Why the Banks are Still in Such a Mess!

[Guest fountainhall]

Having lived in several parts of the world, I have maintained several bank accounts. Until recently, I've had little reason to complain about the services, even from banks involved in hefty government bailouts. That changed yesterday when I was in Hong Kong!

 

First Citibank. Sure, this is a small point, but it’s indicative of the importance of the customer – or lack thereof. All I needed was the bank’s Swift Code. Not finding it on the internet, I called the customer hotline around noon. As always, I was prepared to wait a few minutes after getting through the automatic menus. Then I was surprised. Within 30 seconds, I actually heard a human voice. But it was only to tell me that there was an extra large volume of calls, and could she please take my mobile number so someone could call me back within 2 hours!! When I told her I had a flight in the evening, she guaranteed “less than 2 hours.” In the time that took, she could have easily responded to my question. When I boarded the flight 9 hours later, I was still waiting!

 

Second, the Royal Bank of Scotland. To stay afloat, this bank received around US$75 billion from the UK taxpayer. I have had an account in the UK for around 4 decades. Unfortunately, I have never been able to use internet banking with them since they had a stupid system which required a computer disc only operable with PCs. But I’d never had a problem phoning and talking to staff; nor making infrequent non-urgent transfers as I’d fax instructions and follow them up with originals by mail.

 

A month ago, I knew I would have three rather large payments coming from UK sources. Rather than pay the TT costs for all three (approx. US$130), I instructed the companies to remit the funds to my RBS account. I then faxed the bank 3 weeks ago to inform them of the exact amount of the 3 incoming payments and that I would soon require them to remit one payment of all three deposits in sterling to my account at HSBC in Hong Kong. I resent the fax 10 days ago, just so there could be absolutely no doubt about my requirements.

 

Having had emails from all three sources confirming the transfers, I sent a DHL courier to the RBS bank manager on Wednesday last week with my written instructions and an original signature. (Incidentally, my name, registered address and another original signature were also on the airway bill on the front of the package).

 

According to the DHL tracking system, the courier pack was received early on Friday afternoon UK time. When I returned after dinner that evening, there was a phone message from the bank manager. She asked me to return her call urgently as she needed to speak to me about my request. No other information was provided. I called, but got a recorded message saying, as I expected, the bank had closed. So I made a note to call her on Monday from Hong Kong. This I did – or at least I tried to do.

 

Instead of the bank, for the first time I got some regional call centre. No problem, the young man said, “I‘ll put you through. I just need the sort code of your bank.” That detail was in Bangkok, but I knew my account number and the exact branch address. Well, this seemed to be a bit of a problem, as the minutes ticked over. Eventually, he came back on the line. “Sir, I am sorry, but that lady is on holiday today!”

 

So this lady who needed to speak to me urgently and knew the urgency of my instructions, had had the courtesy to tell me neither the reason for her call nor that she would not be in on the next working day. Yet again, no problem, I was told. He’d connect me to another lady at the branch.

 

Mary then came on the line. No, nothing could be done until the following day because the manager was away for the day! Slowly I explained the whole issue. She then decided to check the file. No problem, yet again. All she needed to do was call me back with some security questions. I said why not now? But the bank had to call back. Before I could tell her I was in Hong Kong and not in Bangkok, the phone went dead!

 

After 10 minutes, I managed to get through to the branch again. “Oh sir,” she exclaimed. “I tried to call you back but there was no reply.” As I began to lose my patience, I explained I was in Hong Kong and gave her my Hong Kong number. “But I cannot call you in Hong Kong. The bank’s regulations are that we must call the customer on the number registered with the bank.” Yet again, I went through the entire situation from that first fax (“yes, it is in the file”). And I stressed again that the payment had to be made “tomorrow at the latest”. So, this time she said she’d speak to the security people and call me back. No problem with a Hong Kong phone this time, I noted.

