For Sale

A 39% stake in a failing bank......Lloyds Banking Group.

 

It is sold as part of a package with other failed, useless and very risky banks, namely Halifax and Birmingham Midshires. 

 

It comes complete with branches in every major town in the UK and years of loss making misery guaranteed. 

 

Bought for £20.5 billion in 2009 and looking to sell for the same price. 

 

One far from careful owner. 

 

Strictly no time wasters as that is what the current owners are. 

Too Much Co-Operation

Lessons Still Not learnt 

 

The story causing most confusion and concern to the financial sector at the moment is the Co-op Bank's proposal to buy 631 Lloyds branches that would effectively triple the size of their banking operations. 

It was doing this with the blessing of the Treasury and Chancellor of the Exchequer, who last year hailed the Co-op's expansion as creating "a new challenger bank" that would give "real choice to customers and supports the economy".

What's more (and crucially), the regulator (Financial Services Authority) did not object to the Co-op Bank’s expansion.......which all looks a little odd now.

 

And here's why......

 

Where a bank lends money either to a personal customer or a business, it must set aside money in case it's never repaid. The more riskier the loan / mortgage, the more it must set aside for a contingency buffer. Simple and effective.

 

The problem is……Co-op Bank has just realised that it has not set aside enough cash......to the tune of around £800 million. Or to put that another way, it can't manage the banking operations it has currently (before it trebles in size) and it may need a bailout out.

 

So why oh why did Lloyds, the Financial Services Authority, the Treasury, the Chancellor of the Exchequer and the Co-op board all agree that they were the best buyer of Lloyds's branches just months ago without looking at the balance sheet to gage their current effectiveness? Shameful.

 

Is it just me or are there still too many clueless idiots working in the banking sector and the regulation of it? 

 

 

Taxing Stuff

One of the big stories of the week relates to Amazon and Google. They have collectively made sales of £6.4 billion or as I like to call it £6,400,000,000 (for dramatic effect). Yet, they paid tax of only £6.6 million. That's an equivalent tax rate of 0.1%!

Never one to miss an opportunity to jump on the back of a popular news story and earn some popularity points, MP's flocked in anger and uproar.

Google and Amazon are not the story here. The continued procrastination of Westminster is the real ‘nuts and bolts’ of the issue. MP's can be as angry as they want at companies manipulating the tax system......but they have the power to change it and make it transparent and easier to regulate. It really is that simple. But that would take effort and thinking outside of the box......not something they have ever been top of the class for.

Is some joined up thinking really out of the question Westminster?