‘Barclays workers could strike’

July 27, 2009 at 6:33 pm

Barclays is bracing itself for the possibility of strike action by its workers after it announced plans to close its final salary pension scheme. The move has infuriated staff members, and the union Unite has said that 92% of its members have requested a ballot on whether they should take industrial action.

It has now been decided that the ballot will be held in August, and if a strike is voted for then the industrial action will take place in September. This is likely to be a huge frustration for the bank, but many workers will feel that it is justified. 17,000 staff will be affected if the final salary scheme is shut down, meaning their pensions will not be linked to their salaries, so it is clearly a cause of huge upset.

Derek Simpson is the co-leader of Unite, and he called Barclays plans “unacceptable” and promised that members will not just accept it if the bank “rides roughshod over their retirement security”. 25,000 staff are represented by Unite at Barclays, over a third of the bank’s employees in the UK, so if they go through with the strike it will be catastrophic.

The move has come around in the first place because of what the chief executive of the bank, John Varley, has called an “untenable” situation with a £2.2 billion deficit. Closing the scheme could save the bank in the region of £150 million each year, and this would supposedly be better for everyone.

But the workers clearly don’t agree, and even more annoying for them is that the final salary benefits of the 1,500 most well-paid investment bankers in the US will not be affected.

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‘Text banking now available at Lloyds’

July 23, 2009 at 3:26 pm

First it was telephone banking, then came internet banking. But the next big thing to hit the consumer banking market could now be text banking. Lloyds TSB has just released a new service that allows its customers to use their mobile phones to get details about their bank accounts, and if it is successful then other banks will surely be offering the same service in the near future.

It has been called the ‘Balance on Demand’ service because customers are expected to use it to get details of their bank balance. They simply have to text ‘BAL’ followed by the last four digits of their bank accounts into their phones and send it to the number provided, and then Lloyds will send them back their bank balance instantly, as well as details of their some of their recent transactions.

There will also be other features available on the service. Customers will be able to transfer money between accounts and receive warning messages when their balance goes below a certain amount, although these have to be set up separately with some involving downloading applications to the phones.

The catch? It’s not free. As well as the normal text charges that users will be charged by their mobile companies, the majority of Lloyds customers will have to pay £2.50 for the service. The only customers who will not have to pay the charge will be packaged-account holders, or those who have accounts that also provide extra services.

This has led the service to be criticised by some who feel that the banks are charging money unnecessarily for a service that users can get free through the internet, and that it is geared more towards helping the bank’s profits than providing a necessary service to customers.

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‘One-in-six prime mortgages now in negative equity’

July 21, 2009 at 3:58 pm

There is bad news for the UK mortgage industry and for thousands of mortgage holders as ratings agency Fitch has just reported that negative equity is becoming an increasingly serious problem across the country.

The agency has just announced that negative equity is now affecting one-in-six of all prime mortgages, or 15% of prime mortgages by value. A prime mortgage is a mortgage that comes with a lower interest rate and where the person taking out the mortgage is more likely to be able to afford the repayments because the mortgage amount is equal to about three years’ income.

What this means is that one-in-ten property owners across the UK are currently in negative equity, a startling figure that reveals the true extent of the problem.

Unfortunately, it is also set to get worse. If house prices continue to fall then Fitch is predicting that the number of prime mortgage holders to go into negative equity will continue to rise, and will jump from 15% this year to 34% next year.

The worst-affected bank is Northern Rock, with 32% of its specialist mortgages affected, although Bradford & Bingley and Alliance & Leicester have also been badly affected in their specialist divisions.

As far as mortgage holders go, Sunderland was rated the worst area in the country with the highest rate of negative equity, with Northampton also being badly affected.

The director at Fitch, Ketan Thaker, said that the problem is that people whose properties are worth more than their mortgages “have options available to them” that people in negative equity do not. They can sell their property or re-mortgage it, for example, or even release equity to help in cash-strapped times.

However, it should also be noted that although being in negative equity reduces the options for those people who find themselves in debt, it does not mean that they are more likely to default on their mortgage payments.

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‘RBS boss’s

July 21, 2009 at 3:58 pm

If you thought you’d seen the worst of the outrageous bankers’ bonuses then you could be in for a shock. It was recently revealed that new RBS boss Stephen Hester has just been offered a pay deal which could see him ending up with £15 million in incentives over the next few years.

This is an incredible figure, especially as the bank is now controlled by the state, and it is sure to provoke the fury of politicians and the public alike. The bank was bailed out by £20 billion of taxpayer’s money, and it was hoped that it could now set an example, but apparently that is not going to happen.

