Financial and business news and articles
Posts tagged Banking
Phishing emails from ‘Amazon’ are well out of order
Mar 14th
Fraudsters are targeting Amazon customers with emails telling them to check their account details
Customers of the online bookseller Amazon are being warned to be wary of a fake “phishing” email asking them to check their accounts.
These emails, addressed “Dear Customer”, say: “Your order has been successfully canceled [sic]. For your reference, here’s a summary of your order.” They then give an order number and a link to “order information”, which appears to take users to an external website that does not belong to Amazon. The emails have a link to the genuine Amazon.com website at the bottom, making them appear authentic.
“From time to time, customers may receive emails appearing to come from Amazon, which are actually false emails, or ‘phishing emails’,” said a spokeswoman for Amazon. “These can look similar to real Amazon emails but often direct the recipient to a false website, where they might be asked to provide account information such as their email address and password combination.”
She advises customers to send any such emails to spoofing@amazon.com and only check their order status by logging directly into their account from amazon.co.uk.
This particular spoof is one of a growing number of fake emails landing in people’s inboxes, as the global wave of phishing attacks grows. Phishing is the criminally fraudulent process of trying to illicit sensitive information such as usernames, passwords and credit card details from website users, usually via emails that look as though they genuinely come from a bank or an online retailer.
Last week the industry body UK Cards Association announced that the number of phishing attacks on bank customers had risen to 51,000 from just 1,700 five years ago. As a result of this and other methods of internet banking fraud, online banking losses totalled almost £60m in 2009 compared with £52.5m in 2008 and £23.2m in 2005. It is the only area of card fraud that has increased rather than fallen in the past year.
“Banks would never approach customers by email asking for their bank details, but people still fall for this scam,” says a spokesman for the association.
Phishing attacks have also plagued users of social networking website Twitter in the past few months. Criminals have been attempting to trick Twitter users into giving away their username and password via messages that apparently come from friends. The messages contain a link to a spoof website that looks just like the Twitter home page, where users are then prompted to enter their login details. Security experts have expressed concern that this information could then be used to gain remote access to Twitter users’ computers.
Last week the website introduced an anti-phishing service designed to protect its users from these types of attacks.
UK banking customers can see examples of recent phishing emails in a gallery, sorted by bank, on the industry’s Bank Safe Online website.
Protect yourself
• Make sure your computer has up-to-date anti-virus software and a firewall installed. Consider using anti-spyware software.
• Ensure your browser is set to the highest level of security notification and monitoring.
• Apply common sense. Your bank would never contact you to ask you to disclose your Pin or other sensitive details by email. Delete such emails and make your bank aware of what you have been sent.
• Always access online accounts by typing the bank or retailer’s address into your web browser. Never go to a website from a link in an email and then enter personal details.
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Letters: Fear and loathing in New Labour
Mar 13th
In light of the articles by Simon Jenkins (The bankers lied. And Darling, merely a puppet on their string, knows it, 12 March) and Mehdi Hasan (It’s defeatist nonsense to talk of a crisis of leftwing thinking, 12 March), it seems evident that there is the need for a rearticulating of the political discourse. The hegemony of neoliberal thinking has defined the political space for 30 years, so much so that even in the present crisis, when we all should be marching on the streets against the bankers, New Labour is still running in fear of framing the debate in social democratic terms.
For the 30 years the right have had a stranglehold on how we define freedom. The political classes have been fearful of any reference to the state as a means of solving problems. Individual freedom, essentially defined in terms of freedom from the state, has been their mantra. For example, George Osborne’s first reaction to the nationalisation of the banks was to jump enthusiastically up and down, claiming that old socialist nationalisation is here again. Cameron is careful that his slogan that there is such a thing as society is followed up by a clear rejection of any idea that this means a bigger state.
The current crisis has left both parties searching for ways to rearticulate a progressive politics, but it is up to the left to grab this opportunity, because they won’t have another like this, to reshape the political discourse and redefine the state and its relation to individual freedom. This is a hegemonic struggle to reclaim the terms of liberty and equality in social democratic terms.
Robert Proni
London
• Donald Hirsch is quite right to say that decent employers should pay a living wage of at least £7.14 an hour, and more in expensive areas (The wages of dignity, 10 March). However, we also need to realise that the legal minimum wage of £5.80 an hour is not being paid to many thousands of employees. The root of the problem is that the statutory enforcement powers are held by Revenue & Customs, and they are failing to do their job properly. That is hardly surprising as there are only 123 enforcement staff for the whole of the UK.
