Bl***y Banks Again

Redemption awaits Britain’s battered banks


Our revolutionary new model would transform their image – and their
customers’ finances








Banks urgently need to broker a
new deal which shows that today’s global giants still use their expertise to
help save their customers money Photo:
Bloomberg





By Gillian Guy

7:55PM BST 20 May 2013

34 Comments




Every 10 years or so, in every industry, an idea comes along that changes it
all. This takes the form of a simple but profound insight: we thought our
business was one thing, but it is something else entirely. Take the iPhone.
Telecoms businesses thought they were making phones. Then Apple decided to make
a hand-held device for which third-party developers could make programs (now
called apps), and which could also make calls. A simple but game-changing shift
in thinking.


At Citizens Advice, we are convinced that the banking industry is teetering
on the edge of a brilliant idea; it just needs a good, firm shove.


With all eyes focused on banks’ risky investment arms, their retail
responsibilities have been woefully neglected. British retail banking makes up
just 21 per cent of profit at Barclays. But providing bank accounts is an
essential public service and a business model that desperately needs updating.



For more than a decade, the conventional wisdom has been that the only way to
make money in retail banking is through interest on loans and debt, excessive
overdraft charges, or up-selling additional products: mortgages, insurance,
payment protection insurance. This is a formula that is neither good for
customers nor banks, which are footing a £14 billion bill for mis-sold PPI after
a super-complaint made by Citizens Advice.


Banks urgently need to broker a new deal which shows that, like the bank
managers of decades past, today’s global giants still use their expertise to
help save their customers money in every way possible.



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New regulations making it easier for customers to switch banks come in this
year. People unhappy with the service they’ve received will be able to leave in
search of a better offer without fear of direct debits going astray or being
stuck without easy access to their money. This will force banks to sharpen their
competitive game and to focus their efforts on giving customers more of what
they want. What’s more, newcomers like Tesco Bank and Virgin Money will add some
much-needed dynamism to the industry.

But the first chief executive to realise that the future of banking is in
helping people use money effectively – and the profound practical implications
of this – will transform the profitability of their business, the lives of
millions of consumers and the competitiveness of our economy.

Your bank has access to an incredible amount of information about you: where
you live, what you buy and where, what bills you pay, how old you are. It knows
who your energy supplier is and how much your last 15 bills were. And it knows
comparable information about millions of other people, too. So what does it do
with this information? Almost nothing. It has been too scared to ask you for
permission to use the data, even to help you.

But it is in the value of this information that modern banking’s breakthrough
lies: offer customers accounts that do everything a utility switching site does
– and more. Make money out of saving customers money.

Start with energy bills. Banks should use the data they have to tell
customers when they are paying more than other people. Find them the cheapest
tariff. Offer them a choice: stay where you are, or click this button and we’ll
switch you automatically. (We’ll also take a small cut from the money you save,
if that’s OK.) This is effortless saving for consumers and would subject energy
companies to competition that they have yet to feel.

Banks could do the same with travel costs, flagging up where frequent
journeys would be cheaper with a season ticket, or your television or broadband
contract, alerting you when cheap offers come up. For a little extra
information, such as the number of people in your household, the type of car you
have or where you tend to shop, banks could go even further to find better ways
for you to spend and save – a kind of data cash-back.

With the support of suppliers, mobile phone bills and petrol prices could
also be thrown into the mix. Companies with competitive rates should be happy to
hand over that data and customers would draw conclusions from those that decided
not to.

To encourage positive behaviour and increase their deposits, banks could
nudge customers into building “savings from savings” by putting the money gained
from switching energy or broadband suppliers into a separate account with a good
interest rate.

Supermarket banks have already signalled a move in this direction. Customer
loyalty cards provide a colossal amount of data and Sainsbury’s has announced it
is to use the personal information it collects through the Nectar Card scheme to
tailor its banking services: corporate gain driven by customer saving.

This idea is simple but fundamental: banks stop making money from encouraging
customers to spend theirs on things they might not need, and start profiting
from helping them to save money on the things they really do. It sounds obvious.
It could be the future of banking. The race is on.

Jersey: Treasure island caught in the searchlight

21 May 2013El País Madrid

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The Seymour Tower, Jersey
Richard Manin
The EU has taken the fight against tax havens seriously, as shown by the May 22 leader summit to discuss tax evasion. But the clean-up should start at home, where territories such as the British Channel Island of Jersey prosper under the shelter of traditional political ambiguity. Excerpts.