Although the condemnation is expected to be far reaching, there are some people who have said that if Hester increases the share price significantly then it will actually be a huge benefit to the taxpayer and he should therefore deserve to get an enormous bonus.

But others have said that his main role is to increase lending rather than raise the share price, and in this sense he should not be rewarded with such a huge incentive. And even those who agree that it is a tough job that needs to attract a top candidate with large incentives have suggested that the timing is a bit insensitive and is not likely to go down well with the public.

Whatever one may think of the vast bonus, it is going to be a bitter pill to swallow for the huge numbers of staff who have been made redundant in recent months, including the 4,500 who have already lost their jobs at RBS, and the many more who have been made redundant in the finance industry.

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‘Mortgage lending rises steadily’

July 10, 2009 at 12:48 pm

The mortgage industry has taken a real battering over the course of the recent recession, with lending dropping enormously. However, signs of recovery were beginning to show through recently with the revelation that mortgage lending has just risen to a 13-month high.

Other findings of note in the statistics released by the British Bankers Association included the fact that in May the lending rate by the biggest banks in the UK rose to a 16% annual rate. This came as the number of mortgages for house purchases approved during the month reached 31,162. This figure was also up by 15.8% compared to May last year. It was also revealed that the value of the loans has gone up on average over the past half year.

However, it was not all good news. Despite the higher level of approvals during the month, it was also revealed that new mortgage lending only grew by £2.3 billion, which is actually the weakest rate of growth for a single month in the last eight years. On top of that, gross mortgage lending also dropped to £7.7 billion, which is also the lowest level in the last eight years.

The majority of lending to other businesses was also down in general, and in fact the only business lending that had actually gone up was to public bodies.

So despite the initial good news, it actually looks like things still have a long way to go in the mortgage industry before a real recovery is on the cards.

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‘Harder questions’ for UK banks

July 10, 2009 at 12:47 pm

Alistair Darling has refuted claims that British banking regulations were the impetus for the global credit crunch. The Chancellor, who recently apologised for expenses claims on his second home, has moved to implicate bank executives as the miscreants behind the current recession.

Gordon Brown has endured almost constant humiliation over the past two years. After assuming office during one of the worst storm seasons in British history, the Prime Minister was forced to contend with the collapse of the banking sector, and now, in 2009, with the media furore surrounding MP expenses.

Few Britons would be surprised to find New Labour hunting for scapegoats on the backbenches. However, with almost 2.3 million people lining up outside the Job Centre, the axe had to fall on somebody.

Mr. Darling emphasised the need for tighter, more intrusive regulations, but urged bankers to be vigilant to developments in other countries: “Regulators cannot only look at their own backyard and hope to understand what is happening.”

Across the Atlantic, US President, Barack Obama has pledged to upend current banking regulations. Mr Obama has proposed greater protection for mortgages and credit cards, and tighter controls on regulatory agencies. He insinuated that the current banking system had been built upon a “pile of sand.”

Whilst the changes remain controversial, Alistair Darling believes that the US is trying to imitate the British economic system. Of course, if the Chancellor "is" hiding behind hogwash and hokum, the next election may prove fatal for Gordon Brown and New Labour.

Did your local MP claim for a wooden spoon, a duck house, or a church donation? The BBC has released a postcode search feature that should satiate your curiosity.

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‘Stress tests see how banks would cope with worst recession since WW2’

July 3, 2009 at 1:12 pm

The FSA (Financial Services Authority) has carried out a series of stress tests on UK banks in a bid to see how they would cope if the economic situation continued to deteriorate. To do this, the FSA assumed the conditions of a recession that was the worst since World War II. Part of the reason behind the testing of the banks was to measure how well they would be able to withstand severe losses in the near future.

Many of the big names were tested, including Royal Bank of Scotland, Lloyds and Barclays, and a few of the harsh hypothetical conditions that they were tested on included:

  • an unemployment rate of 12%
  • a 50% drop in house prices
  • a 6% drop in gross domestic product
  • a 60% decline in commercial property prices

The FSA based the tests on hypothetical five-year models, but it wanted to make clear that these were not actual forecasts of where it saw the economy heading, but rather just a selection of worst-case scenarios to see how far the banks could handle the conditions. However, some economists have said that the conditions were actually quite similar to what could become the reality in the near future.

There has been a certain degree of secrecy surrounding the results of the tests, and the only bank to reveal its results so far has been Barclays. The FSA has stated that it will not release the results of any individual bank because the results will be used to determine their decisions surrounding future regulation. This has frustrated a lot of people working in the financial sector who want more details of how individual banks performed.

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