In Hackney, where I live, only 258 investigations have been carried out in seven years. Anecdotal evidence of illegal avoidance abounds, but the onus is on the individual to complain, and few feel able to do so. Ideally the enforcement powers should be transferred to local authorities, but in the meantime high-profile awareness campaigns could be organised by councils with advice and information points located in their buildings. This policy will be part of the Hackney Labour manifesto for the forthcoming local elections.
Tim Webb
London
• Neil Kinnock (Letters, 10 March) utterly fails to comprehend the burning sense of disillusionment that has driven so many former Labour supporters either into cynical abandonment of politics or, like John Kampfner, to embrace the Lib Dems. The charge against the New Labour project is not that it did not deliver the benefits he lists. It did, and there were others which curiously he omits, above all the lancing of the Northern Ireland carbuncle and significant constitutional reforms – devolution and human rights legislation. The charge is that it squandered its massive parliamentary majorities and the goodwill that the electorate bestowed on it to transform a divided, sick society.
On the contrary, it took to its bosom the neoliberal ideology that nourished that divide, extending privatisation; it renounced and even demonised public sector initiatives and went back on the welfare state concordat that was the hallmark of the postwar Labour settlement. So, Labour administrations have presided over the widest gulf ever between the haves and have-nots and now the inevitable massive recession. We have witnessed a generation of politicians intent on feathering their own nests, the expenses “scandal” being a minor part of this. Not to speak, as Neil Kinnock dare not, of the criminal adventure that was the Iraq war. I, a onetime Labour activist, like John Kampfner, have joined the Lib Dems, who I see as a catalyst for, and working partner of, a rejuvenated Labour party once it is purged of the New Labour virus.
Benedict Birnberg
London
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Could Lehman’s Dick Fuld end up behind bars?
Mar 12th
What should be the fate of Lehman Brothers’ chief executive, Dick Fuld? After this week’s 2,200-page potboiler from the bankruptcy courts, one former Lehman banker has an uncompromising opinion.
“I think this is gross negligence of the highest order and I want to see people behind bars,” says Larry McDonald, a former Lehman vice-president whose book, ‘a colossal failure of common sense‘ chronicled the bank’s collapse.
Some 18 months after Lehman’s demise, anger is still raw among the bank’s former employees towards the “31st floor” which housed the executive suites of top management.
“On the trading floor, most people were making money in bonds, currencies, commodities,” says McDonald, who says thousands of careers and pensions imploded when the bank went bust. “People lost millions and millions and millions of dollars overnight. Most people want jail time – and not just for Fuld.”
The court-appointed examiner mandated to scrutinise Lehman’s collapse, Anton Valukas, concluded in his report that there were grounds for “colorable claims” against Fuld, the bank’s auditor Ernst & Young and three successive chief financial officers – Chris O’Meara, Erin Callan and Ian Lowitt – for presenting a misleading picture of Lehman’s finances in its accounts. A series of temporary asset sales under a trick known as “repo 105″ artificially bolstered Lehman’s balance sheet to the tune of $50bn.
Like few other financiers, Fuld, 63, has become a lightening rod for public outrage over the credit crunch. The man once nicknamed the “gorilla” for his pugnacious style was memorably named last year as the worst American chief executive of all time by Portfolio magazine, which said he had remained “belligerent and unrepentant” since Lehman’s demise. During a Congressional probe into the bank’s failure, Fuld offered little apology, preferring to express outrage that the government declined to bail out his firm – he said he would wonder “until the day they put me in the ground” why taxpayers did not come to Lehman’s rescue.
For the bank’s final full year of existence, 2007, Fuld received $22m in remuneration. Since Lehman’s demise, he’s been working for a new firm, Matrix Advisers, and he spends spare time at a country home in the backwoods of Idaho. When a Reuters reporter tackled him in September, he delivered a self-pitying lament about his unfair treatment.
“They’re looking for someone to dump on right now and that’s me,” said Fuld. “You know what they say? This too shall pass.”
Fuld’s response to this week’s report by the bankruptcy court has been a shrug of the shoulders. A statement from his lawyer, Patricia Hynes, asserts that he did not know of the bank’s Repo 105 transactions that papered over financial cracks: “Mr Fuld did not know what those transactions were – he didn’t structure or negotiate them, nor was he aware of the accounting treatment.”
That’s a big declaration – since Fuld’s long-serving right-hand man, chief operating officer Bart McDade, says he recalls discussing it with the CEO. In an interview on January 28 with the examiner, McDade is quoted as saying: “Fuld knew about the accounting of Repo 105.”
The department of justice’s success rate in Wall Street convictions over the financial crisis has been poor. One high-profile prosecution against two Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, ended in abject failure in November, when a jury decided that incompetence and mismanagement didn’t amount to a crime.
