Trafford Business Connect

March/April 2014 TRAFFORD BUSINESS connect
29
banking
Taking a view of the banking sector
Having worked in the banking
industry for more than 30 years I
have seen many changes to the
operations and ethos of this sector.
I originally joined Williams & Glyn’s
when I left school and was thrust
into the world of high finance. Those
were the days when banks opened
at 9.30am and closed at 3.30pm and
cash machines only distributed £20
at a time. However, we all survived.
Today is very different, the crash
of the financial sector in 2008
highlighted that whilst significant
progress had been made in terms of
products and services, this all came
at a cost.
The Banks had changed their
culture from service to sales. Staff
were encouraged to cross sell to
their customers, which meant they
achieved their sales targets and were
paid bonuses. However, this culture
caused the banks issues as they fell
foul of this practice due to potential
mis-selling in some but not all cases,
which has resulted in the hedging
scandals, the payment protection
issues and now the question of how
many businesses were unnecessarily
placed into administration. Massive
contingencies have been made
for compensation to both past
and current customers as we see
investigations progress.
We have seen both Barclays and
Lloyds Banks return to profit recently
and both have chosen to pay a large
proportion of this to their staff as
bonus payments.
Antonio Horta-Osorio, the Chief
Executive of Lloyds Banking Group,
will accept a £1.7m all-share bonus
for 2013 as the taxpayer-backed
lender reported a pre-tax profit
of £415m. The admission came as
Lloyds reported its full-year results
for 2013, which showed a statutory
profit of £415m, compared to a loss
in 2012 of £606m.
As well as Mr Horta-Osorio’s own
bonus, Lloyds confirmed it had put
aside an overall staff bonus pool
worth £395m, equating to an average
payout to each of the bank’s staff
of £4,500.
Barclays is not owned by the taxpayer
and their boss, Anthony Jenkins, has
chosen to give up his bonus of £2.7m,
for the second year running.
Lending is still a bone of contention
with most individuals and businesses.
The Banks are continuing to have a
very cautious approach to providing
any facilities, be it loan, overdraft,
mortgage or working capital. The rise
of the alternative route is apparent
with crowd funding, business angels
and pay day loans becoming very
popular. The amount of bad debt
on the Bank’s balance sheets
particularly from property related
businesses during the recession has
made them wary of offering even
secured facilities to established
businesses, and therefore virtually
discounting any support to start ups.
However, from this chaos we have
seen many new businesses created
due to redundancies, and people
have invested their money and faith
in themselves.
Family offices are also providing
seed capital for start ups and people
like myself who are ex-bankers are
using their expertise to support new
and growing businesses to succeed
and finding capital from various
sources for all manner of projects,
large and small.
Sue Aldridge
CLM Capital Ltd
www.clmcapital.co.uk