Would Britain’s banks be better if their commercial operations were split off from their high-street branches? This is the question the government has posed but it risks turning one risky bank into two even riskier operations.
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The average account-holder thinks bankers are overpaid if they receive £100,000 and obscenely remunerated at £1m. So there’s little benefit in a bank showing restraint and trimming a £20m bonus to £10m – which is why they have not.
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There are arguments for higher interest rates and arguments against, but the government cannot fail to have spotted that an increase will vastly boost bank profits and the government is the biggest investor in the banks. Higher rates should allow Lloyds even to pay a dividend from this year’s profits.
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Halifax’s sin was to indicate that borrowers would not pay more than 2 per cent above base rate.
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How much longer can George Osborne pluck the golden goose of banking before he kills it? The financiers’ reaction to the chancellor’s latest £800m tax raid should be to call off negotiations on bonuses and lending levels.
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Citigroup Inc (NYSE:C) may be no better an owner of EMI than Guy Hands’ Terra Firma funds, but at least it is looking for an early exit. The US bank’s seizure of the music group is a lesson in hubris.
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Banker-bashing – casino banks in particular – has just received a major blow. The Office of Fair Trading has again looked an investment banks’ underwriting fees and has decided that, however uncompetitive they are, it will not intervene.
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Having just four big banks is not the restriction to competition in British finance, it is the customers’ unwillingness to choose between them. The UK has just four big supermarket groups and they are ruthlessly competitive.
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Charitable giving ought to be voluntary, but this government sees it as a punishment for being a big bank or for receiving a bank bonus. The plans for enforced donations risk getting charities a bad name and government an even worse one.
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Another bank bonus season and more claims from politicians that they will not tolerate high payments. But the ministers are crying wolf. They threaten action and don’t take it. And nor should they act.
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