 

The end result was that the “rules”, about which I had never at any stage been informed and which they could easily have pointed out to me had they bothered to reply to either of my faxs, could not be changed. So, had I not in fact been returning to Bangkok last night, I would have had to make a special round trip just for one lousy security phone call to the number registered with the bank! I was both astounded and appalled.

 

And the questions they wanted to ask? How long have I had the account? Do I have any direct debits? Where are the funds being transferred? That’s all! 30 seconds of my time! On my next visit to the UK, that account is being closed and my business goes elsewhere.

[Guest]

There is a lack of competition in the UK banking market.

Many brands have been swallowed up into RBS, Santander & worst of all LloydsTSBCC&GHalifaxLeedsBankofScotlandBirminghamMidshires.

Two of these three have majority shareholdings by the British government, after the recent Gordon Brown disaster.

 

The new government needs to show some judgement and break the 2 large banks into at least 3 different entities each, before they sell of their controlling interest.

[Guest fountainhall]

There is a lack of competition in the UK banking market.

How do you rate HSBC in the UK? Is there any bank you would recommend?

[KhorTose]

How do you rate HSBC in the UK? Is there any bank you would recommend?

 

We closed 153 bank last year in the US, and 43 this year. Total US bank Information closure information since 2007 can be found here.

http://www.calculatorplus.com/savings/advice_failed_banks.html

 

The good news is only small banks seem to be falling out.

[Bob]

The good news is only small banks seem to be falling out.

 

Well, that might have something to do with the fact that the federal government bailed out the failing big banks. The bad news was that the US Treasury, through the TARP program, paid out (loaned) 245 billion dollars to help the banks. The good news (which never seems to get that much reported) is that the US Treasury has already been repaid ALL of those funds (in fact, it's projected that the US Treasury will make a profit of about 20 billion dollars on the bank loans altogether).

 

The US banking system is actually in good shape now other than they're still reluctant to lend and they are paying miniscule interest on deposits. But, on the negative side, the big investment banks really have not been called to task for all the damage done due to their worthless investment schemes and, given the political and economic climate, likely will never have to substantially answer for the untold damage they caused to the entire system.

[Guest fountainhall]

The good news (which never seems to get that much reported) is that the US Treasury has already been repaid ALL of those funds (in fact, it's projected that the US Treasury will make a profit of about 20 billion dollars on the bank loans altogether).

The Hong Kong government also made profits as a result of its actions during the Asian economic crisis. In August 1998, speculators shorted the Hong Kong stock market in a major attempt to drive it way down, even though its Financial Chiefs had warned they would use its US$60 billion currency stabilization fund to ensure they did not succeed.

 

As the concern intensified, the Hong Kong Monetary Authority announced it would purchase as many shares as necessary in the stocks making up the Hang Seng index to maintain the index value. The speculators were not convinced and mounted their attack. Most pundits in Hong Kong thought the government would get scared after committing around US$1.5 billion. In one of the most amazing days I can remember, it actually purchased US$15 billion in shares. The speculators withdrew with blood on their balance sheets. The government, on the other hand, eventually ended up with a massive profit.

[Bob]

As somewhat noted, I have no problem with the financial bailouts as the governments involved had no other choice. And, in the panic of the situation, I think that they handled it about as best as could be expected. Thanksfully, the loan program turned out okay in the end.

 

Yet, I also believe in accountability and there ought to be a lot of people (the ones who sold worthless investment papers and derivatives, those that ripped off their own banks with excessive salaries and bonuses while the banks were going down the tubes, etc.) sued for civil damages and, in some cases, jailed. Unfortunately, too many governments don't pay much attention to this type of "white collar crime" so to speak.

[Guest fountainhall]

I also believe in accountability and there ought to be a lot of people (the ones who sold worthless investment papers and derivatives, those that ripped off their own banks with excessive salaries and bonuses while the banks were going down the tubes, etc.) sued for civil damages and, in some cases, jailed.

