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Hounding of Investment Banks puts City in danger

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Hounding of Investment Banks puts City in danger

Post  Panda on Sun 23 Mar - 10:39

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10716797/Hounding-of-investment-banks-puts-City-in-danger.html


Have you ever read such a load of nonsense. Joe Public is rewarded with a pittance for placing their Savings in a Bank yet sees the Management and traders award themselves massive bonuses and pay millions in Fines.....I despair.!!!

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Hounding of investment banks 'puts City in danger’
Big investors warn bank bashing is threatening Britain's position as a financial centre
Hounding of investment banks 'puts City in danger’
Robert Talbut, director of investment at Royal London Asset Management, said there was a danger investment banking was being “hounded” out of London Photo: PA
Harry Wilson By Harry Wilson9:30PM GMT 22 Mar 2014 Comments45 Comments
Britain's leading fund managers have warned London risks losing its place as Europe’s financial centre if investment banks are “hounded” out of the country due to public anger over bonuses.
Senior investors say the UK must remain the location for international headquarters of Wall Street and other major foreign banks, as well as British investment banking businesses, if the City is to keep ahead of rival centres.
Gerry Grimstone, chairman of The City UK and Standard Life, one of the country’s largest fund managers, said it was “very important” London retained its position as the home of major international and domestic investment banking businesses.
“If you want to operate globally you have to compete,” he told The Sunday Telegraph.
“If Britain wants to be part of the global financial services sector it has to have the people within it that can run these businesses.
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“It is very important there are strong investment banks in Britain. It is very, very important that London is one of the investment banking centres of the world.”
The warning comes as Barclays, which operates the largest investment banking arm of Britain’s domestic banks, faces growing calls to shrink the business amid shareholder anger at the continued payment of large bonuses, despite a fall in profits.
However, senior City figures have defended the bank’s stance and said Barclays could hive off the division and run it from New York unless the furore dies down.
Robert Talbut, director of investment at Royal London Asset Management, said there was a danger investment banking was being “hounded” out of London.
“If ultimately they [Barclays] take the view that the regulatory and political pressure is going to continue unremittingly that could be the right thing for them to do [list the investment bank in New York],” said Mr Talbut, who is also chairman of the investment committee of the Association of British Insurers, which represents institutions with assets of nearly £2 trillion.
“We need to be very careful we don’t accidentally drive the business out of London.”
Another senior fund manager said: “I would be surprised if they are not looking at this and it seems a very real possibility to me that they might move the business to New York.”
There is growing political concern about the potential for Britain to lose out on financial services jobs and investment because of the continued public backlash against the banking industry.
Mark Garnier, a Conservative member of the Treasury Select Committee, said he would be “sorry” if UK lenders were forced to withdraw from the business.
“Barclays proved you could get stuck in and build something. I would feel very sorry if we were to see UK banks pulling out of investment banking because it is a viable business,” he said.
A joint report published last week by consultants from Oliver Wyman and analysts at Morgan Stanley found that European lenders had seen their market share of revenues from once lucrative businesses such as fixed income, currencies and commodities trading and sales fall by five percentage points last year.
Ted Moynihan, head of the financial services practice at Oliver Wyman, said Wall Street banks were pressing the “natural advantage” of their much larger domestic market.
“If you’ve got a home market as profitable as the US is, it enables you to take a few more bets. But, even for the US players, they are questioning parts of their business where the market has changed,” he said.
Among the biggest problems for European banks have been preparations to implement the incoming EU rules capping bonuses at 200pc of salaries.
Lindsay Tomlinson, the former chairman of the National Association of Pension Funds and now a director of Legal & General, said he was concerned the cap would hurt domestic banks against foreign rivals.
“I think pay levels are going to decrease over time but it is clear the UK and Europe are operating on a different timescale to the US and Asia,” he said.
Mr Grimstone agreed the issue of pay was critical. “Any company wants to pay its people the least it can get away with but certain businesses require certain specialists to run them and these people have a market value,” he said.
Mr Talbut said: “What I am concerned about is that, if European-headquartered investment banks are hounded out of the market, if the banks are to be demonised out of Europe, I would much rather that was done by design than accident.”

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Thought you might like to read the comments

Post  Panda on Sun 23 Mar - 10:58

xasperatedMe • 32 minutes ago
Dear Bankers

Stop complaining and pay back what you took from us.
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ignore • 34 minutes ago
"very important that London is one of the investment banking centres of the world.”