Experts say that for all the public appetite for charges, it could be tough to make them stick. Jacob Frenkel, a former SEC enforcement lawyer now at the Washington law firm Shulman Rogers, says the examiner’s language was careful: “What I found striking is that even when Valukas’s language was tough, it didn’t venture into the arena of fraud. He talks about gross negligence, which isn’t criminal, and he talks about materially misleading – but he notably avoids the word ‘false’.”
In other words, the “I knew nothing about it” defence might just work – even for the man in the corner office during the most notorious Wall Street banking collapse since the Great Depression.
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Nick Clegg calls for 10% bank tax to rescue recession victims
Mar 12th
Lib Dem leader condemns bankers as ‘Scargills in pinstripes’ and says electorate, not him, will decide who is next PM
Nick Clegg is to call for a 10% tax on bank profits to fund a £2bn job creation programme to rescue victims of the recession.
In a Guardian interview, the Liberal Democrat leader condemned bankers for behaving like ”Arthur Scargill in pinstripes”, and vowed his party would be “a radicalising, rather than moderating force” in the event of a hung parliament so long as the majority party was committed to bring the deficit under control.
On the eve of his party’s pre-election spring conference, he insisted he will consult his party fully before joining a coalition or supporting a Queen’s speech tabled by a minority government.
Clegg insisted it is not for him, but for the electorate to decide whether David Cameron or Gordon Brown becomes prime minister. However, he also attacked Brown in contemptuous terms: “It’s very difficult to invest much hope or faith in a man who could not even maintain relations with his own colleagues”.
He said Brown was not a credible figure to rebuild the economy. “This is the man who wrought the damage, he should not be the person to do the repair work”.
Brown’s late conversion to electoral reform was “hardly a hallelujah moment”. He added: “There is no point anyone clinging to power when it’s obvious the British people don’t want you … they’d prefer someone else.
“That’s where constitutional nicety bumps up against political reality. It’s not for me to decide. We give the electorate the cards, they deal them”.
Clegg said he remained, on balance, “a huge critic” of Margaret Thatcher, but admitted Britain needs to rediscover the zeal she showed when she tackled the unions.
The banks, he said, have now become Britain’s great contemporary vested interest. He said: “Bankers are Scargill in pin stripes. Scargill’s stated aim was to challenge who runs the country. The bankers have behaved in the same arrogant way … to benefit only themselves …
“The banks have basically been given untrammelled support by both Labour and Conservative governments to do exactly what they like, and take massive risks with our livelihoods and savings.
“They have been holding a gun to the economy. A progressive liberal like myself is not going to be squeamish about blowing the whistle on a vested interest.”
In the only tax rise proposed by his party, he now backs a 10% tax on bank profits, a break up of the banks’ investment and retail arms, and finally a requirement on banks owned by the taxpayers – RBS and Lloyds – to be required to behave in the public interest on issues such as take-overs of UK firms.
He also proposes tighter requirements on banks to lend. “What I hear from the Conservatives is … ‘we’ve got to wait for the rest of the world’. I really don’t think the Tories get how much we’re skating on thin ice as an economy.
“If we don’t take on this vested interest ourselves, now, unilaterally, immediately, we’re asking for trouble. The liabilities of British banks are now four and a half times the size of the British economy. We are like a large version of Iceland. We are not sheltered in any way”.
In his interview Clegg also:
• dismisses Tory plans to open new schools and rejects profit-making firms opening new schools. “I keep reading that we and the Tories have identical policies on schools but it’s complete rubbish.”
• insists he will not ringfence the NHS from cuts. He said: “We need to make significant savings to safeguard the GP surgery or A&E or the maternity ward”.
• promises “to slash the headcount of the Department of Children”.
He tried to defuse the issue of whether he would back Cameron or Brown in a hung parliament saying: “I think these constitutional niceties will be swept aside if it’s obvious that there’s one party that enjoys a mandate, if not an actual majority. I don’t think there will be a photo finish.”
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Nick Clegg calls for 10% bank tax to rescue recession victims
Mar 12th
Lib Dem leader condemns bankers as ‘Scargills in pinstripes’ and says electorate, not him, will decide who is next PM
Nick Clegg is to call for a 10% tax on bank profits to fund a £2bn job creation programme to rescue victims of the recession.
In a Guardian interview, the Liberal Democrat leader condemned bankers for behaving like ”Arthur Scargill in pinstripes”, and vowed his party would be “a radicalising, rather than moderating force” in the event of a hung parliament so long as the majority party was committed to bring the deficit under control.
On the eve of his party’s pre-election spring conference, he insisted he will consult his party fully before joining a coalition or supporting a Queen’s speech tabled by a minority government.
Clegg insisted it is not for him, but for the electorate to decide whether David Cameron or Gordon Brown becomes prime minister. However, he also attacked Brown in contemptuous terms: “It’s very difficult to invest much hope or faith in a man who could not even maintain relations with his own colleagues”.