I am appalled that so many 'bankers' who so eagerly and knowingly gambled with other people's money - and in so doing not only caused utter misery for hundreds of millions around the world but brought our world to the brink of a financial collapse - should remain unpunished. Special prosecutors should have been appointed to indict the Chairman and CEOs of the relevant institutions and to identify those who 'bent' and 'broke' the regulations in pursuit of their own selfish gains.

 

I remember the interim head of AIG - an honourable man, by all accounts - suggesting to a Congressional Inquiry that he could not fire such individuals. They were the only ones who knew the complex intricacies of the webs they had weaved. As such, they were the only ones who could unravel it. Governments must ensure that such shenanigans can never happen again without draconian penalties for those involved.

[Bob]

For some reason, bankers have been elevated to some level of respectability that too often is absolutely laughable in my opinion. If you work for a bank and wear a three-piece suit (perhaps with the watch and chain?), the public for whatever reason has come to view these people as capable and intelligent people. In my view, too many of them get far more respect than they have ever deserved.

 

Before I get started, I should note that there are a lot of very good bankers out there; unfortunately, however, there are also many bad ones. A few examples underlying my attitude:

 

1. If I wanted a job fixing your toilet, cutting your hair, spraying for bugs at your home, building you an outhouse, selling your home, or a myriad of other everyday tasks, I'd need a license from a state. That license surely doesn't guarantee that I'd be an expert or even honest but at least the licensing statutes (often accompanied by test requirements)are designed to make sure the person has some minimal knowledge and is at least cognizant of the various rules and laws governing the given profession. But, lo and behold, what do I need to be a loan officer, trust officer, or even President of your local (or mega) bank? Not a damn thing - other than somebody telling me I'm the new trust officer, loan officer, or whatever. I've known trust officers who I've sometimes wondered if they could spell the word "trust."

 

2. Different rules seem to govern what are called standard banking practices. For example, let's say you gave me some of your money to take care of or hold in trust for you and then let's say I did two things with that money: (1) Half of it I used to buy stock in a company I owned and (2) The other half I just took to use for whatever purpose I wanted but, to be "fair", I did sign an "IOU" (with interest provided, of course)payable to you down the line. In both of those cases, I would have committed a felony in any US state (although the name of that felony might be called something different in many of the states, the gist of all charges would be embezzlement or fraud). Yet, now let's say you take that same money to your local bank to be managed by its trust officer. Invariably (not every bank does this but too many do), some of your money without your prior consent will be used to buy some of the stock of that bank and some of your money will end up in CD's of that bank. If you really analyze what happened there, it's really no different than the two felonies I committed as noted above. Yet, too many consider these activities just standard banking practices and nobody bats an eyelid.

[Guest fountainhall]

On my next visit to the UK, that account is being closed and my business goes elsewhere.

A quick follow up to my opening post in which I ranted about the treatment I received from 2 banks. One was the Royal Bank of Scotland. In most such cases I shall register a complaint. In this case, I wrote directly to the Chairman of the bank, a long letter that was for the most part dispassionate and factual, although I did call its actions disgraceful.

 

To wrap up the tale, I received a letter from the Chairman's office apologising for the "incident" and informing me that a full enquiry had been instituted. That, I reckoned, would be the end of the matter. So, imagine my surprise when I received a 3-page letter yesterday going through my complaint and eventually confirming that the bank should have handled it better. As a good will gesture, it had deposited £1,000 into my account!!

 

As I have written on other threads, it can often pay to complain - provided it is factual and not a long rant! I guess I'll have to postpone transferring my business to another bank - for the time being!

[Guest]

Contrary to what's stated above, bankers are mostly intelligent people. What they lack is morality.

 

The investment bankers who often cause all the trouble award themselves huge short term bonuses when it's going well and when it goes wrong, there's no clawback. The problem belongs to the shareholders and government.