Luis Doncel The authorities of this quasi-independent territory are caught up in a controversy that has nothing to do with the past. They know that their economic system – based on very low or non-existent taxes – is arousing suspicions among governments and, above all, the citizens of other countries, who are wary of making ever-more sacrifices while others get a free pass.
“We’re not a casino, but a centre that collects investments to be injected somewhere else. That’s just what Europe needs. We’re part of the solution, not the problem", says the island's treasury minister, Philip Ozouf. "This government has always complied with and will continue to comply with international standards," Chief Minister Ian Gorst insisted this week.
Confronted with the arguments of the Government of Jersey and the financial lobby, the activists of the Tax Justice Network organisation rank the tiny island – which has less than 100,000 inhabitants but bank deposits exceeding €140bn – as the world’s seventh biggest tax haven on its list of “secrecy jurisdictions”.
"Despite Jersey not formally having bank secrecy like Switzerland or the Bahamas, secrecy is achieved in other ways: through funds, offshore companies and, since 2009, foundations", assures the NGO, which promotes transparency in international finance.
"The OECD does not include us on its list of tax havens," repeat the Jersey authorities, failing to convince critics. "On that list there are just two tiny islands in the Pacific: Nauru and Niue,” replies Mike Lewis, counselor to the Action Aid Organisation. “If this criterion were valid, there would be no tax havens in the world.”
“All the tax havens say the same thing,” adds writer and journalist Nicholas Shaxson. “They only pull out the OECD listings to try to show how clean they are."
But the Jersey’s problems are not growing solely under the weight of non-governmental organisations or mobilised citizens. Governments also appear determined to tackle the outflow of money that is escaping their tax inspectors.
"The message is simple. If you hide the money, we’ll be going after you", British Chancellor George Osborne said last week after London tracked down 100 big tax evaders in a joint effort with the US and Australia carried out in Singapore and the British Virgin Islands, the Cayman Islands, and the Cook Islands. This renewed momentum behind tax collection has encouraged Jersey to accept the exchange of banking information automatically with London and Washington.
Organisations including the Tax Justice Network are demanding that this measure be extended to all the countries of the EU, in order to start to have it taken seriously. Jersey’s response is that it will take that step when the 27 member states commit themselves to it as well.
Geoff Cook, CEO of Jersey Finance, representing the interests of a sector that accounts for 40 per cent of the economy, admits to some reservations about this new regulatory wave. "We do want to be good neighbours and to go along with what other governments decide. But there’s a risk that if the perception that Europeans are going to give out all the information on our customers spreads, our customers will choose to move their money to other territories. The exchange of information is fine if we all do it.”
Minister Ozouf is amicable with the journalist who has come to his country. But one question falters his smile. The British government itself estimates that an agreement to automatically exchange information with the three Crown dependencies would bring around one billion pounds (€1.185bn) into the public coffers. Is that not an admission from London that the island is, de facto, a tax haven? “That isn’t our figure and we don’t recognise it” responds the minister. “Even assuming that it were true, though, this amount is equivalent to what Jersey, Guernsey and Man would pay in in total over the next five years.”
Despite its new role as the older brother who obliges the little ones to follow the rules, the UK has until now taken a position so vague that its former colonies, overseas territories and Crown dependencies have been able to do as they please. London controls one of every five tax havens in the world, and many critics believe that it could have done a great deal more.
Nicholas Shaxson, in his bestselling Treasure Islands – which has become the Bible of the movement against tax havens – defines Jersey as a combination of "futuristic offshore financing and a medieval political system".
If the political structure of Jersey is very particular, its tax system is no less. The legislators dislike complications, much preferring round numbers instead: zero per cent tax for non-financial companies, 10 per cent for financial entities, and a straight 20 per cent on income, regardless of income level.
The stakes are high. Organisations like the Tax Justice Network have set out a three-fold objective: identifying which specific individuals, companies, funds or foundations are leaving their money in tax havens; agreeing on the exchange of information between all governments; and bringing in developing countries to help them benefit from these improvements.
Some steps have already been taken. The US, the UK and Australia have reached an agreement to scrutinise the funds of companies in half the tax havens of the world. At this week's summit, European leaders will try to design a common framework to combat tax evasion. If the giants of politics act decisively, little fish like Jersey will be forced to respond. But no one can guarantee that this will not turn out to be yet another missed opportunity.

Co-op bank crisis claims two more directors


Two more senior Co-operative Group directors have been shown the door in the
wake of the disastrous performance of the mutual’s banking division.








Problems at the Co-operative
have led to a number of senior departures at the supermarkets-to-funerals
mutual Photo:
Alamy





By Harry Wilson, and Philip
Aldrick

7:00PM BST 26 May 2013

26 Comments




Steve Humes, finance director of the supermarkets-to-funerals group, is to
step down following the series of disasters that forced the mutual to deny it
needed a taxpayer bail-out and have left it with a potential £1bn-£1.5bn capital
hole. Jim Slack, chief information officer at Co-op Bank, has recently left, it
can be revealed.


The changes are believed to part of a comprehensive review by Euan
Sutherland, the group’s new chief executive. He will update the Co-op’s
20-strong board on Friday about the bank’s capital problems, which have forced
it to stop lending to new business customers, and pledge to have a solution in
place by June.


Investment bank UBS and lawyers Allen & Overy are working on the
strategic review, which could result in the sale of a part of the core business
– such as the funerals service.


Mr Humes and Mr Slack are the latest senior directors to leave the group amid
concerns about problems in Co-op Bank. Brian Tootell, the bank’s boss, quit
after Moody’s slashed the division’s credit rating to “junk” earlier this month
and suggested it might need state support. In February, James Mack, his finance
director, left to join another financial services company.


Mr Sutherland, who only took the helm earlier this month, is believed to be
close to making a string of senior appointments already, including replacements
for Mr Humes and Mr Slack.



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Mr Humes, who will step down shortly, has been group finance director since
2011, having previously held the same role in the food division. He joined the
Co-op in 2000. Mr Slack, chief information officer of the Co-op Bank, left the
business last month for “personal reasons”.

Mr Slack was a key member of the team responsible for the disastrous computer
system upgrade for the banking operation that cost the mutual more than £200m.
The new IT platform, known as Finacle, was meant to combine the computer systems
of the Co-op Bank and Britannia Building Society following the Co-op’s 2009
acquisition of the rival mutual.

The Co-op spent £250m on Finacle but has since had to write off the cost due
to problems with the system, adding to the capital shortfall that led Moody’s
downgrade. Co-op Bank’s spending on the system was counted as capital
expenditure and was therefore not taken through its profit and loss account.

However, taking these costs into account means the business would not have
made a profit since 2009.

For instance, in 2010 the bank reported a pre-tax profit of £48.9m, but once
the cost of its annual IT expenditure is factored in the business made a loss of
£20.1m. Similarly in 2011 a £54.2m profit becomes a £16.9m loss once the cost
spending on the computer system is deducted from the bank’s earnings.

The dramatic change to the bank’s profits shows the huge amounts the Co-op
Bank was spending on the system.

Co-op Bank had until April been in the process of buying 632 branches from
Lloyds Banking Group, which would have come complete with a brand new IT
platform to which the lender could have transferred its entire business.

However, the acquisition of the so-called 'Project Verde’ business collapsed
last month around the same time Mr Slack left the bank. Responsibility for Co-op
Bank’s IT systems has now passed to Andy Haywood, a former senior IT manager at
HBOS and the head of IT at the Co-op. Mr Haywood worked for Boots before joining
Co-op in January 2012.