He said Brown was not a credible figure to rebuild the economy. “This is the man who wrought the damage, he should not be the person to do the repair work”.
Brown’s late conversion to electoral reform was “hardly a hallelujah moment”. He added: “There is no point anyone clinging to power when it’s obvious the British people don’t want you … they’d prefer someone else.
“That’s where constitutional nicety bumps up against political reality. It’s not for me to decide. We give the electorate the cards, they deal them”.
Clegg said he remained, on balance, “a huge critic” of Margaret Thatcher, but admitted Britain needs to rediscover the zeal she showed when she tackled the unions.
The banks, he said, have now become Britain’s great contemporary vested interest. He said: “Bankers are Scargill in pin stripes. Scargill’s stated aim was to challenge who runs the country. The bankers have behaved in the same arrogant way … to benefit only themselves …
“The banks have basically been given untrammelled support by both Labour and Conservative governments to do exactly what they like, and take massive risks with our livelihoods and savings.
“They have been holding a gun to the economy. A progressive liberal like myself is not going to be squeamish about blowing the whistle on a vested interest.”
In the only tax rise proposed by his party, he now backs a 10% tax on bank profits, a break up of the banks’ investment and retail arms, and finally a requirement on banks owned by the taxpayers – RBS and Lloyds – to be required to behave in the public interest on issues such as take-overs of UK firms.
He also proposes tighter requirements on banks to lend. “What I hear from the Conservatives is … ‘we’ve got to wait for the rest of the world’. I really don’t think the Tories get how much we’re skating on thin ice as an economy.
“If we don’t take on this vested interest ourselves, now, unilaterally, immediately, we’re asking for trouble. The liabilities of British banks are now four and a half times the size of the British economy. We are like a large version of Iceland. We are not sheltered in any way”.
In his interview Clegg also:
• dismisses Tory plans to open new schools and rejects profit-making firms opening new schools. “I keep reading that we and the Tories have identical policies on schools but it’s complete rubbish.”
• insists he will not ringfence the NHS from cuts. He said: “We need to make significant savings to safeguard the GP surgery or A&E or the maternity ward”.
• promises “to slash the headcount of the Department of Children”.
He tried to defuse the issue of whether he would back Cameron or Brown in a hung parliament saying: “I think these constitutional niceties will be swept aside if it’s obvious that there’s one party that enjoys a mandate, if not an actual majority. I don’t think there will be a photo finish.”
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Barclays breaks ground with 18,000-seat basketball stadium in Brooklyn
Mar 12th
• Bob Diamond and rapper Jay-Z at ground-breaking ceremony
• British bank hopes $300m deal will promote its image in America
Seated alongside rap star Jay-Z, Barclays president Bob Diamond beamed cheerfully as a soul rendition of the US national anthem was partially drowned out by the din of circling helicopters and noisy protesters.
In a marquee on a disused rail yard in the New York borough of Brooklyn, hundreds of dignitaries including the city’s mayor gathered to watch a ground-breaking ceremony for an 18,000-seat basketball stadium to be named the Barclays Centre under a naming deal that has cost the British bank more than $300m (£200m).
The stadium will house the Nets, an NBA team owned by Jay-Z, and will be part of a broader $5bn development including shops, offices and 6,400 homes on a desolate site described by a local religious leader as “rodent-infested and garbage-strewn”.
For Barclays, the arena is a key step in a path to building its brand in the US public consciousness. Ever since snapping up the American assets of defunct Lehman Brothers for a bargain $1.75bn in 2008, the bank has had a none-too-subtle ambition to be a top tier player on Wall Street.
“It’s helping us brand Barclays with our clients, customers, future clients and future customers,” said Diamond, who added that contributing towards urban development could be a small step in repairing the battered public reputation of banks. “That’s not why we’re doing it, but if it plays a small part in improving the image of the industry, that’s good.”
Barclays was recently ranked number one in fixed-income trading on Wall Street, a shade ahead of JP Morgan. The bank is strong in commodities and currencies but remains smaller in traditional investment banking operations such as equities and corporate finance for mergers and acquisitions.
Recent reports have suggested that Barclays is considering buying a high-street bank in the US to bolster its position. Diamond played this down as “speculation”, though he admitted that Barclays wanted to build certain consumer businesses, including the credit card brand Barclaycard.
The new Barclays Centre is intended to be a rival concert venue to Manhattan’s Madison Square Garden and the bank was warmly praised for its involvement by New York mayor Michael Bloomberg and by the governor of New York state, David Paterson.
