Turning fire back on banks
FASCINATING to learn that a former Bank of England official Megan Butler, now working at the Financial Conduct Authority (FCA), had her fingerprints on the regulator’s New Year’s Eve decision to drop its inquiry into the culture of the banks.
Even though the Treasury was not involved, the direction of travel was set by George Osborne in his Mansion House speech in July 2015 when he argued that the time for ‘banker bashing’ is over.
It is, however, ludicrous to offload this responsibility for bank behaviour to the Banking Standards Board, which for all its virtues is not statutory.
No one in Britain, so far, may have yet been tried for their role in the financial crisis of 2007-08, but that does not mean the authorities should give up on the wrongdoers.
The Serious Fraud Office, under David Green, is not ready to throw in the towel.
In a scantily reported hearing on Monday six bankers were formally charged with seeking to manipulate the Euribor interest rate which set the cost of borrowing for euro transactions. Among those charged is the higher profile Deutsche Bank trader Christian Bittar who told the court he will contest the allegations.
Nor should we assume that because it has gone quiet, the SFO’s investigation into alleged overpayment of commissions to Qatar, at the time of the Barclays bailout in 2008, is over.
Reported efforts to forge a Deferred Prosecution Agreement have thus far failed, so the SFO is pressing on with its probe. It remains to be seen whether Jes Staley, newly installed chief executive at Barclays, might seek to overturn the approach of his predecessors, which was to contest every step of the way.
The bad odour of the past continues to stalk finance.
Only now, with a high level government job on the table as Osborne’s new tax guru, has Angela Knight, the former chief executive of the British Bankers Association, acknowledged a culpability for the Libor scandal.
She has apologised profusely for rate-rigging at a time when it was her organisation that was responsible for setting, monitoring and promulgating Libor interest rates.
It carried on regardless, despite warnings from the US Federal Reserve, passed on by the Bank of England, that something serious was amiss. This ought to disqualify Knight from holding public office.
It might feel a better time to call off the hounds from the major banks if we could actually be sure the culture has changed and fairness and the rights of the customer were respected.
A study conducted by payment consultants Account found that 96pc of the revenues that banks earn from foreign currency dealings, on behalf of small and medium-sized business customers, are hidden from clients at a cost to the sector of £4bn a year. Barclays is said to be the top offender, charging an average of 3.68pc for transfers.
All this would suggest that the culture at the heart of the banks is bad as ever and the City needs an FCA that is prepared to clean-up to keep its foot on the throat of the industry.
Oil spill
IT is almost as if there is now a bidding war among oil analysts to guess who can forecast the lowest price. Standard Chartered is most bearish with a projection of $10-a-barrel.
We are still some way off that, but on Tuesday Brent crude reached a 12-year low of $30.46.
That is not enough to prevent collateral damage. Premier Oil shares plunged nearly 30pc to just 20p after broker Jefferies slashed the target price pointing out that net debt for the full year could hit £1.8bn.
More importantly for all UK investors, BP revealed it is to reduce its head count globally by 5pc, or 4,000, as part of a £2.4bn restructuring, with 600 people going in the North Sea. Alex Salmond and Nicola Sturgeon must be thanking their lucky stars that they lost a referendum built around an assumption that Scottish oil would finance the future state.
BP shares dropped a further 1.16pc having lost 40pc of their value since the oil price slide began in 2014.
Overseas Petrobas of Brazil, partner of BG Group in the Santos Basin, also revealed it is slashing capital spending. What that means in terms of the Shell offer, if anything, has yet to be explained.
The slumping oil price is as much a crisis for the corporate world as it is for the global economy.
Festive fallout
WHO is the Grinch who stole Christmas? Forgetting for the moment the sun seeking flood agency boss Philip Dilley, the answer must be those German interlopers Aldi and Lidl.
Far from fading away in the festive season, when everyone likes that extra treat, they captured one million extra shoppers in the final 12 weeks of the year with 15.6m households visiting their stores.
Aldi has now overtaken Waitrose to become Britain’s sixth most popular grocer.
So much for the idea that they would only thrive in rotten times.