 

Now I wish I'd been smart enough to get a job with huge bonuses for short term performance. Perhaps I could already be retired in Thailand.

 

We need a few little changes to the banking industry.

 

1 Any portion of salary above the first £70,000 per annum should be subject to clawback provisions if the bank requires any form of bail out within 10 years.

 

2 Under the current shareholder structure, the underlying OWNERS of the banks don't even get to vote on matters at the AGMs.

I'll explain. Large portions of the banks are largely owned by the man in the street, in the form of his pension fund investments, his investment trust's etc. Now this fund will often be managed by some Oxbridge graduate, who will not want to vote out his Oxbridge chums who are running the bank.

Somehow, the whole structure needs revising so the underlying investor gets to vote on bank policy. Perhaps the fund managers should be required to poll the membership on matters regarding AGM votes.

 

3 Some form of concerted global intervention is required to eliminate short term practices and excessive salaries from the banking sector. Of course this is a little risky considering the lack of competence in many governments.

[Guest fountainhall]

3 Some form of concerted global intervention is required to eliminate short term practices and excessive salaries from the banking sector. Of course this is a little risky considering the lack of competence in many governments.

In general I agree that there needs to be a radical revision of banking practices and remuneration. I have argued above that a considerable number of those banking executives who got the world into the crisis in 2008 should be behind bars. They were effectively criminals gambling with billion dollar chips made from the hard-earned cash of vast numbers of people. When they realised - if they had not done so at the outset - how toxic that gamble was, they came up with other products to reduce their own risk exposure yet still further enriching themselves.

 

However, that's rehashing an old argument. Perhaps one positive outcome of the present crisis in the US and Europe will be a more radical overhaul of how all banks are permitted to operate. And hopefully part of that will be a worldwide co-ordinated overhaul rather than country by country. But, as z909 says, many governments are simply financially inept. If regulators do not understand what they are regulating, the systems of national governance need to be placed under the microscope. And the chances of that happening . . . ? As likely as HeyGay spending the rest of his life with the lady boys in Obsessions, I reckon

[Guest fountainhall]

At last, a little glimmer of light in the form of some sense amongst top bankers. The two leaders put in charge of Britain's Royal Bank of Scotland, 82% state-owned thanks to unbelievable shenanigans, have both waived their annual bonuses.

 

First the Chairman, Sir Philip Hatton, voluntarily gave up a share bonus estimated to be worth £1.4 million. Thereafter, following an almighty tug-of-war involving the media and politicians, the Chief Executive has finally waived his right to a bonus of almost £1 million.

 

These payouts would have been peanuts to failed US bankers. When are we going to see them voluntarily give up their mega bonuses, I wonder?

 

http://www.guardian.co.uk/business/2012/jan/29/rbs-stephen-hester-waives-bonus

[Guest]

I do oppose excessive rewards for mediocre performance.

 

However, somewhere out there we can probably find the banking equivalent of a Warren Buffet or Alex Ferguson, who might just outperform sufficiently to turn RBS around and get it off the taxpayers books at a big profit.

Paying that person a few million based on performance would be money well spent, but with the current political interference RBS will struggle to headhunt any proven talent.

[Guest fountainhall]

Some more action by the British government. The former CEO of the Royal Bank of Scotland who led the bank into its disastrous expansion, is now plain Mr. Fred Goodwin. A committee of senior civil servants has stripped him of the knighthood he was awarded in 2004 "for services to banking”.

 

Normally an honour is only taken away if someone has been guilty of a criminal offence punishable by longer than three months in jail, or has been stripped of their professional status by their regulator.

 

Goodwin has suffered neither fate, but had been sharply criticised for excessive risk-taking in a report prepared by the Financial Services Authority in November into the RBS collapse.

He now joins an ignominious list of individuals stripped of their honours, including Robert Mugabe, the president of Zimbabwe, and Anthony Blunt, who spied for Russia.

 

 

http://www.guardian....oses-knighthood