Property developer Bruce Ratner, whose Forest City Ratner group is spearheading the project, said Barclays had been a loyal backer through several delays since signing on to naming rights in 2007: “We’ll never forget how, through difficult times, Barclays stood with us through thick and thin.”
But Barclays’ brand-building efforts have not been universally welcomed. One New York City councillor, Letitia James, has suggested the bank’s involvement is unwelcome in an area of ethnic diversity because it did business in South Africa during the early 1980s despite that country’s regime of apartheid.
And some community activists have railed against the compulsory purchase of properties to redevelop Brooklyn’s Atlantic Yards. Protesters outside the ground-breaking ceremony waved placards reading “stop the rape of Brooklyn” and heralding “the destruction of Brooklyn’s soul day”.
However, Al Sharpton, a prominent black civil rights leader who stood alongside Diamond to support the new stadium, remarked: “You can’t have a baby without labour pains.”
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Lehman Brothers collapse: what the FSA’s evidence reveals
Mar 12th
Documents show the concerns held by the Financial Services Authority about the ability of Barclays to maintain a big enough capital cushion if it proceeded with the takeover of Lehman Brothers
A series of intense transatlantic phone calls between US and UK regulators made during the frantic weekend that ended with the collapse of Lehman Brothers are detailed in the Financial Services Authority’s first documented account of the bank’s demise. The account is based on confidential information it would normally not have been able to disclose.
While the FSA chief executive Hector Sants refused to give evidence in person to a court-appointed US bankruptcy examiner, the regulator submitted written evidence which shows the US authorities made repeated attempts to convince the UK to change its rules to make it easier for Barclays to take over the ailing US bank.
The FSA said under UK law it would not have been able to make its submission public but that Barclays had consented to the release of conversations it held with the UK regulator that weekend.
The documents show the concerns held by the FSA about the ability of Barclays to maintain a big enough capital cushion if it proceeded with the ambitious takeover and the worry that even if the bank could satisfy the capital requirements “the aggregate level of risk might still be unacceptable”.
But they lso show Barclays decided not to make a formal bid as Lehman’s long-term liquidity position was uncertain and the US authorities could not provide a guarantee to support Lehman’s trading positions beyond the change of US president in January 2009.
The dilemma of how to deal with Lehman’s burgeoning liabilities before Barclays could formally complete the takeover – which, under UK listing rules, requires a shareholder vote, which can take months to organise – is at the heart of the calls made that weekend, before Lehman collapsed on Monday 15 September 2008.
The series of calls – which began on Thurday 11 September 2008 – culminated in an exchange at 3pm on Sunday 14 September – just hours before Lehman collapsed – between the FSA’s then chairman Sir Callum McCarthy and Christopher Cox, the chairman of the US Securities and Exchange Commission. In the call, Cox urged McCarthy to waive the listing rule which required Barclays to hold a shareholder vote on the deal and which would have taken weeks and left Lehman in limbo unless the US authorities were prepared to guarantee its trading positions.
McCarthy made it clear that there was no precedent for such a waiver and that Barclays had not asked the regulator to consider such a move.
Just two hours earlier, at 1pm, McCarthy had told Timothy Geithner – now the US Treasury secretary but then the president of the Federal Reserve Bank of New York – that without a guarantee from the Federal Reserve Bank of New York Barclays was faced with providing an unlimited guarantee of prior and future exposures of Lehman.
The documents show that on the Sunday lunchtime the “FSA remained concerned about whether Barclays could structure a transaction which would enable it to maintain the necessary core tier one capital ratio” but that the Barclays chief executive John Varley had telephoned Hector Sants, his counterpart at the FSA, at 4pm on the Sunday to admit that Barclays had decided the deal could not be done.
Varley had told Sants of his bank’s ambition to buy Lehman on the previous Wednesday and had made it clear that the bank had three main criteria before proceeding with a bid:
• a high level of certainty of completion with the necessary support of the Federal Reserve to ensure this
• liquidity support from the Federal Reserve
• a discount on Lehman’s net asset values.
Sants stipulated that the FSA would need to know what impact the deal would have on Barclays’ liquidity and capital and that the regulator would “not countenance a drop in the Barclays core tier one capital” below the minimum set out by the regulator.
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The view: Why Hollywood still loves the banks
Mar 12th
Where is the full-scale filmic assault on the evils of global finance? Will Oliver Stone’s Wall Street sequel be it?
As well as its import for female directors and general reassurance that the forces of right do occasionally prevail, perhaps the most enduring legacy of The Hurt Locker’s Oscars landslide will be its reminder that Hollywood can actually deal with that quaint location known as the real world. Which makes it all the more glaring when other areas of it have been so conspicuous by their absence from the screen.
