A few days ago I posted an article, which can be found here, setting out why banks needed to up their game in terms of developing a plan to manage the current crisis, otherwise they faced the imposition of regulations and higher capital requirements that would be bad for them and bad for their economies. Well both Barclays and Deutsche just got a nasty surprise. Continue reading
Posted in Banking, Business, Politics
Tagged Banks, Barclays, Business, Capital, China, Crisis Management, Debt Ceiling, Deutsche, economy, Europe, politicians, Regulators, Republican, reuters story
Bob Diamond appeared before the Treasury Select Committee of the British Parliament today. While some MPs had more than a reasonable banking knowledge and asked some good questions, both sides came up short. Here is why along with some general observations.
Where MPs Came Up Short
MPs still suffer from derivatives derangement syndrome and a total misunderstanding of investment banking. Diamond had to remind MP Pat McFadden that Halifax, HBOS, Alliance & Leicester and Northern Rock all collapsed and they had nothing to do with derivatives and the riskiness of investment banking.
Following on from the above, it appears that MPs, along with the rest of the population do not realize that loans involve risk taking and that losses do not only come from derivatives or “casino” banking—a most unbelievable notion. Until MPs and regulators fully understand the dimensions of risk they should forego any decision to change the structure of the industry. Continue reading
Posted in Banking, Business, Politics
Tagged Bank of England, Banks, Barclays, bob diamond, british parliament, Business, deerivatives, economy, Financial Crisis, Government, Libor, libor rates, MPs, politics, Risk, Treasury, treasury select committee
The LIBOR problem will spread well beyond Barclays and once again banks are being asked serious questions about their values and their culture. What next for the industry?
The manipulation of the LIBOR rate by Barclays and other banks is about to set-off another major crisis within the banking industry. There appears to be no question about the bank’s guilt as Barclays have actually admitted wrongdoing and have applied to the EU for whistleblower status.
For all the negativity that will be thrown at them in the coming days and weeks, that action on the part of the management is actually quite commendable. If you disagree then I suggest you look at the number of times banks have been caught doing wrong and pay large fines but at the same time refuse to admit any wrongdoing. Continue reading
Posted in Banking, Business
Tagged Banks, Barclays, bob diamond, Business, Citigroup, Culture, current-events, economy, Financial Crisis, HSBC, Libor, occupy-wall-street, RBS, Risk, Values
The past few weeks have witnessed several instances where shareholders have rejected executive compensation packages proposed by bank boards. Is this the dawn of a new era in corporate governance?
Many years ago when I was Business Manager to the Global Head of Treasury at ABN AMRO, the unit submitted its bonus request for that year to the director responsible for the investment banking unit. When he saw the size of the request his acerbic response was; “so what about the shareholders”.
It would appear that shareholders around the world are now beginning to ask the same question. From one bank to the next shareholders are venting their displeasure at the size of executive compensation plans—forcing management to revise their payouts.
Posted in Banking, People
Tagged ABN AMRO, Bank of America, Banks, Barclays, Bonus, Business, Citigroup, Dodd Frank, Executive, Financial, Government, Management, Pay, Shareholders, Subprime Crisis, UBS