BBB - Brian Bollen's Blog

Modern Banks and the Art of Gross Impertinence

I have just had the most extraordinary phone call from someone purporting to be a representative of my bank (Tracey, I think she said, in Milton Keynes). Without being unduly superficial, I have to say that she sounded like a Tracey.

In effect, she wanted to know what I plan to do with some money that is coming into my account. I told her in no uncertain terms that I found the question grossly impertinent, and that it is no business of hers, or her colleagues elsewhere, what my financial plans are. I can only imagine what the reaction would be if I were to telephone her back and ask her what SHE plans to do with the proceeds of her next salary payment. I would be told, in no uncertain terms, to mind my own business. Why should it be any different the other way around? Why do banks assume, because they act as temporary custodians of one's cash, assume a proprietorial attitude towards it? I find it grossly offensive that they act in this way. I know it's not an isolated incident; another bank did exactly the same when my daughter had a sum paid into her account recently.

Data protection? Client confidentiality? Banks cite these as unassailable reasons not to tell you about your own affairs when it suits them, but ride roughshod over them when it suits them. Apart from any other consideration, how can I be certain that Tracey was indeed who she claimed to be? And finally, to rub salt into the wound, as I am currently overseas, and Tracey called me on my UK mobile, it cost me good money to be outraged...

Mandelson For Prime Minister: One Step Closer?

Returning to an earlier theme about the possibility of Peter Mandelson might enter 10 Downing Street as the bona fide key holder rather than a welcome guest, I was intrigued by the change of the law that has taken place to enable life peers to resign their peerage, and enter the House of Commons. Whatever can the good Lord have meant by that? Older readers will remember that Alec Douglas-Home resigned his peerage (a real one, not a life one) after becoming Prime Minister in October 1963, and won a by-election in Kinross (the constituency more fully known as Kinross and Western Perthshire was abolished in 1983). Which poor Labour MP, I wonder, might be required to make the ultimate sacrifice, and lay down his expenses claims for the greater good? Suggestions on a postcard please...

More Power To The Bank of England's Elbow? When it can't tell you how long it takes to clear a cheque?

Letter to the Financial Times, July 21, 2009

Dear Sir,

I have been reading with some amusement, occasionally turning to bemusement, about the proposals to change the role of the Bank of England. I personally believe that it was philosophically right to give the Bank independence on setting interest rates, even if in practice that independence has gone in all but name as the current UK Prime Minister tries to be Chancellor of the Exchequer, Bank Governor and Foreign Secretary as well as fill his principal role.

I am alarmed, though, by Mr George Osborne's proposal to award virtually all responsibility for financial supervision back to the Bank of England. I have no real principled objection to the proposal, only a purely practical one.

The last time I spoke to anyone at the Bank of England, an exceedingly rare occurrence in nearly 25 years as a financial journalist, not one member of the staff there could tell me how long it takes to clear a cheque.

If it can't handle the complexities of one of the most basic banking operations, how can it be expected to carry out the multi-faceted role that Mr Osborne envisages for it?

Just a thought.

Yours sincerely

Brian Bollen

Peter Mandelson for Prime Minister?

I'm not a gambling man myself, but earlier today (June 8 2009), out of a sense of curiosity, I asked a number of bookmakers for odds on Peter Mandelson taking over the role. 

The quote from PaddyPower, 20/1 against, looks surprisingly short to me, and I can't begin to think what kind of mischief a determined troublemaker might make with it. 

'Leading bookmaker opens book on Peter Mandelson succeeding Gordon Brown as UK Prime Minister' would make an interesting headline in any newspaper at the minute. Quickly followed by: 'The odds are shortening on Peter Mandelson moving into 10 Downing Street as the new Prime Minister'. Followed by: "The UK's leading bookmakers have stopped taking bets on whether Peter Mandelson will be the next Prime Minister; it is now being viewed almost as a certainty...'

I just thought I would pass this on; so that if such stories start popping all over the place in the next few days, I will at least be able to claim that I was one of those to latch on to the possibility. 

Incidentally, they are also quoting odds of 3/1 for the 2012 Olympics not to start on 27th July 2012. That seems VERY short to me. Do the good people at PaddyPower know something we don't???

Hazel Blears: Go Straight To Jail?

Forgive me please if I exhibit a lack of understanding of basic English law. But if Ms Hazel Blears, who performs some peripheral function in what passes for the UK Government, is planning to hand over a cheque for around £13,000 to Her Majesty's Customs & Revenue in respect of capital gains tax previously unpaid, is she not by definition making a very public admission that she evaded such tax in the first place? If so, she has committed a crime. Tax evasion, unlike tax avoidance, is illegal.