Call it what you like – the almost-Depression, the new economic order, the age of Lidl – but for all that we’re not quite yet eating each other in unlit basements, these remain profoundly jittery times for those of us locked into the chaos created by western banks. And yet thus far, with the exception of Michael Moore’s documentary(ish) Capitalism: A Love Story, both the banks themselves and the bedlam they unleashed remain oddly and persistently off-camera. It’s a strange omission, even allowing for the fact that plenty of projects that might have dealt with the subject in some way will, in something of a proving of the point, have been denied a place on the production line on account of the film industry’s own frantic tightening of purse strings.
But we will, of course, shortly have Wall Street: Money Never Sleeps – the open-goal sequel to Oliver Stone’s 1987 romp, now being ushered into the waiting room of pre-publicity, the trailer out in the world and the film the subject of a Vanity Fair cover story. As a takedown of global capitalism, it may not approach (or aspire to) the high dudgeon of Moore, the gist of the thing being Michael Douglas’s master insider trader Gordon Gekko finally getting himself released from jail in the autumn of 2008 and, failing to singlehandedly avert the oncoming train crash, aiming instead to repair his relationship with his estranged daughter. Essentially, what we have here is The Wrestler in Armani – with the script, as pointed out by the Independent Eye, not averse to a crafty sight gag involving Gekko checking out of prison complete with vast mobile phone (you know – like in the 80s!).
Maybe playing it for laughs shouldn’t surprise us here. After all, Gekko aside, Douglas in self-parodic mode has been called on to represent big money’s human face more than once. Witness his scowling turn as übermensch financier Nicholas van Orton in David Fincher’s inscrutable The Game – or the hambone performance as fiendish hedge fund manager Steven Taylor in garish Hitchock remake A Perfect Murder, ineptly attempting to off trophy wife Gwyneth Paltrow.
Indeed, fittingly, given as it was also the moment when the “financial innovations” that later sent us all to Cash Converters quietly began to slip into gear, it was around the same time in the sleepy late 90s that cinema last showed any productive interest in the banking system. Revisited now, Patrick Bateman’s zinger in American Psycho about the real nature of his business carries with it an even more malevolent crackle, while from the same era came Boiler Room, an engagingly pulpy melodrama about life on the furthest fringes of Wall Street that, now we know what the big boys were about to get up to, surely deserves a small footnote in history. (Certainly, either of those movies feels like a more coherent response to the ongoing crisis than, say, the epically glib Up in the Air).
Of course, what complicates all this is that Hollywood is hardly a disinterested observer when it comes to the banks. While studio heads might be seen as masters of all they survey, much of their clout in recent years came on loan from many of the same institutions who were then caught up at the heart of the crisis. For Disney, there was Bear Sterns, for Paramount Deutsche Bank, and so on, with $10bn lent by Wall Street to the studios just between 2004 and 2008. As such, you can understand the onscreen reticence to bite the hand that fed. But while suited men in a burnished boardroom discussing credit derivatives may not have the raw cinematic appeal of disabling bombs on Baghdad roadsides, it might just help save Hollywood’s soul if it admitted that banks were more than simply places in which to set heist movies.
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Sir Brian Pitman obituary
Mar 11th
Banker widely respected for his five decades with Lloyds TSB, he continued to be active with Morgan Stanley and Virgin Money
Sir Brian Pitman, who has died aged 78 after suffering a heart attack, was widely regarded as the most successful banker of his generation. In the 18 years up to 2001, as chief executive and then chairman of Lloyds Bank, he transformed it from the smallest of the original “Big Four” high street banks to one of the largest and certainly the most successful in financial terms.
This success story was not without its pieces of good fortune, nor some high-profile mistakes. But a determination to succeed, and a rejection of the aggrandising ambitions which brought his competitors down, helped capitalise on the luck and overcome the failures.
Pitman worked for the bank virtually all his adult life. He joined his local Cheltenham branch as a 21-year old in 1952, so that when he finally stepped down as chairman he was just short of a half century. The extra year would probably have meant a lot to a man who was an avid cricket fan, and no mean player in his youth. Indeed, cricket and music – he played the trombone – were his abiding passions, demonstrated by membership of the MCC as well as Yorkshire and his native Gloucestershire cricket club.
But for unfortunate family circumstances, the lifetime banker might well have followed one of these passions. His father died in a car crash when he was only nine weeks old. He won a scholarship to Cheltenham grammar school, but when university beckoned at the end of the 1940s, Pitman decided he had better go out and earn some money instead. “I felt I had been enough of a burden on my mother,” he said.
His ability was soon spotted, and he quickly moved to the head office in London. As head of Lloyds’ City office in the early 1970s, he was responsible first for backing adventurers such as Jim Slater and Sir James Goldsmith, then for helping work out how to save the banking sector when the whole edifice was on the point of collapse after the property crash of 1973.
