Home Economy The Banking Storm Continues

The Banking Storm Continues


Barclays has been up against the wall for well over a month, and the RBS is right there alongside its rival. After software glitches hit the perennially troubled bank (with an estimated cost of £125m for ‘cleanup’), bank boss Stephen Hester has been on somewhat of a charm offensive, hoping to offset any new ‘discoveries’ that internal investigators may find. But, the language is still tepid platitudes: “It is very clear to me a successful business must be built off the back of serving customers well, and until we as an industry can say we are doing that, we won’t have finished the changes we need to make.” But, what are those changes of which you speak, Mr. Hester?

Nonetheless, there is obviously a witch-hunt on now and the skeletons in the closet may be more than the public is prepared to hear about. These are, indeed, dark days for the banking sector and Hester’s proclamations that the world ‘needs us’ may not be the best tack when you have posted a fresh “pre-tax loss of £101m for the second quarter of 2012” (although this is a better showing than last year). But, the woes don’t stop there. RBS is embroiled in the Libor-rate scandal just as much as Barclays and is also facing compensation payouts for “mis-selling payment protection insurance, and mis-selling specialist insurance called interest rate swaps to small businesses,” the BBC reports. Not good.

Once again, the need for transparency should be at the top of the agenda for the UK high street banks. They are already losing waves of customers to building societies and co-operatives – people are no longer willing to put up with dodgy charges and unscrupulous business decisions made in their name. Until the Hester’s and Bob Diamond’s of the world clearly outline what it is they are willing to do to change their behavior, I fear these gentlemen are just spouting empty words. And their customers will continue voting with their feet.

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William R. Feins , freelance journalist from London, UK; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.

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