In which case, should not the police arrest her and interview her, and the Crown Prosecution Service begin building a case against her, and the governor of Holloway Prison begin preparing a cell? Somehow the thought of the personage who is increasingly known as Squirrel Nutkin sewing mailbags is strangely cheering.

And if an act that is illegal somehow falls within the rules of the Houses of Parliament, does that suggest that we have finally moved through the looking glass? Any last vestige of credibility that the so-called Mother of Parliaments had is finally gone. Hercules would have trouble finding a river deep and fast-flowing enough to clean out the UK branch of the Augean Stables!

Is The Royal Bank of Scotland Having A Liquidity Problem?

Is The Royal Bank of Scotland having a liquidity problem? The reason I ask is very simple. I asked it for my money back - all £57.77 of it - in the summer of last year, and I am still waiting, despite three further requests, the last of which was made last Friday (April 17 2009). I have still not received my money despite an assurance that the matter would be resolved.

The request dates back to the fraudulent removal of more than £3,000 from my RBS credit card last July. To give RBS credit, the matter was addressed and the money reinstated very very quickly. I instructed that the account be closed, and asked for the small credit balance to be returned. But I am still waiting. As a creditor who is also a taxpayer and a shareholder, I think I am being very shabbily treated.

Which is why I ask: is The Royal Bank of Scotland having a liquidity problem?

It is also demanding payment from my daughter of money that it says she owes on a credit card account that was closed several years ago, and which she insists she doesn't owe, but is considering paying just to get it off her back. Trouble is, they will not provide proof of the alleged debt unless she pays it £10 for duplicate statements, the originals of which she says she has never seen, so we are at something of a stalemate. Much of the supposed debt seems to comprise its arbitrary charges, late payment fees and over limit fees and such like, which could continue mounting ad infinitum.

'Customer services' staff have given her conflicting information, including an opinion that no, she doesn't owe the money, which was reversed just hours later with a statement that included the accusation that she was lying about a change of address some months ago. In mounting frustration, bordering on desperation, I contacted the press office, a maneouvre which journalists will report usually brings a satisfactory response. Not so far it hasn't. The press officer who returned my call discussed the matter with my daughter on Saturday afternoon, promised to look into it, and ring her at work first thing on Monday morning (April 20). Again, she is still waiting. And in the meantime, my active imagination has gone into hyperdrive.

Is The Royal Bank of Scotland so desperate for cash that it is resurrecting old accounts where it can claim in a manner that out-Kafkas Kafka that there is a debt, that it then retrospectively levies charges on, and demands settlement of, banking on the hope that people will cave in and pay money they do not in fact owe? If so, this is nothing less than state-sponsored extortion. But then, what do we realistically expect from a government that is planning to double the country's debt in just a few short years, whose representatives claim reimbursement for charges to watch adult entertainment and bathplugs, and whose police forces seem to regard themselves as much above the law as does their boss, the Home Secretary?

If any readers have had any similar problems with The Royal Bank of Scotland, do feel free to contact me on brianbollen@mac.com.

PS To give credit where credit's due - something of a rarity during the recent banking crisis - RBS did eventually return my money and waived the amounts they said my daughter owed. But they have still not offered an explanation, or an apology, or provided proof of the alleged debt. And I only got this far because I contacted the head of media relations and asked for his help. My efforts to get satisfaction as an 'ordinary' customer got us precisely nowhere. Good luck with any RBS problem; you'll likely need it. Don't get me started, by the way, on GE Money and the crooked car dealers it helps finance...

Just Exactly Why Can't Banks Be Allowed To Fail?

Letter to the Financial Times February 28 2009

Dear Sir,

Your editorial in today's newspaper (Saving HM Royal Bank of Scotland) makes several references to the presumed immunity of banks to normal commercial pressures (too big to fail, the banks must be saved, clearly cannot be allowed to fail). Would you please explain why? Over the past 18 months or so, I cannot readily recall reading a reasoned justification of that presumption, yet it underpins all efforts to confront the crisis.

If Woolworths and Zavvi and MFI and other businesses can be allowed to go bust, why not banks? As a provider of a range of media services to large financial institutions, and to publications that depend on selling to large financial institutions, I have a vested interest in the status quo ante being reinstated, and soon, please. But I still cannot find any real justification why banks are a special case for which the laws of financial gravity must be repealed.

Yours sincerely,

Brian Bollen

NEWS FLASH: THE SPEAKER IS ON THE LAUNCHPAD

BBC Two has announced that it will begin transmitting a new reality series about learning how to speak in public.  The Speaker has been scheduled for broadcast in April on BBC Two, airing twice a week for eight one-hour episodes. As an active member of Toastmasters International in the UK, I believe it will spark an increase in learning how to speak in public. All our clubs are happy to receive new requests from would-be members, and welcome them to our clubs as guests. If you would like to enquire, please contact me, Brian Bollen or Margaret Bollen, on 01908 234952, or via email: brianbollen@mac.com, or margaret.bollen@virgin.net. 