Off shore leaks: Liechtenstein and Portugal hit by the scandal

27 May 2013
Presseurop Volksblatt, Expresso


Volksblatt, 27 May 2013
"Offshore Leaks: Liechtenstein apparently implicated in shady business," runs the headline in Volksblatt. The Liechtenstein daily says that "at least 120 people or businesses domiciled in the principality could be implicated in tax havens".
Liechtenstein thought it had escaped from the "shock wave" caused by the publication of an international investigative report on tax havens but, according to the paper, it is now feeling the shake-up. On May 27, Volksblatt picked up a story published a day earlier by two Swiss Sunday papers Sonntagszeitung and Le Matin Dimanche —

The Principality is almost as present as France in the Offshore Leaks report, despite its clean money policy adopted in March 2009. Trustees in Vaduz and Schaan had clients that were implicated in huge fraud and corruption scandals.

SonntagsZeitung estimates that 30bn Swiss Francs (€24bn) in non-declared revenue is sitting in the principality's safe deposit boxes. A figure that the head of the Liechtenstein government, Adrian Hasler, has declined to discuss.
The scandal has also rippled out to Portugal. This weekend, Portuguese daily Expresso revealed that at least 22 people and 12 offshore companies with links to Portugal were mentioned in the report, but of these, only four people with addresses in Portugal are Portuguese citizens, and none of them is a public figure. The newspaper adds that —

the earthquake caused by Offshore Leaks had an immediate consequence, in as much as it put tax avoidance and evasion on the top of the agenda for the leaders of the 27. But this is an area in which European decisions are taken unanimously and some countries have diametrically opposed interests. As a result, practical measures have failed to keep pace with the indignation prompted by the disappearance of billions of euros in a Europe where the lack of liquidity in public coffers has been cited as a justification for austerity policies. There seems to be an end in sight to banking secrecy, but the process will be slow and those who benefit [from a lack of transparency] will do everything they can to prolong it.

I SEE IN GUARDIAN A HEADLINE SAYING BANKS LIKE RBS AND HSBC HAVE CUT 189,000 JOBS SINCE CRISIS BEGAN.

Badboy wrote:I SEE IN GUARDIAN A HEADLINE SAYING BANKS LIKE RBS AND HSBC HAVE CUT 189,000 JOBS SINCE CRISIS BEGAN.

I'm not surprised Badboy, more to come because of the mounting PPI claims , yet not one Bank has been censured or had it's licence taken away.

Banking Secrecy: Swiss propose US tax truce

30 May 2013
Presseurop Financial Times, Neue Zürcher Zeitung, Le Temps


Financial Times, 30 May 2013
“Another nail in the coffin of tax secrecy,” headlines the Financial Times in its editorial following news that the Swiss Federal Council (government) proposed a new law on May 29 to allow banks to cooperate with the US to trace tax cheats. The bill aims to end to a long running battle between US tax authorities and Bern, which has already seen the closure of Wegelin, Switzerland’s oldest bank, after it admitted helping Americans avoid tax.
Existing Swiss laws forbid banks from providing data about clients. The new law would provide a one-year window in which banks would be allowed to provide tax investigators with internal documents. While this could avoid the pursuit of criminal charges against individuals, banks are still likely to be fined billions of dollars for aiding tax evasion. For the FT –

As far as it goes, the law is a good one. It helps remove the legal and reputational uncertainty that is hampering Swiss banks’ business in the US market, and it lets the US exact punishment and admission of guilt from those who have helped Americans cheat on their taxes.

However, the economic daily points out that –

The law will suspend normal confidentiality rules for one year only. But the old and cosy world where too few questions were asked should not be allowed to survive.

Before the bill can become law, it must still be passed by the Swiss parliament. And there the "Lex USA," as it is dubbed in Switzerland, "is meeting strong resistance," reports Swiss daily Neue Züricher Zeitung, which warns on its front page that the "tax deal with the United States may be doomed to failure".

For the moment there is no majority in Parliament to support the Federal Council's action. The three main parliamentary groups reject the "Lex USA".

Geneva-based daily, Le Temps, for its part warns that –

the opacity that cloaks the peace agreement as well as the uncertainty over whether banks will be able to exercise their free will about entering or not the American past settlement programme does little to contribute to the legal and economic security desired by all sides.

Banks Haggle As CPP Bid Deadline Looms


Delays to an insurance mis-selling compensation scheme come
as the company's founder faces the deadline for a takeover offer.


11:12pm UK,
Thursday 30 May 2013

CPP is a major credit card insurer

• 
  
• 
  

By Mark Kleinman, City Editor

Britain's biggest banks are continuing to haggle over the terms
of an insurance mis-selling compensation scheme that has threatened the future
of CPP, one of the country's biggest providers of identity theft cover.

Sky News understands that some of CPP's biggest business partners, which
include the major names in high street banking, are stalling on the details of a
plan to pay out as much as £1bn to CPP customers over the next year.

The scheme of arrangement, which will see CPP writing to all
potentially-affected customers who took out one of its credit card or identity
theft policies, was due to have been agreed by the end of May.

Insiders said on Thursday that the big banks were disputing some of the
proposed details with the Financial Conduct Authority, the City regulator, and
that it may not now be operational until next year.

They said the prospect of a resolution had been further complicated by a
proposed bid for CPP from Hamish Ogston, the company's founder.

He has been set a deadline of May 31 to formalise a putative 1p-a-share bid,
which would value CPP at just £1.7m.

Sources said that on Thursday, the likeliest outcome was that Mr Ogston would
seek a further extension to that deadline from the Takeover Panel, the City body
which regulates mergers and acquisitions.

They cautioned, however, that the outcome could yet change ahead of Friday's
deadline.

Mr Ogston is also thought to be keen to amend some of the details of the CPP
redress scheme if he proceeds with his bid.

Under the proposals, affected customers would have just over a year to claim
for policies which they believe they were mis-sold.

"The Scheme is expected to feature a deadline for customers to submit a
claim, following which all of those customers who are within the scope of the
Scheme and who have not submitted a claim will be prevented from bringing a
claim," documents issued by CPP said recently.

"The deadline is expected to fall seven months after the Scheme becomes
effective, with an additional six month period being allowed thereafter for
customers to bring a claim where they can show that they were subject to
exceptional circumstances."

The mis-selling at CPP has cost the company £10.5m in fines and forced the
company to sell its US arm as it sought to appease its lenders.