We have heard all this before. The RBS logic for the takeover after La Salle went to the Bank of A., was that RBS would get the investment banking part of Abn-Ambro, the other(and better ) parts going to Santander and Fortis. For Santander this was a good deal.
A senior investment banker from RBS presented a revised set of projections, after the La Salle sale ., arguing a bid could be justified for ABN purely on the basis of ABN’s investment banking operations. This was without due diligence. Indeed Fred the Shred stated there was no need for due diligence because Barclays Bank would already have done that relating to its own bid for ABN.
In other words a total cock-up all relating to investment banking.They like to mask their basically fairly simple operations into something which appears complex to justify their pay , attempting to diminish criticism by stressing the "complexities" as well as defining informed criticism as "bank bashing".
RBS is a warning not to take the investment bankers too seriously.
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chairmanchand123 • an hour ago
This is utterly ridiculous! The fund managers are supporting the "Wolves on Canary Wharf" -- they would, they are part of the obscene culture. "Hounding" is the wrong word. All decent British people, shareholders and even establishment leaders like the IoD are saying is that there are limits to greed and arrogance, to fraud and corruption. If the global investment banks only want to operate in markets that have zero ethics, no regulations, no criticism then the UK is no place for them. Those who RELOCATE must pay back to the UK taxpayer at least ten years value of state guarantees, tax concessions, low interest rates, and return all bonuses to UK shareholders. Still want to leave?
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fried_egg • an hour ago
Just another attempt to weaken the resolve of many governments around the world to ensure a race to the bottom in control and regulation. New York is not any softer than London, but the threat of moving is always used to try and soften one of them up... A cycle that must be broken by standing up to them and reminding them who gives them legitimacy and business
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soi_cat • 2 hours ago
The temple has to be cleansed. England is finished if we cant get rid of these banking criminal parasites.
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Paul_Weighell • 2 hours ago
In transactions and M&A, London fell to 2nd place last quarter after New York. The first time it has not been 1st for 7 years. No doubt the masses of bank basjers wil not happy until we lose yet another entire industry. New York and the other ctnres are laughing their socks off.
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bristle66  Paul_Weighell • an hour ago
An "industry"? A strange use of the word. Tell me, what precisely is it that you produce - apart, that is, from tax receipts for central government and obscenely large bonuses for yourselves?
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Jack_H  Paul_Weighell • 2 hours ago
No banker is going anywhere,New York and Hong Kong will recruit locally.If we can lose an industry that totally depends on taxpayer support and has called in on it it, has made the majority of the population worse off,what's not to like?All this crap about banks leaving is an empty threat you can't go anywhere that will welcome you.The threat you pose to the rest of the economy is too great......you do not generate wealth just inflation.
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capital_kid  Jack_H • an hour ago
Jack

Some on here believe that things cannot be as they were, however, Paul unfortunately is not one of them.

I for one won't forget the last twenty years of boom built on debt, a dream sold by the powers that be. I totally agree with you that sound economies are not built on inflation sadly I do not think that this country knows any other way now.
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Burma_Zen • 3 hours ago
The real criminals are the 650 MPs who allowed themselves to be corrupted by the bankers to delivers policies where taxpayers money and immunity is offered ensuring the continuation of these highly illicit City activities.
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Jack_H • 4 hours ago
After the one trillion pound bailout they can't see what all the fuss is?The banks are going nowhere,after the fines the Americans levied for libor and mortgage fraud they will not relocate there.,no legal system in Asia is trusted and Europe would curtail bonuses even more.The banks could relocate to Switzerland but I doubt they could all fit.London place as the main sewer for banker is assured unfortunately.
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gentlecynic  Jack_H • 3 hours ago
Unlikely to go to Switzerland since they are outside the EU and are having difficulty in keeping up with the EU's financial regulation.
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knys13 • 4 hours ago
Adam Posen has just happily pronounced that the BoE were at fault for placing too much trust in banks and bank management...this for an industry which can't exist without trust, and all these City types can whine about is banker bonus bashing?

Why don't they get off their backsides and focus their minds on how to restore, not only the regulators trust, but public trust? Even if they are particularly thick and inept, they should be able to focus their minds on a few slightly more important issues.

Parasites.
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truth47 • 11 hours ago
In the meltdown thats coming the country will despise the politicians for not shutting the banks down in 2008 giving in to blackmail and bailing out private institutions with everyones futures.The incompetence and corruption is so widespread and deep routed that no one has gone to prison because the evidence in the trials would go right the way to the top.
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scottie19  truth47 • 3 hours ago
And how would this country operate and you operate without a banking system? How would you buy your weekly groceries and how would you receive your salary?

The fact is £trillions go around the City every week and if it was really dishonest, it would grind to a halt.
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alexw  truth47 • 10 hours ago
Yes the global credit bubble has not popped yet. When it does, and it looks like china will be setting it off soon, then the monetary losses will be catastrophic. It will make 2008 look like a side-show.