Comedienne Jo Brand heads the judging panel of The Speaker, BBC Two's search for Britain's best young speaker. Alongside fellow judges, performance expert and RADA tutor Jeremy Stockwell and motivational speaker John Amaechi, Jo travels to every corner of the UK to find the country's most talented young speakers in the BBC's new, primetime entertainment series.

Featuring 14 to 18-year-olds, The Speaker will see tough-talking teens, class jokers and shy, sensitive types go head to head as they learn to talk publicly and passionately about the things that matter to them.

Executive Producer Kieron Collins said: "The Speaker is a fresh, 21st century take on the traditional public speaking competition. Our teens are a disparate, diverse group of youngsters but they are united by their passion and their desire to speak out on what matters most to them.

"Britain's youth often get a raw deal in the media. This show redresses the balance; it's about communication, confidence and giving British teenagers an opportunity to be heard.

"Each week, our mentors and judges give a masterclass in a different aspect of speaking, so there will be plenty for people to learn at home, too. Whether it's going for a job interview, preparing a business presentation or getting ready to make your father-of-the-bride speech, there should be something here for you."

Long established for her stand-up comedy, Jo Brand is a leading light of the entertainment world with regular appearances on panel shows and undertaking a range of challenges from Question Time to Mock The Week.

This is the first time she has acted as a judge and she will be drawing on all her performance experience to seek out those young speakers who have a talent for getting their message across and who really connect with their audience.

Having appeared on stage with his family's vaudeville show from the age of four to 17, it could be said that Jeremy Stockwell was born to perform.

From playing the ukulele to tap dancing and then on to stand-up comedy, devising theatre, improvisation and mime, Jeremy is one of nation's leading drama coaches, working as a RADA tutor and behind the scenes on top TV shows such as How Do You Solve A Problem Like Maria? and Strictly Dance Fever. So who better to help the speakers improve their performances, use their body language effectively and inspire their audiences?

John Amaechi is a multi-faceted speaker having travelled globally to speak on topics wide-ranging and influential. He is a champion of young people and passionate about their rights and needs in an ever-changing world. John started his career as the only Brit to make a successful American basketball career in the highly competitive NBA. Whilst playing he undertook a degree in psychology and, since his retirement from the game, has focused on offering training, development and mentoring to a range of corporate and young people's projects as well as commentating on basketball for the BBC at the Beijing Olympics and acting as an Ambassador for London's 2012 Games. John will be aiming to fire up the speakers, encouraging them to speak with passion, commitment and personality.

On The Speaker, Jo, John and Jeremy travel the length and breadth of the UK, putting youngsters through their paces at the regional auditions. Only a select 20 make it through and then the contest gets underway in earnest with a different challenge and a different communication skill to tackle each week.

Helping the finalists learn and rise to the weekly challenges is a group of guest mentors who offer expert tutelage and inspiration to draw on.

The four guest mentors are: Queen of the Dragons' Den, Deborah Meaden, who coaches the speakers in the art of improvisation; Earl Spencer, who invites the speakers to Althorp House where they explore the craft of information giving; journalist and newscaster Kate Silverton who coaches them in the nuances of storytelling; and Tony Blair's former chief strategist and speech writer Alastair Campbell, who demonstrates the subtleties of persuasion.

Each week, their speeches are evaluated by the judges and their mentor. Then the three speakers who don't meet the very high standards set have to go head-to-head in a final speaking challenge, The Last Word.

One hopeful youngster is then eliminated from the contest. All of this builds to one final showdown at the end of the series in which the three best candidates make the speech of their lives.

Launching closer to transmission, The Speaker will have an extensive multiplatform offering encouraging adults and young people from a wide range of backgrounds to submit speeches to the shows website, and to share their speeches and ideas with each other. There will also be a whole host of practical advice and downloadable tips for everyone to use plus a behind the scenes look at the series.

The Speaker is a factual entertainment series produced by BBC Entertainment Manchester and due on air in April 2009. The Series Producer is Ian Carre and the Executive Producer is Kieron Collins.

The series will be 8 x 60 minutes, and will transmit on BBC Two in April 2009.

Have we overdone it?

Have we overdone it? Has the doom and gloom gone far enough?Should we stop mocking people who say they can see green shoots of recovery? Are we misinterpreting economic fundamentals to be the end of the world? Is it just that we have become so used to bright financial sunshine that we have overreacted to the shafts of financial darkness we've been seeing recently?