Although it recently obtained a six-month reprieve, CPP is now axing more
than 100 jobs and its long-term future remains in the balance

RBS BRANCHES MIGHT BE SOLD TO AN AMERICAN HEDGE FUND OR VIRGIN MONEY.

Badboy wrote:RBS BRANCHES MIGHT BE SOLD TO AN AMERICAN HEDGE FUND OR VIRGIN MONEY.

Well I hope they are Badboy, the taxpayer might get some of it's money back.

AS THE RESULT OF THE RECESSION BANKS PROFITS HAVE DROPPD BY £7BILLION.

Badboy wrote:AS THE RESULT OF THE RECESSION BANKS PROFITS HAVE DROPPD BY £7BILLION.

Well if they stopped paying Bonuses that would save millions.

Illustration by Aisha Franz


New Regulations Are Strangling Community Banks

By Camden R. Fine May 7, 2013 11:00 PM GMT+0100
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The wave of new banking regulations that Congress created to deter and punish Wall Street’s misdeeds is landing with much greater impact on the U.S.’s almost 7,000 community banks than on the too-big-to-fail lenders.

Community banks didn’t cause the financial crisis; they played by the rules. Because of their time-tested business model, one based on customer relationships rather than transaction volumes, community banks aren’t a threat to the financial system. Yet they are being forced to pay a penalty in regulatory costs -- to comply with rules aimed at preventing the bad behavior on Wall Street from happening again.

Community banks are also disproportionately affected by the new rules. Right now, banks with less than $10 billion in assets control only 20 percent of total U.S. banking assets. Washington lawmakers and regulators are holding back community banks from devoting their full attention and resources to making more loans and fueling a more robust economic recovery.

The effect of these regulations is that Congress has added insult to injury for community banks while rewarding the real villains. The megabanks are benefiting from what Bloomberg View calculated is an $83 billion annual taxpayer subsidy, the value of implicit guarantees by the U.S. Treasury. Bloomberg View was correct to characterize the too-big-to-fail subsidy as “a major driver of the largest banks’ profits.”

Credit Quality

Perversely, Federal Deposit Insurance Corp. data show that large banks have both the lowest credit quality and the lowest cost of funds in the industry. Community banks rank the highest in both categories even though they have had to compete for years against the megabanks’ access to cheaper money in pricing loans. In addition, community banks must compete against the big lenders’ lower comparative costs in handling regulatory paperwork.

This is morally wrong -- and bad economic policy. Community banks should be putting their capital to work in the small towns, rural communities and middle-class urban enclaves they know well. Instead, they are focusing too many of their precious human resources on onerous paperwork and time-consuming compliance measures.

Community banks are the source of almost 60 percent of all small-business loans of less than $1 million, as well as mortgage and consumer loans tailored to the needs of their local communities. Large banking organizations with more than $50 billion in assets hold almost 40 percent of outstanding small loans to businesses, according to the Federal Reserve, but loans to small businesses aren’t a significant portion of large-bank lending. Small-business loans represent less than 5 percent of the large banks’ total domestic lending.

Five Steps

Lawmakers should rethink the regulations aimed at the megabanks. Here are five steps Congress can take now to rebalance the regulatory burden and give Main Street businesses greater access to loans:

-Exempt small banks from certain mortgage rules. Provide “qualified mortgage” safe-harbor status for all home loans originated and held in portfolio by community banks, including balloon mortgages and interest-only loans, and exempt these banks from mandatory requirements to maintain cumbersome escrow accounts for the same class of loans.

-Cut red tape in small-business lending. Waive the new requirement to report information on every new small-business loan application. It falls disproportionately on community banks that lack the back-office expertise and other resources to comply.

-Require cost-benefit analyses by regulators. Prevent regulators from proposing new rules before they have determined that costs won’t exceed benefits. This step must recognize the disproportionately higher cost of compliance on small banks, and ensure new rules are consistent with existing regulations, written in plain English and easy to interpret. More broadly, new rules should reduce the threat to society of future crises, and the resulting economic damage from a recession and high unemployment.

-Waive certain audit rules. Increase to $350 million from $75 million the market-capitalization threshold requiring outside auditing of internal controls. Bank examiners continually monitor these systems at smaller banks. Waiving the audit requirement for small, publicly traded local banks would reduce their expenses substantially without creating more risk for investors, taxpayers or the deposit-insurance system.

-Eliminate the annual requirement on no-change privacy notices. Mailing annual notices on privacy policies serves little purpose when no changes have been made. Keep the notification requirement for those years when changes are made.

None of these changes would alter the already significant regulatory tools that provide appropriate oversight of community banks. But it would be a failure of logic and lawmaking if the new wave of banking regulations that are meant to stop Wall Street excesses instead resulted in cutting off one of Main Street’s economic lifelines.

(Camden R. Fine is president and chief executive officer of the Independent Community Bankers of America. The opinions expressed are his own

James Crosby asked to have his title stripped
EmailFormer HBOS Chief Executive James Crosby has been formally stripped of his knighthood.

Mr Crosby made the request to have his title removed himself following a scathing parliamentary report into the bank's collapse.

The official announcement that the honour had been withdrawn from Mr Crosby was reported in the London Gazette.

The London Gazette, the official journal of record, said: "Letters Patent dated 11 June 2013 have passed the Great Seal of the Realm cancelling and annulling the Knighthood conferred upon James Robert Crosby on the 6 December 2006 as a Knight Bachelor."

Mr Crosby asked to have the honour removed after the Parliamentary Commission on Banking Standards claimed he was the "architect of the strategy that set the course for disaster" in his handling of the bank.

Following the commission's report in April Mr Crosby announced he would give up 30% of his £580,000-a-year pension.

He also stood down from roles with catering firm Compass Group and private equity firm Bridgepoint.

He was given a knighthood after leaving HBOS in 2006, but following the report said he believed "it is right that I should now ask the appropriate authorities to take the necessary steps for its removal".

Responding to the report in April he said it made for "very chastening reading".

He said: "Although I stood down as CEO of HBOS in 2006, some three years before it was taken over by Lloyds, I have never sought to disassociate myself from what has happened."