People forget that these sorts of things are not one offs that happen and are quickly recovered from. They take years and years to work through. The great depression began in 1930 and was not over until the mid-1940's. This bubble has been even greater in scope. When it goes the investment bankers of this world will be lucky to keep their lives.
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Goldenboy • 12 hours ago
The irony is that investment banks and derivatives actually saved the world economic system from the disaster created by retail banks and mortgages in the US, Spain and Ireland. Far from hounding the well paid investment bankers we should be thanking them.
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capital_kid  Goldenboy • 3 hours ago
Lehman brothers = investment bank
Merrill Lynch = investment bank
Bear sterns = investment bank
Goldman Sacha = converted to holding bank status
Investment banks making huge profits because a. Almost free money from central banks i.e. borrow at .5% and reinvest in risk free products. B. After creating the biggest retail sell off in a generation throw in some risk free dosh and ride the wave all the way again. Don't even mention the volker rule as it is complete rollocks.

So do tell me again how we should be thankful for investment banks?
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Paul_Weighell  capital_kid • 2 hours ago
Your cherry picked list is utterly wrong. Here is the list of the 465 US retail banks that failed since 2008. 3:465 is not evidence to support your claim.

http://en.wikipedia.org/wiki/2...

Over the entire history of banking by far the largest failure is of retail banks due to defaulted loans.

US retail sub-prime loan defaults were what caused the current mess. Most investment banks or investment divisions of mixed banks made and continue to make profits.
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capital_kid  Paul_Weighell • 2 hours ago
Paul

Can you please explain how your evidence supports the claim "we should be thankful for investment banks"

I don't see the relevance here.

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knys13  Goldenboy • 4 hours ago
As I've asked you before, who do you think structured, funded and signed off the RBS acquisition of ABNAmro, the Devon teller?

And who do you think was responsible for packaging up and flogging fraudulent mortgage paper out of the US...ever heard of JPM and Goldman Sachs to name just a few?
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Paul_Weighell  knys13 • 2 hours ago
and why do you think the mortgage paper was worthless? It was worthless because the retail loans were in mass default. If the defaults had not happened then the mortgage paper would clearly not have been worthless. You need to get cause and effect in the correct order.
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knys13  Paul_Weighell • an hour ago
And why were the retail loans in mass default, aside from the Fed raising rates, Paul?

Why would mortgage originators knowingly write bad loans, deliberately extending credit when they knew there was no hope of repayment?

Might it have had anything to do with the fact that the investment banks were making tons of cash out of buying the paper from the originators, irrespective of quality, securitising it and then flogging it into the global financial system using compliant rating agencies to do their bidding? Was it because the originators and the investment banks happily presumed that they had shuffled the risk onto another Muppet, like the German Landsbanken, and they were laughing up their sleeves?

Perhaps you need to look a little deeper into cause and effect?
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scottie19  knys13 • 3 hours ago
And who forced the US banks by law to lend those poor people those mortgages. None other than Bill Clinton and Barack Obama.
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knys13  scottie19 • 2 hours ago
Oh, I see, so the government made the mortgage originators issue fraudulent loans, which the likes of JPM and Goldman Sachs happily "bought-up", so that they could use the toxic paper to stack some of their securitisations for preferred, bulge-bracket hedge fund clients that wanted to short the market, skimming fat commissions along the way from both their clients and their sophisticated Muppets (who can't be defrauded, because they should have know they were being defrauded?)?

Why don't you blame the rank dishonesty and greed on the devil, as well?
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Paul_Weighell  knys13 • 2 hours ago
"so the government made the mortgage originators issue fraudulent loans"

Well yes. Clinton did indeed force the lenders to provide 40% of loans to the red line areas that had prudently been avoided.

The loans themselves were not 'fraudulent'. The 'fraudulence' was borrowers defaulting on their repayments.

Why did you think it was called sub-prime and why do you think lenders changed their policies to lend sub-prime when they knew they were more likely to default?

How did you miss all that?
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knys13  Paul_Weighell • 2 hours ago
Er, no Paul, the government made them issue sub-prime loans, they didn't make them issue fraudulent sub-prime loans.

And the government certainly didn't force the likes of JPM and Goldman Sachs to securitise the fraudulent loans and flog them to Muppets, knowing that the securitisations had been skewed to fail, did they?

Or are you some kind of conspiracy theorist that just can't see the raw greed and amorality of the current crop of shysters that call themselves "investment bankers"?

Are you, perhaps, an "investment banker"?
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Some very informed comments. 

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