Having identified The Royal Bank of Scotland as a possible buy at 60 pence a share, even more attractive at 50 pence, and a must buy at 41.70 pence, I have been rendered speechless as the share price has continued to fall. This is the bank that financed my first car at age 17, but only after interviewing me and my parents in person, on the premises, did they agree to do so. I grew up with RBS as a model of sobriety. In fact, it was while standing in the banking hall of the Airdrie High Street branch patiently waiting for the return of my 'pass book' in the mid-1970s that I began to formulate the career plans that would see me join Midland Bank International (RIP) on graduation from Glasgow University in 1979.

Compared to Airdrie Savings Bank, RBS even then was slightly racy, with daylight actually allowed into its branches. But compared with its Babylonian counterparts south of the border it epitomised good old fashioned Scottish virtues of thrift and conservatism. The notion that it is now virtually worthless is one I struggle badly to accept. It must, for heaven's sake, have cash in the till equivalent to 20 pence a share. Whatever happened to fundamentals?

I have lived through several economic cycles, starting with the Barber Boom in the early 1970s, and seen a number of disasters, starting with the secondary banking crisis of 1973-74, which most people don't even know happened, because we did not have 24/7/365 news coverage to panic us all. 

I was working on the Southern European region of MBI when Banco Ambrosiano went belly-up. Virtually on the day I joined the Financial Times Group Johnson Matthey hit the news. I wrote about Latin American debt rescheduling for five years. I edited the FT's mergers and acquisitions through the last great slump of 1989-92. 

I launched myself as a freelance in the teeth of the recession in 1993. I edited a monthly newspaper for ING Barings in the post-Leeson months, being one of the few people to benefit from the Barings collapse. We've had LTCM, Russian flu, Asian contagion, SARS. And now the credit crunch. In short, I think I've seen it all before. Only the sheer scale and speed of recent events has been different.

So the question I am asking is: have we overdone it? There is little doubt that many investment banks are in complete disarray, and a strong feeling, at least for the moment, that the investment banking model is broken. 

There is little doubt, either, that many of their most senior staff, who have spent almost a lifetime making money out of taking risks with their employer's and other people's money, are in stout denial, unable to recognise that there might be some other way of making money. 

How about the old-fashioned way, executing a risk-free transaction for a client as an agent, in return for a fee, rather than as a principal looking to make money from taking risk? Or giving independent advice? To a financial fundamentalist like myself, who has never properly understood or approved of complex derivatives, it seems self-evident that we should go back to basics. I would bet a pound to a penny that the Airdrie Savings Bank isn't ridiculously overleveraged and exposed to toxic assets.

I think RBS will inevitably be transformed into as near a replica of its former self as it is possible to create: a sound high street retail-based bank running a matched book in a narrow range of products. But the process involved in reaching that state will involve the break-up of a vast organisation, generating fees for investment bank advisers of one size or another, and creating new business opportunities as the transformation unfolds. 

The money raised from sales will go to creditors, and the UK government, and then eventually to 'ordinary' shareholders if there is any left. It has to be worth more than 20 pence a share, doesn't it? Even the Bank of Credit & Commerce International in the end returned more than 100 pence in the pound, if I recall correctly. Surely RBS can't be in a worse state than that?

I believe we have overdone the doom and the gloom. To me, it seems inconceivable that virtually every single asset of every single major bank is almost literally worthless. And remember, in whose interests is it for banks to shock and awe us with balance sheet busting bad debt provisions? The new managements will benefit from writing off as much as possible against 2008 figures, so that even if they do more than break even this year, and become slowly profitable next, they can be hailed as geniuses.

Lowering expectations is something that Britain has become an expert at. I suspect it's happening again, and the wool is gently being pulled over our eyes. As the debts that have been provided for, in such prodigious amounts, largely continue to perform, at some point banks will have no option but to begin writing them back on to the books. 

 We saw it in the 1990s with Latin American debt, for instance. And what happens then, as what is effectively new capital suddenly appears from nowhere, adding to the walls of money provided by governments? The banks will be overcapitalised, and overcapitalised banks are like drunken sailors on shore leave with three months' pay in their pockets.

In resolving the current crisis, banks and governments are sowing the seeds of the next one. As surely as they have overdone it as the pendulum swings towards austerity and frugality, they will overdo it again when it swings back towards cheer and prosperity.

Short Selling Post-HBOS: Is A Ban Unthinkable?

I have been writing about securities lending and short selling for a number of years. I have never pretended to understand the nuances and subtleties of the arguments for or against either practice, let alone their everyday practice, but in the extraordinary circumstances of recent times I have been giving it rather more thought than I normally might.

In the current climate, I think a case is mounting for the banning of short selling. I am not saying that I am in favour of such a ban, or against it, but I find myself, as a journalist who has been writing about the international financial markets for nearly 24 years, wondering not so much why short selling is allowed in the first place, but why any shareholder would want to facilitate the destruction of value it can bring about by lending the shares the short seller needs.