He added: "I am deeply sorry for what happened at HBOS."

For a knighthood to be withdrawn, the Honours Forfeiture Committee has to make a recommendation to the Prime Minister, who then passes it on to the Queen for a decision.

said: “The board wants to put in place a fresh face for privatisation. It’s an entirely logical thing for the board to want to do.”
“I want to do what’s right for RBS,” he continued. The outgoing chief executive said the privatisation “would have been for me an end” adding that “if you’re looking for a window to have someone for whom it’s a beginning this is as good a window as you’re going to get.”

“Am I completely comfortable with the rationale? Yes, I am,” he continued. He went on to say he was “co-operating amicably” and would “stick around” as long as the bank needed him.

Sir Philip said that RBS needs “to have a CEO with a big period in front of them rather than a big period behind of them” to lead the privatisation of the Government’s stake.

He explained that given the Treasury’s desire to privatise its stake by the end of next year, any new chief executive would need to be in place by January 2014 to give them at least six months in the job before starting the sales process.

As a result, he said now was the right time to announce the search for a successor to Mr Hester, who will stay in position until the end of the year, to ensure a smooth handover, unless a successor is found sooner.

Mr Hester could receive as much as £5.8m on his exit, including £1.6m in lieu of notice, equivalent to 12 months' pay and benefits. He will also be eligible for unvested options through his long-term incentive plan, which could be worth more than £4m based on the bank’s current share price. He will not be eligible for a bonus for 2013.

Shares in RBS closed at 325.6p on Wednesday ahead of the statement, which came after London markets had closed. However the bank’s American depositary receipts were 2.8pc lower in the US on Wednesday night.

On a personal front, the outgoing chief executive, said his job was not “complete” and that as a result he had “some human regrets”. He went on to call his rebuilding of the state-backed bank a “qualified victory.”

The search for a successor at RBS will begin straight away, led by Sir Philip. Internal candidates to replace Mr Hester include Bruce van Saun, the group finance director, and Nathan Bostock, who is due to replace Mr van Saun as finance director. External contenders could include Richard Meddings, Standard Chartered’s finance director.

Sir Philip said that Mr Hester’s successor would be paid on a “commercial basis” and that the more the bank moves “back into the private sector, I hope the less political or even media scrutiny that we will get.”

In a written statement, the Chancellor, George Osborne, said “now is the time to move on from the rescue phase to focus on RBS being a UK bank that provides greater support to the British economy.”

Mr Osborne is due to deliver his annual Mansion House on June 19, at which he is expected to fire the starting pistol on the privatisation process for both RBS and Lloyds Banking Group.

Mr Hester has cut thousands of jobs at the bank as part of his restructuring and is on Thursday due to announce a further 2,000 will go from its investment banking arm

Stephen Hester, RBS chief executive, is to leave by the end of this year. The bank has begun a search for his successor. Photo: BLOOMBERG



By Peter Dominiczak, Political Correspondent
12:59PM BST 13 Jun 2013

18 Comments

Mr Javid, the Economic Secretary to the Treasury, made the comments as praised Stephen Hester’s contribution to Britain’s recovery from the financial crisis.
Mr Hester yesterday announced that he was stepping down as chief executive of RBS amid speculation that he was forced out following a row over the Government’s plans to privatise the bank.
Mr Javid denied that George Osborne, the Chancellor, had been “directly involved” in Mr Hester’s departure from RBS, insisting it was a “decision for RBS and its board”.
“When the previous Government carried out its bailout because of its failed policies, paying over £45 billion for a stake in RBS at that very moment it overpaid by £12 billion about the then share price,” Mr Javid said.
Mr Javid also said that Mr Hester would receive a payoff of only one third of what he could have received under the contract drawn up by the last government.
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When he leaves the bank Mr Hester will receive a payment in lieu of notice of £1.6 million - equivalent to one year's salary and benefits.
Mr Hester will not receive a bonus for 2013. During his time at the bank, he only claimed one of the five bonuses he was entitled to, Mr Javid told the Commons.
The RBS chief executive will also keep his long-term incentive plan which at today's share value is estimated to be worth around £3 million.
Mr Javid said the number of shares Mr Hester can receive is capped at 65 per cent of the total, which would be just over £4 million at today's share price.
Mr Javid said the decision for Mr Hester to step down was taken so that RBS could move on from the "rescue phase".
He said: "When Stephen Hester took over, the bank was on the edge of collapse, with a broken culture, and posed a huge risk to financial stability.
"It had been bailed out by the British taxpayer at a cost of over £45 billion. Stephen Hester brought it back from the brink and since then he has worked hard to make RBS a safer and a stronger bank, better able to support its customers."
He added: "The size and complexity of RBS has been significant reduced, with a far greater focus on serving its customers. Entire business lines have been exited and there has been a dramatic simplification, rationalisation and de-risking of the bank's business model.
"This is an impressive list of achievements and is one of the largest corporate restructurings in history.
"Stephen Hester has made an important contribution to Britain's recovery from the financial crisis and I am sure that all MPs would like to join me in congratulating him in all that he has done and achieved during his time at the bank."
The minister said that the Government has “no fixed timetable” for the privatisation of RBS and “that includes the general election”.

NatWest 'most trusted big bank' despite IT meltdown
NatWest has been voted Britain's "most trusted mainstream bank" despite IT problems that have plagued millions of customers over the past year.

