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Banking – The Profession That Dare Not Speak Its Name

August 7, 2012

It would be easy to jump to conclusions about the banks currently under investigation for offenses ranging from fixing the LIBOR (Barclays), money laundering in the US and Mexico (HSBC), and now breaking US financial regulations by “processing” up to $250billion of Iranian transactions over a decade through its New York operation (Standard Chartered ).

None of these banks have actually been found guilty of any of these offenses. But given post-2008 tendency to accept greed and self-interest as the default for the world’s major banks, the alleged activities of these beacons of financial integrity, most of which have strong British connections, will not have enhanced London’s reputation as a global financial centre.

Equally worrying for Britain – whose economy  over the past thirty years  has been stripped of its ability to make things by the twin depredations of globalisation and the twisted vision of the Iron Lady – is that these days we make much of our living by buying and selling. And a major part of our transactional economy depends upon the financial sector.

If the image of our banks as ruthless, unprincipled, bonus-hunting shysters is not bad enough, accusations of incompetence make matters even worse. Step forward RBS, who have just announced a provision of $200million against likely compensation to customers affected by their recent computer crash. Those likely to be in for a payout most likely include the guy who spent the weekend in a remand prison because he couldn’t access the cash for his bail payment.

Today Lloyds TSB took a bow. An employee responsible for online security was today convicted of defrauding the bank to the tune of nearly $4 million over a three-year period. Red faces all round in the compliance department.

My own little example of banking incompetence concerns my corporate bankers in Bahrain, one of the international banks I refer to above. I don’t really know why I refer to them as “my bank”. They are their own bank, and nobody else’s.

Not content with imposing from out of the blue a charge for the privilege of banking with them equivalent to around £900 per annum (that’s $1500 in greenbacks), they announced a few weeks ago that they would be switching off their current internet banking service and replacing it with a new one – at a cost, of course, while the current system is “free”.

The published deadline was July 20th. I resolved to make the change when I got back to Bahrain in mid-September. But for one reason or another it is turned out that I will need to do some banking while I’m away.

So a few of days ago I decided to see if the service had really been switched off. I duly logged on and made a transfer of funds to a supplier – a week after the scheduled shut down. I then went to the head office corporate desk to find out what was doing on, and how I could carry out normal banking transactions while I was away without the online banking service. How, for example, would I be able to monitor my cash balances?

The guy at the desk, who performs the same function for TWLB customers as Geoff Boycott did  for the England cricket team – po-faced stonewalling – appeared mildly surprised when I told him that I could still access the service. He disappeared for fifteen minutes to consult with his colleagues, and returned with the news that the service was due to be switched off until the end of the month – ie today. It seems that they are staggering the shutdown.

So how can I make transfers when I am abroad, I asked. By fax or email? No fax, no email, he said. The only way you can do it is by couriering the necessary forms to us. Or by using the normal post, he added with what I took to be an ironic smile.

I ran out of reserves of choleric indignation with these guys some while ago. Call it outrage fatigue. So I smiled and said I would think about Plan B.

When I got back to the office, I thought of a wizard scheme. Why not call the folks who run the internet banking service and ask them to schedule my shutdown later, so that at least I could get my transactions out of the way and enjoy a quiet break without having to think of banks and all their foolish works?

So I called them. And from them I got a third version of the truth. It seems that internet access under the old system will be extended until the end of September. In the manner of the Pharisees, I asked the same question three times: so I will definitely be able to bank online until the end of September? And three times the lady said yes.

This was the answer that suited me best, so I documented the conversation with an email to myself – just in case they change their minds yet again.

The bank in question may be the one of the world’s largest, but three versions of the truth from three different sources offer compelling evidence that it doesn’t know its arse from its elbow, as we Brits like to say.

And if it can’t get its act together in matters so small and insignificant, why should I have any confidence that it knows what it is doing further up the food chain, while it and its competitors are stashing away sums equivalent to the GDP of a small country in the likelihood that they will have to pay out those sums in fines and compensation?  

I feel so much better now that I know that the grand a year I now have to pay them for allowing them to hold my cash on an interest-free basis is helping to pay for their misdemeanours and incompetence.

Of course the big picture is that my business is irrelevant. These guys have long forgotten why banks came into existence in the first place – to look after people’s money, and use that money to lend to reliable customers so that the wheels of commerce could be oiled. The simple things I ask of them – to make a few payments on my behalf, keep my cash safe and send me the odd statement – are the corporate equivalent of looking after Granny’s pin money.

You get the impression that they feel life would be simple if they didn’t have customers – at least not small ones. How can I compete for their attention when Mexican drug barons, Iranian money launderers and the great derivatives casino offer such tempting opportunities for corporate and personal enrichment?

I feel sorry for the thousands of decent and industrious employees of these banks who are as much the victims of the foolishness of their superiors as are the customers and shareholders. Not only are their jobs at risk in the constant rounds of downsizing, but they have taken over from tax inspectors as being the least likely to reveal their occupation at parties for fear of the sniggering contempt that their disclosure might induce.

Are the banks beyond redemption? I’m not sure the current generation of leaders actually cares. After all they have already made their money and can safely retire to their townhouses and country estates, leaving others to deal with the chaos. Extreme wealth, I’m told, is a pretty effective balm for wounded pride.


  1. Banks really are the curate’s egg. Why hasn’t anyone ever started a bank that serves its customers rather than vice versa? It’s so obvious that it must have been tried – why did it fail?

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