He emerged with his reputation unscathed from this experience, just as he did subsequently after Lloyds’ loans to South American regimes went badly wrong. Pitman was in charge of Lloyds Bank International in the mid-1970s, when the supposedly rock-solid sovereign loans were made. Then as chief executive of the group in the 1980s, he had to support the rescue package and write off £1.8bn of bad debts.
The result was a then-record loss. But ironically, Lloyds’ failed international ambitions helped the determined chief executive avoid other mistakes made by his rivals and build a super-efficient domestic business.
International business had been very important for Lloyds, and historically it had held a strong position in South America. Pitman was not happy that his bank trailing should be trailing behind Barclays, National Westminster and Midland. He wanted to get bigger, and he especially wanted to expand the bank’s international coverage.
His first attempt was a takeover of the Royal Bank of Scotland in 1984. When that came to naught he turned to Standard Chartered – an exclusively international bank with a strong presence in Asia and Africa. That bid, too, was blocked, but the defeat turned out to be extremely fortunate.
The failure to internationalise, and the cost of the international bad debt, left Lloyds with little choice when its rivals were piling into investment banking during the late 1980s. Pitman avoided the temptation to follow them in buying stockbrokers – a strategy that rebounded on NatWest, Barclays and Midland. Instead he spent the 1990s pursuing a domestic strategy, creating the first broad retail financial institution with the acquisitions of TSB, Abbey Life insurance, Cheltenham and Gloucester building society, and finally Scottish Widows.
As a result, Lloyds TSB, as the bank became, overhauled its main rivals. During Pitman’s leadership its stock market value shot up from £1bn to £20bn, while Midland was acquired by HSBC, NatWest succumbed to Royal Bank of Scotland, and Barclays faltered, though retaining its independence. Unfortunately his swansong – a bid for Abbey National in 2001 – had to be abandoned in the face of resistance from the mortgage bank and opposition from the regulator. Three years later Abbey National went to a Spanish buyer, Banco Santander.
Takeovers were not the only source of growth, however. Pitman was one of the first business leaders to adopt the mantra of “shareholder value”. Long before this became the byword of every chairman and chief executive, Lloyds was measuring its success in terms of creating value for shareholders, rather than measures such as absolute size that preoccupied most bankers.
Sir Brian, as he became in 1994, did not measure the bank’s performance against his banking peers. Instead he looked for the world’s most successful companies – Coca-Cola, Walt Disney and General Electric – and drove his staff to match their performance.
His determination and high expectations of staff attracted the soubriquet “charming thug”. But he was a very private man. Unlike many of his contemporaries, he eschewed the limelight, avoiding publicity as far as possible and concentrating on doing his job at the bank.
Indeed, in many ways he was a caricature banker, taking the early commuter train from his Weybridge home, devoting himself to building the bank that had dominated his life.
Cricket remained an abiding passion, and he was an excellent golfer. But business was his life. When he stepped down as chief executive in 1997, he took several non-executive directorships, including the chairmanship of the clothing chain Next (1998-2002) and seats on the boards of companies as varied as Carlton Communications (1998-2004) and then ITV (2003-08), the engineering conglomerate Tomkins (2000-07), Carphone Warehouse from 2001 onwards, and Singapore Airlines from 2003.
When he finally resigned as Lloyds TSB chairman in 2001, Pitman became an adviser to the US investment bank Morgan Stanley, and was still involved in banking there and elsewhere up to his death. He was associated with the Virgin Money consortium with which Sir Richard Branson hoped to take over Northern Rock in 2007, and last January became Virgin Money’s chairman. Last November the Financial Services Authority made him one of five new advisers on corporate governance.
Pitman is survived by his wife Barbara, whom he married in 1954, and their children, Mark, David and Sally.
• Brian Ivor Pitman, banker, born 13 December 1931; died 11 March 2010
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Bring on the Robin Hood tax | Polly Toynbee
Mar 13th
Posted by Polly Toynbee in Business
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Everyone but the rich is outraged by the financiers’ billowing wealth. At the budget, Labour can tip the balance back to the people
The budget is 10 days away and yet already the chief secretary, Liam Byrne, appears to have ruled out any new tax rises to deal with the deficit. That is a deeply alarming prospect – and as a political stand, a blunder. If the election squeezes out any honesty about the cuts to come soon, then voters need to know the choices. The Institute for Fiscal Studies warns the likely cuts will wipe out virtually all the extra spending of the Labour era – an unimaginable blow. Unless taxes rise to mitigate that disaster. Whether or not Byrne really meant it, why was he pretending tax rises were off the agenda?
