin with an IT failure affected three banks – the Royal Bank of Scotland (RBS), NatWest and the Ulster Bank. Their computer systems (partially) crashed, routine financial transactions were messed up and 15,000 lives were seriously affected. These are 15,000 ‘valued’ customers who didn’t get their pay in the bank account on time (overdraft charged; direct debit failure penalties) or were charged for things twice (see the previous bracket). Some could not access THEIR money and others spent time in jail because bail didn’t clear. Yeah, seriously! Even we were affected – in an annoying rather than serious way. A cheque left our sons account on a Thursday and did not reach our account till the following Monday. And John had to phone the bank twice – they said sorry very nicely. I still think that it is highly incompetent and irresponsible not to have the robustness necessary so that updating a pesky widget doesn’t end up screwing up the lives of thousands of people.
What we saw over the last ten days is an example of the madness of our post-modern lives: these are the banks the Government lent loads of our (tax payer) money to so that they stop lending to the tax payer and to small businesses, make obscene profits again, pay bonuses to their employees AND demonstrate a level of incompetence rarely seen and forgiven elsewhere.
A week ago Barclays was fined £290 m ($450 m) for trying to manipulate a key bank lending rate known as Libor. Put simply, Libor measures how much banks have to pay to borrow from their rivals. It is calculated on a daily basis by the British Bankers’ Association on the basis of estimates submitted by 16 banks; the four highest and four lowest submissions are ignored and the eight remaining form Libor. This is a general measure of the health of the financial sector and financial transactions for unimaginable amount of money use the Libor rates.
Lately, it transpired that between 2005 and 2008 Barclays has been filing misleading (read fraudulent) submissions with the single aim to boost their profits. If this were not sufficiently morally repugnant and, possibly illegal, during 2007-2008 they submitted artificially low figures trying to hide the extent to which the bank was in trouble.
This whole thing is starting to look even more damaging with disclosures of calls from the then deputy governor of the Bank of England, Paul Tucker, and references to senior Whitehall involvement.
The way I see it, the only good thing about this affair is that it can easily become a corruption and conspiracy kind of novel.
A very bad thing about this is that in the tightly knit network of 147 transnational corporations that own 40% of the value of the world corporations Barclay is the top financial institution. And the most influential one! Our financial and economic world is controlled by freaking fraudsters!
In the first case we are dealing with serious incompetence and irresponsibility.
In the second, there is fraud and corruption.
One could expect that there is some retribution, wouldn’t one?
Well, according to the latest news the chief executive of RBS, Mr. Hester (yes, the one who last year wanted his close to £1 m bonus after dismal performance and ended up refusing it because it became embarrassing), has announced that this year he won’t be getting a bonus – thank the Lord he had the decency to clarify that he doesn’t deserve one.
Bob Diamond, chief executive of Barclays, resigned; after quite a bit of pressure. He is the highest paid chief executive in the FTSE 100 and is rumoured to have negotiated a ‘good bye’ package of between £20 and £30 million ($31-$47 million).
For crying out loud, anybody apart from bankers would have been simply sacked and sent to jail. Then again, what can one expect from a Chelsea fan!
What is your take on all this?