Moneywise editor Mark King said NatWest had 'innovated' well through services such as emergency cash Photo: ALAMY




By Steve Hawkes
6:00AM BST 14 Jun 2013

1 Comment

The award for the bank - part of the bailed-out RBS empire - comes just 24 hours after chief executive Stephen Hester was ousted from the business.
Part of his strategy was radically improving the service offered to customers by his high street banks. The prize follows a poll of 20,000 readers of personal finance magazine Moneywise.
Moneywise editor Mark King said NatWest had "innovated" well through apps and services such as emergency cash, where customers who have lost their debit cards can still acccess ATMs.
But critics will be stunned by the award given the chaos last summer when NatWest was dubbed "NaffWest" for an IT meltdown which locked millions of customers out of their accounts for days.
Regulators said they may fine RBS for the IT failings, which forced Mr Hester to waive his 2012 bonus.
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In March, NatWest and RBS cash machines crashed for the second time this year.
Mark King, Moneywise editor, told the Daily Telegraph: "The interesting point about NatWest is that they appear to have been seen to deal with the IT problem they had well.
"While they responded to the issue slowly, they did eventually put things right, and customers seemed to respect that."
He added: "It's also the case that a reasonable number of people don't automatically link them to RBS and so see them as less impacted by the financial crisis than we might imagine."
RBS hired Kiwi Ross McEwan to run its retail empire last year. Just two months ago, he revealed plans to open "mini" branches of NatWest in train stations and shopping centres.
The Moneywise award for the most trusted financial service provider went to the Yorkshire Building Society, ending three successive victories for First Direct.
First Direct picked up three gongs, including best current account for call centre service. The Bank of Scotland won the award for "most improved bank". The Co-op topped the poll for best current account for branch service.
Over the weekend, it emerged that Barclays had been voted the "least trusted bank".

Pensioners face huge losses from Co-op rescue
Pensioners and other retail investors in the Co-operative Bank are facing massive losses under a £1.5bn rescue plan for the ailing mutual expected to be unveiled on Monday.

Holders of £370m of permanent interest bearing shares (PIBS) issued by the Co-op and Britannia Building Society before its takeover are expected to have their coupons cancelled, making them effectively worthless.




By Philip Aldrick
9:30PM BST 16 Jun 2013

28 Comments

Holders of £370m of permanent interest bearing shares (PIBS) issued by the Co-op and Britannia Building Society before its takeover are expected to have their coupons cancelled, making them effectively worthless.
About £60m of PIBS are held by members of the public, paying interest annually of between 5.5pc and 13.5pc a year. PIBS are typically owned by pensioners, attracted by the steady guaranteed income.
Under the terms of the rescue, the Co-op Group will offer them new bonds instead that will cut the value of their holding by more than half.
The harsh terms for the PIBS holders are necessary as part of broader arrangement to plug £1bn of the £1.5bn capital hole by restructuring the Co-op's £1.3bn of junior debt.
Under the deal, the Co-operative Group – the bank's parent – will issue a new £500m bond, paying about 6.5pc annually, to buy out the junior creditors. They will also be given equity in the group.
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The bulk of the new bond will be offered to the £1bn of "lower tier two" creditors, for whom the deal – once the equity element is included – will be worth about £700m, about in line with what their debt is trading at in the market. The arrangement will spare the Co-op the pain of having to sell any of its crown jewels, such as the funerals or pharmacy business, to plug the capital hole.
The Co-op's insurance business is already on the block and will contribute a further £500m towards the £1.5bn total capital raising next year.
The Co-op's financial regulator, the Prudential Regulatory Authority (PRA), has agreed the terms. However, an announcement could be delayed subject to the PRA's final sign off.
Co-op sources said the deal was good for the majority of bondholders. "This is a solution by the Co-operative Group to what, if the bank had been independent, would have been a nationalisation," one said.
The insider conceded the group was aware there could be an outcry among retail investors but argued there was little choice because of where they sat in the capital structure. PIBS are the mutual sector's equivalent of shares, which arguably could have been completely wiped out had the bank been listed.
Bondholders will have to sign up voluntarily to the so-called "liability management exercise". Some have warned privately that they would be prepared to take the Co-op Group to court in protest at losses they claim were caused by the Group's decision to buy Britannia in 2009.
The Co-op Bank's recapitalisation comes ahead of the release of the Commission on Banking Standards final report, which will recommend a series of changes to how lenders operate.
The report is expected to come out ahead of George Osborne's annual Mansion House speech on Wednesday, where the Chancellor may hint at a sale of Lloyds Banking Group by 2015.

Osborne To Decide On RBS Sale Hurdle

Chancellor expected to signal the removal of an obstacle to sale of RBS in Mansion House speech next week, Sky News understands.

6:29pm UK, Saturday 15 June 2013


Mr Osborne is poised to decide on removing the RBS sale hurdle

• [email=?subject=Shared from Sky News:]Email[/email]
  ;
  

By Mark Kleinman, City Editor
George Osborne is poised to signal next week the removal of a key obstacle to the sale of the Government's shareholding in Royal Bank of Scotland (RBS), just days after its chief executive was forced out.
Sky News understands that the Chancellor is discussing with Treasury officials a plan to announce in his Mansion House speech on Wednesday an intention to cancel a capital instrument put in place during RBS's bail-out in 2008.
The Dividend Access Share (DAS) prevents RBS paying dividends to its ordinary shareholders, and gives the Government preference in the banks's shareholder structure.
Removing the DAS would cost RBS an as-yet undetermined price but could fall somewhere between £1bn and £2bn, analysts have speculated.
Announcing a plan to negotiate the termination of the DAS would be another milestone in taxpayers' eventual exit from an RBS shareholding that became necessary to prevent the banks's collapse.
And it would come just a week after Stephen Hester, RBS's chief executive said he would step down by the end of the year, after the bank's board and the Treasury agreed they wanted a new leader in place to lead the re-privatisation.
Mr Osborne will not decide whether to include an announcement about the DAS in his speech until after he has digested the conclusions of the Parliamentary Commission on Banking Standards (PCBS), which will publish its final report next week.
"Resolving the DAS is on a menu of options for the speech but it has not been decided yet," said a person close to the Chancellor's deliberations.
One issue for Mr Osborne is that the PCBS will leave open the question of RBS's future structure, asking the Treasury to report back in the autumn its conclusions about the merits of a break-up that would hive its remaining toxic assets into a separate "bad bank".
The Treasury is understood to have been sent a copy of the report on Friday.
Another challenge will be to agree an appropriate price for the special share, with Mr Osborne advised by officials that setting it too low could run into state aid-related complications in Brussels.
One advantage for him in recouping another substantial sum of money from RBS is that it would bolster the argument that the Government could sell its shares at a lower price than expected and still break even.
Forcing RBS to pay an especially high price for the DAS, though, would eat into the bank's capital base and leave the Chancellor open to the accusation that he is placing another hurdle in the way of RBS increasing its business lending.
UK Financial Investments (UKFI), the agency which manages taxpayers' 82pc stake in RBS, is understood to believe that it would be helpful if Mr Osborne signalled the move to resolve the DAS at Mansion House.
The Treasury, RBS and UKFI all declined to comment.