Last week Gordon Brown warned of “bumps in the road” ahead. The man who denied the looming crunch doesn’t say such things lightly. Economists warn that Britain is wobbling on a tightrope over a second recession where spending cuts would precipitate more unemployment and risk sinking the economy into a downward spiral. Mortgage lending figures just plunged, house prices are predicted to fall and export and manufacturing figures were dreadful. Growth figures for this year’s first quarter may have fallen backwards – and they will emerge two weeks before election day. Blame the January snow for lack of shopping – but the outlook could be grim.
The chancellor should be listening to the group of 80 MPs and economists calling for another fiscal stimulus to keep the economy afloat: Britain is one of only two G20 countries withdrawing the stimulus this year. To invest in housing, transport and clean energy with growth and jobs is the Rooseveltian way out of recession and debt. The cabinet debates how to use a windfall from the bank bonus tax and lower than expected unemployment. With an abyss gaping below, of course it must be put back into investment. And this is no time to rule out tax rises.
So far Labour has failed to find the words to express public outrage at the financiers’ billowing wealth while the Treasury is drained. Only weeks since launching, the campaign for a Robin Hood tax on all financial transactions has gathered extraordinary support. It hasn’t been hard, so profound is the untapped public anger at the bankers. This week the European parliament voted for it overwhelmingly – 536 to 80 – supported by the social democrats and the majority conservative EPP grouping: opponents were the ECP rump rightwingers the Tories belong to. Nicolas Sarkozy and Angela Merkel support it. Vince Cable will put it into the Lib Dem manifesto. Gordon Brown supports it but, as ever, he wants US support, which is unlikely. Backed here by some 100 organisations from Oxfam to the Salvation Army, Professor Jeffrey Sachs of Columbia University came to London this week to promote the tax, urging the EU to go it alone.
Rarely has a campaign gathered such momentum in so short a time: 140,000 have joined and more gather by the day, besieging MPs (RobinHoodtax.org.uk). In this budget, campaigners want a sterling transaction tax, to come in at once. Imposing just 0.005% on every sterling deal is within Britain’s sole control, raising £4bn. If the EU agrees a wider financial transactions tax, it would bring Britain another £4bn – one estimate is £100bn across Europe, to be used at home, in foreign aid and on climate change.
Money must be raised, but deficit panic has become a tulip mania in reverse, a group-think stoked up by those with a strong interest in no change. Frighteners about loss of credit rating are absurd: British debt is borrowed long, without need to refinance for some 12 years, and interest rates are low. But the Conservative’s City friends are good at scaring the public about imminent bankruptcy and they lean hard on the Treasury. Look at the budget demands of the Institute of Directors: cut public spending by 35%, (but ringfence cash for roads, rail and airports). Cut corporation tax on companies to 15%, reverse national insurance and 50p tax rises and cut the protections for agency workers. Make the rich richer and the poor poorer – so who are the real class warriors?
Labour has failed to cash in politically on public fury at the rich who brazenly resist fair tax. HSBC’s information has been stolen on 24,000 private accounts in Switzerland and now it frantically assures clients the contents won’t reach tax authorities: HMRC hopes it does, but where is the Labour tub-thumping? Swiss and Liechtenstein bank doors are jemmied open by theft, but why does the EU tolerate any tax haven secrecy? General De Gaulle sent troops to surround Monaco over hiding tax fraud, and cut off its water: they relented. Meanwhile “respectable” consultants with government contracts advise top earners on avoiding the 50p tax rate by describing income as capital gains, or giving interest-free loans to be written off once the Tories get in and the tax is cut. PricewaterhouseCoopers tells the Financial Times it recommends paying dividends out before 1 April – their corporate social responsibility boasts somewhat at odds with denying cash to the state at a time of national emergency.
Where is the shame? The threat is that top people will flee to tax havens, but HMRC has finally toughened rules for residency. Do the rich relish the life of Guy Hands, the private equity head of Terra Firma who loves his money more than his school-age children and parents he can no longer visit from his Guernsey refuge, avoiding that 50p?
What we face here, which Labour has yet to find words to express, is a war between those who control the money sucked up into their own pockets, against the great majority who are the losers. This is the tidal pull of inequality that Labour tried and failed to swim against. This budget is the time to tip the balance on reward and tax towards the people. The reason the Robin Hood campaign is galloping forward so fast is that everyone but the rich wants that tide reversed. This is a totemic tax: many others are needed too.
The budget should lay out the facts – the country is still in great economic peril. If the deficit were paid off by cuts alone, that means a cut of 17% in every department except schools and aid – unthinkable and unnecessary. Money must be raised: it would be a positive social good to raise it from those still making fortunes out of easy processing and skimming of our money in these hard times. Put the case to the voters and see what they think. Labour has little to fear on this. If this is class war, the other side declared it – so let’s fight it.