Morning:
8°c
The instinctive reaction of many people on hearing of falling bank profits will be to cheer. Overpaid so-and-sos, they've had it far too easy for too long, ripping us off, closing branches, blah blah.
Unfortunately, the banks will take it out on someone and it's likely to be their customers. Already hit with high charges, we can expect more of the same.
They will find any way they can to hit us with raised fees. The desire to "monetise" - the City buzz-word meaning to extract a return - everything that moves will be intense.
They've got shareholders to pacify and dividends to maintain - and whatever they say, for banks the investors always come first, ahead of staff and clients. The justification is that they're the owners so they must. The cynic in me says they're also those who determine whether the management stays or goes. Shamefully, Britain has seen no senior banking heads roll, despite the slew of negative announcements. They will do their utmost to ensure that situation continues.
Small businesses will struggle to get the loans they need. Funds may still be available - but at a price. If past form is a guide, the banks will attempt to justify the costs they impose. So, in order to borrow, a personal visit to the bank manager will be required as opposed to speaking to an anonymous employee over the phone. That meeting will be paid for by the potential borrower.
The banks will raise their game in personal banking. Highlighting the individual care and services they provide is a good way of increasing their bills.
What Sir Fred Goodwin, chief executive of RBS, calls "mercy killings", the consolidation of smaller, weaker banks, will also become more frequent.
While there is unlikely to be an exact repeat of the Northern Rock disaster, a pattern is beginning to emerge which sees the troubled operator bailed out, either by the Government in the case of the Rock, the cash-rich sovereign wealth funds which went into Barclays, the pension funds which propped up the HBOS rights issue, the major life companies that rushed to the aid of Bradford & Bingley or the foreign bank - Santander - that took out Alliance & Leicester.
None of these saviours were British banks. Indeed, the latest, Tesco, which has agreed to assist RBS by paying £950 million for the bank's 50 per cent stake in Tesco Personal Finance, is a supermarket. That may be the end game - having made such a series of cock-ups the bankers are shoved aside by those who think they can do a better job, namely the supermarkets.