MY BROTHER HAS A CO-OP ACCOUNT,HOPE ITS GOING TO BE OK WITH INDIVIDUAL BANK ACCOUNT HOLDERS.

Foreign Currency 'Rate Manipulation' Claims

Bloomberg news service publishes allegations of an unregulated financial service that could be prone to manipulation.

2:46pm UK, Wednesday 12 June 2013


Bloomberg published a news report about foreign exchange rates

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The City regulator has told Sky News that it is "aware of allegations" that traders have been manipulating foreign currency exchange rates.
The Bloomberg news agency reported that the alleged practices have been daily occurrences for more than a decade, in the WM/Reuters rate spot foreign exchange market.
The market is estimated to be worth $4.7trn (£3trn) a day.
The Financial Conduct Authority confirmed that it has been speaking to "relevant parties" but said that this market is not regulated.
There is no suggestion that these practices are illegal.
The benchmark rate is administrated and published by the World Market Services company, a wholly-owned subsidiary of the Boston-based financial institution State Street, from an office in Edinburgh.
In a statement, State Street told Sky News: "The process for capturing this information and calculating the spot fixings is automated and anonymous."
The service was introduced in 1994. Rates are published at fixed hourly times for 158 currencies between 7am and 9pm UK time, each day. They allow dealers to trade one currency against another within a one to two-minute window.
Bloomberg claimed that the rigging directly affects the value of funds and derivatives that affect pensions and savings accounts, but experts are reluctant to put a value on that loss.
It claims to have spoken to five anonymous dealers - but all have refused to name any institution involved.
:: Bloomberg is a commercial rival to ThomsonReuters, the organisation which provides the branding for this foreign exchange service.

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Doesn't it make you sick that these Banks can do what they like and get away with it!!! where was the FSA while all this was going on?????

Sainsbury's Bank deal could lead to 'domino effect' on UK banks, says FIS
Outsource project could pave the way for major banks to migrate systems
By Matthew Finnegan | Computerworld UK | Published 15:31, 09 May 13








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The outsourcing of Sainsbury’s Bank’s core banking IT could lead to a “domino effect” on the UK financial industry, FIS has claimed.
It was announced on Wednesday that Sainsbury’s would buyout Lloyds’ share of the 50/50 venture, which relied on using Lloyds’ legacy mainframe systems. Outsourcing and software provider for the financial sector, FIS, was chosen to lead the project of migrating retail-only Sainsbury’s Bank’s data over to its hosting environment.
Mark Davey, Executive VP at FIS, said that this is the first time a that an existing UK bank has taken the decision to move its entire banking platform to an external provider.

• Sainsbury's Bank to outsource entire banking system in £90 million migration project
  
  
  
• Nationwide Building Society hit by online banking outage
  
  
  
• Gartner: CIOs at big banks must step up to plate to get a grip on IT costs
  
  
  

“It is very rare to see a bank that is moving all of its system lock stock and barrel onto a new platform and environment,” he told Computerworld UK. “Normally banks do this one solution or product at a time.”

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He added: “In the UK market place there is really no bank of the scale of Sainsbury’s that has ever outsourced the running and the support of these applications ever before.”
However, Sainsbury’s Bank is not the first of any UK bank to outsource the running of its core banking systems using off-the-shelf software. Start-up Metro Bank also outsourced the delivery of its systems through Niu Solutions, running a core banking system from Temenos, and major banks have looked to external providers for elements of their banking IT. MetroBank chief executive Craig Donaldson previously said that the outsourcing of the bank’s IT was “crucial” to it becoming the first new entrant to the UK high street in 100 years.
For Sainsbury’s Bank though the challenge is moving from Lloyds existing infrastructure into the outsourced environment of FIS, an operation that is expected to take up to 42 months, following a year of preparations under a non-disclosure agreement with Sainsbury’s.
According to Davey the lengthy period of transition is necessary to avoid any disruption to the bank’s customers during the difficult process of migrating away from Lloyds’ legacy systems.
“Like any situation where you are moving from one system to another these things are complex and difficult and require an incredible amount of planning and execution, particularly if you don’t want to disrupt business operations which are a critical part of protecting the brand reputation of these organisations 

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url+'&intcmp=related_wp;wp_article;link_'+(n/2)+'_category' : url+'?intcmp=related_wp;wp_article;link_'+(n/2)+'_category'); } $(this).attr('href',newUrl); }); //article footer icons $('ul#articleFooterIcons>li').each(function(n){ var channel = getAbbrevChannelFromUrl(); switch(n){ case 0 : $(this).click(function(n){ var s=s_gi(s_account);s.linkTrackVars='eVar13,events';s.linkTrackEvents='event6';s.events='event6';s.eVar13='article_tools;'+channel+';print';s.tl(this,'o','article_tools;'+channel+';print'); }); break; case 1 : $(this).children('a').click(function(n){ var s=s_gi(s_account);s.linkTrackVars='eVar13,events';s.linkTrackEvents='event6,event16';s.events='event6,event16';s.eVar13='article_tools;'+channel+';email';s.tl(this,'o','article_tools;'+channel+';email'); }); break; case 2 : $(this).children('a').click(function(n){ var s=s_gi(s_account);s.linkTrackVars='eVar13,events';s.linkTrackEvents='event6,event16';s.events='event6,event16';s.eVar13='article_tools;'+channel+';share';s.tl(this,'o','article_tools;'+channel+';share'); }); break; case 3 : $(this).children('iframe').click(function(n){ var s=s_gi(s_account);s.linkTrackVars='eVar13,events';s.linkTrackEvents='event6,event16';s.events='event6,event16';s.eVar13='article_tools;'+channel+';retweet';s.tl(this,'o','article_tools;'+channel+';retweet'); }); break; case 4 : $(this).click(function(n){ var s=s_gi(s_account);s.linkTrackVars='eVar13,events';s.linkTrackEvents='event6,event16';s.events='event6,event16';s.eVar13='article_tools;'+channel+';digg';s.tl(this,'o','article_tools;'+channel+';digg'); }); break; }//switch }); //blogs boxout on article pages $('body.article #blogContainer a').each(function(n){ var$(this).attr('href',newUrl); }); //related articles boxout on article pages $('body.article div.relatedContent li a').each(function(n){ var url = $(this).attr('href'); var chan = getAbbrevChannelFromUrl(); var newUrl = (/\?/.test(url) ? 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url+'&intcmp=s_show_unit;' + chan + ';title' :

