‘Volcanic ash disruption – what are the banks doing?’

April 23, 2010 at 2:20 pm

For travellers stranded abroad because of the volcanic ash disruption it is an expensive time. Many have paid thousands of pounds to get back to the UK, either by hiring a car or paying hefty fares on coaches, trains and ferries. Others are having to fund hotel and food bills for extended stays in resorts which may not be covered by their insurance policies. So what, if anything, are the banks doing to help their customers?

The British Bankers’ Association says that banks will be sympathetic to their customers’ plights but that there is no specific guidance regarding exceptional circumstances such as these in the Lending Code by which banks must abide. At the end of the day if your bank does not judge you able to make the repayments then they will not provide extended credit.

Their advice is that holidaymakers should contact their bank to see what help can be given and that banks will deal sympathetically with any request on a case by case basis. Many banks are, for instance, waiving ATM fees and fees for late payments on credit cards.

This is what some of the big names are doing:

  • RSB/Nat West – fees waived for cash withdrawals abroad and credit limits extended where appropriate
  • HSBC – fees waived for using debit or credit cards at foreign ATMs (whether or not customers are affected by the ash cloud)
  • Lloyds TSB – cash machine fees waived as well as fees for going over credit limit or for late payment
  • Barclays and Barclaycard – will consider requests for extension of credit limit or overdraft

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‘Lloyds set for lucrative 2010’

April 16, 2010 at 3:46 pm

Just a few weeks after Northern Rock announced a belated return to stability, Lloyds Banking Group has revealed that it expects to make a profit during 2010, a drastic turn around in its fortunes. The news prompted an immediate 10% rise in Lloyd’s stock value, up to 62.03p per share.

Lloyds lost more than £6 billion last year, after bosses overestimated the value of its latest acquisition, Halifax Bank of Scotland (HBOS), which was bought by Lloyds at the beginning of 2009. The bank had already been rescued with government funds in 2008, alongside the Royal Bank of Scotland, Northern Rock and Bradford & Bingley.

The taxpayer still claims a 41% share of Lloyds, but experts have warned that the bank cannot currently afford to pay back its government loans. Financial advisers have predicted an arbitrary 2011-2014 date for Lloyds to return the £17 billion that was used to stop the bank imploding in 2009. The BBC was more pessimistic, citing 2015 at the earliest.

Lloyds will continue with cost-cutting measures this year, beginning with the sale of the TSB brand, a number of Cheltenham & Gloucester branches, and the totality of its stake in Intelligent Finance, an internet bank. Lloyds hopes to earn £13.5 billion from this ‘capital raising’ scheme, which came into effect at the beginning of November 2009.

Bank chief Eric Daniels was delighted with Lloyds’s unexpected return to form. He said that in the first 10 weeks of the year "the group’s trading performance has been strong and we are pleased with the group’s performance.”

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‘Northern Rock sheds recession moss’

April 1, 2010 at 2:35 pm

Northern Rock, a bank that came to typify the collapse of the financial sector in 2008, has cut its losses by more than 81%. The firm lost £257m last year, compared to £1.36bn two years ago. Bosses will now share a £13m bonus fund, as recompense for pulling the bank out of insolvency.

In September 2007, Northern Rock became the first bank in a century to experience mass withdrawals, otherwise known as a ‘bank run’. Five months later, after the public emptied Northern Rock’s vaults, the firm was scooped up by the government, who split it into two distinct entities – a ‘good bank’ full of money, and a ‘bad bank’ full of unpaid mortgages and ruined assets.

The good bank, which is called Northern Rock Plc, will be sold to the highest bidder later this year. The sale will allow the bank to return to private ownership, and help repair the £23bn hole in Gordon Brown’s money box. Northern Rock Asset Management PLC, the bad bank, will begin life anew as a mortgage provider, whilst continuing to recoup losses on existing loans.

Northern Rock has already increased lending, but the bank has seen no change in the number of people saving with the branch, suggesting that consumer trust is still very low. However, customers who are still struggling to pay back their Northern Rock loans have been offered a more ‘friendly’ approach to repossession.

The bank has laid siege to 1,600 fewer properties than in 2008, after the number of customers in arrears jumped to 23,000 people, approximately double the figures from two years ago. The firm endeavours to pay back half of its own loan within the next four years. The other £11.5bn could take an extra 16 years to materialise.

In related news, from the 24th May the government will cease to guarantee all deposits in Northern Rock accounts, meaning that money lost in any future crises will not be making a speedy return to the balance sheet.

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