UK banks ordered to plug £27.1bn capital shortfall
Prudential Regulation Authority says extra capital needed at RBS, Lloyds, Barclays, Co-op and Nationwide

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The PRA found the biggest capital shortfall at RBS, which needs to find £13.6bn. Photograph: Will Oliver/AFP/Getty Images
Barclays, Co-operative Bank, Nationwide and the two bailed-out banks Royal Bank of Scotland and Lloyds Banking Group have been ordered to plug a £27bn capital shortfall identified by the new banking regulator – sparking concerns about the impact the financial repairs would have on their ability to lend.
The Prudential Regulation Authority, part of the Bank of England, also surprised the City by instructing Barclays and Nationwide to reduce the risks they take after focusing on a new measure of the risks being taken, called the leverage ratio.
Both banks have, according to the PRA, a leverage ratio which is below an internationally agreed standard of 3% - which allows banks to have assets worth 33 times their capital - which must be hit by 2019. The two have been given until the end of the month to come up with a plan to reduce their leverage although the PRA did not say when the target must be hit.
This focus on the leverage ratio was unexpected and could result in both of the firms – which have been actively lending to businesses and households – needing to find extra capital in addition to the shortfalls already identified. Analysts at Credit Suisse estimated that Barclays might need an extra £2.4bn or may have to cut back its assets by £81bn. However, there were also suggestions that the requirement could be even larger – as much as £7bn – if action was needed swiftly. Barclays has a plan to hit the ratio by 2015.
Of the £27.1bn capital shortfall identified by the PRA, some £13.7bn of capital had already been found by the end of last year.
But even as chancellor George Osborne fired the starting gun on a sell-off the taxpayers' 39% stake in Lloyds, the PRA said the bailed out bank had needed £8.6bn of additional capital and still had some £7bn to find. It will do so by selling off assets and reducing risks.
The biggest hole was at RBS, the 81% government-owned bank which Osborne said on Wednesday said he could yet split intotwo – good and bad – banks. But the £13.6bn shortfall identified at RBS has now fallen to £3.2bn, a £3bn shortfall at Barclays has been reduced to £1.7bn and Co-op said it will fill its £1.5bn hole by listing shares on the stock market.
Nationwide building society had a £400m shortfall which has filled but the mutual now has to tackle the implications of the leverage ratio measure. Nationwide, which has a leverage ratio of 2.1%, described it as "a less sophisticated measure which ignores the quality of assets or the business model".
It is the first time the City regulator has published such detailed information about the shortfalls but the move was criticised for potentially restricting lending and hindering future economic growth after the chancellor said in his Mansion House speech that the economy had "left intensive care".
Kevin Burrowes, UK financial services leader at PricewaterhouseCoopers, said: "While more transparency is welcome, it is debatable whether this disclosure is supportive of pushing economic growth or facilitates more bank lending."
In total eight financial firms were assessed – HSBC, the UK arm of Santander and Standard Chartered were given the all clear – to ensure they had taken large enough provisions for: compensating customers for mis-selling payment protection and interest rate swaps; further losses on loans after offering forbearance to customers by tweaking borrowing terms; and the way they value risks on their balance sheets.

The PRA said firms had been asked to produce plans to "address shortfalls that do not reduce lending to the real economy".

George Osborne accused of lobbying on behalf of banks for weaker regulation
George Osborne has defended anyone's right to lobby for lighter regulation, after Sir Mervyn King accused Downing Street of applying political pressure on behalf of weaker banks

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By Rowena Mason, Political Correspondent
12:58PM BST 25 Jun 2013

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Speaking in the House of Commons, the Chancellor did not deny claims that he and Number 10 lobbied the Bank of England's Prudential Regulation Authority "at the behest of the banks".
The allegations were made by Sir Mervyn, the outgoing governor of the Bank of England, in his last appearance before MPs on the Treasury select committee this morning.
Sir Mervyn suggested the watchdog had been put under political pressure by Downing Street to weaken requirements on the banks to hold a large amount of spare cash.
The banks argue that they would be able to lend more and help kickstart the economy if they did not have to keep such big reserves.
However, regulators imposed tough requirements on banks after the financial crisis to ensure they would never again run short of cash need to be bailed out by the taxpayer.
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Sir Mervyn today told MPs: "Banks need to think very carefully about relationships they have with supervisors. I don’t think banks should conduct conversations with supervisors through front pages of FT or any other newspaper. Banks shouldn’t leave conversations with supervisors and feel next step is to phone Number 10 or Number 11 Downing Street. There were certainly calls made to Number 11 and in some cases to Number 10.
Asked whether those politicians responded by putting pressure on supervisors, he said: "I think conversations were had."
Andrew Tyrie, the chairman of the Treasury Committee, immediately went to the House of Commons to ask Mr Osborne whether he had taken part in such a lobbying operating.
He said Sir Mervyn had indicated that "unacceptable pressure had been brought to bear on the Preudential Regulation Authority from within government at the bhest of the banks, putting at risk the regulator's independence".
"Will the chancellor reassure the house that he knew nothing about this, that he was not personally involved and that he will investigate the allegation that others did bring unacceptable pressure and report to parliament?" Mr Tyrie said.
However, Mr Osborne gave no such reassurances and defended the right of banks to "make their case".
"if there's unacceptable pressure, I absolutely say that is not acceptable," he said. "The PRA is completely independent and it's made its independent dceisions on capital in our banks. We empower our regulators to do their job.
He added: "Of course, banks, consumer groups, anyone else can make their case. But ultimately it's an independent body that makes the judgement. that is the system we have created."