Courtesy of Finextra. More than 100,000 German credit cards have been recalled by banks following a suspected security breech at an unidentified Spanish payment processor Continue reading The ugly side of globalisation | security breach in Spain impacts German credit cards
A general thread that has been building for me for some years now is highlighted in a few things I have seen recently. The thread is my hatred of advertising and in particular online advertising. For me it lies in the same category as junk (paper) mail except worse. I can simply throw paper junk mail out as one package, so it is not intrusive. Online advertising is horribly intrusive because it is pervasive. I use lots of things to ensure my online experience is minimally interrupted by ads In 2004 people were asking about blog business models. Now it … Continue reading The coming media crisis and parallels with the financial crisis
There has been much talk of systemic risk since the financial crisis hit. I see it more as a crisis of banking and banking confidence, and the debate on systemic risk is critical because it exists because of Government intervention and protections, implicit and explicit. The latest from Lord Turner of the FSA is a discussion paper, that reviews systemic risk and provides as good a discussion on that topic as I have seen. What it particularly interesting is how the insights raise the prospect of penalising globally integrated banks over nationally independent organizations with higher capital requirements. Things just … Continue reading On Bank Systemic Risk, International Integration and Capital Requirement | Turner Discussion Paper
Gillian Tett voices her concerns here, based on background discussions with bankers. We are not out of the woods yet, despite the equity markets. Rally fuelled by cheap money brings a sense of foreboding | FT Yet, if you talk at length to traders – or senior bankers – it seems that few truly believe that fundamentals alone explain this pattern. Instead, the real trigger is the amount of money that central bankers have poured into the system that is frantically seeking a home, because most banks simply do not want to use that cash to make loans. Hence, the … Continue reading “Rally fuelled by cheap money brings a sense of foreboding” | ft.com
Martin Wolf makes a persuasive argument that regulatory division between financial utilities and risk takers (casinos in his words) is impossible. Why curbing finance is hard to do | FT Martin Wolf First, the border between utility and casino banking is impossible to draw. For Mr Kay, the utility is the payment system and protection of deposits. This would leave all lending – including to households and businesses – inside the casino. For those in the US who hark back to the Glass-Steagall Act, the distinction is between commercial and riskier investment banking. … … Mr Kay’s distinction is clear, … Continue reading Is the utility bank/ risky bank model workable?
In the regular Monetary Policy Report the Bank of Canada keeps their focus on a low interest rate environment right through 2010. On inflation the view is mixed … The main upside risks to inflation relate to the possibility of a stronger-than anticipated recovery in the global economy. A stronger global recovery would be transmitted to Canada via trade, financial, confidence, and commodity price channels. There is also the risk that Canadian domestic demand could be more robust and have a more sustained momentum than projected. On the downside, a stronger-than-assumed Canadian dollar, driven by global portfolio movements out of … Continue reading Bank of Canada joins other Central Banks is calling for caution
I thought this a particularly succinct view of the next 10 years view prospects for banks and their business planning. The view from New York | Buttonwood/ Economist The bearish view came from Josh Rosner of Graham-Fisher. Mr Rosner was one of the first analysts to spot the potential havoc caused by the interaction between subprime mortgages and structured products like CDOs. He thinks the economy will not rebound as it did in the 1980s. Demographic trends are not as favourable (the baby boomers were entering their prime earning period in the 1980s; now they are retiring); while credit card … Continue reading A succint comparison of exiting 1980 recession, and 2009 recession
It is with some relish I see Mervyn King agreeing with me from last February. King calls for break-up of banks | FT – Oct 2009 Mervyn King, governor of the Bank of England, called on Tuesday night for banks to be split into separate utility companies and risky ventures, saying it was “a delusion” to think tougher regulation would prevent future financial crises. The Great Unwinding | part 1 of 3: 2009 – 2012 | The Bankwatch – Feb 2009 This will effectively split the financial community into two distinct sets: financial utilities – significant operating restrictions in light … Continue reading Mervyn King calls for banks’ break up per “The Great Unwinding” post in Feb
In this piece at the NY Times, Krugman points out the obvious that despite profits, Banks’ retail operations have not recovered. The large profits we are hearing about are all centred in the Investment Banking units. I would add that it will take more than a turnaround in consumer confidence and reduction in unemployment. It will also take time to work through the de-leveraging impacts of consumer desire to reduce debts and save more for future crises while this one is firmly in peoples minds. For everyone who is still working they know of someone who is not, and that … Continue reading Bank retail operations have not recovered despite profits
In the banking business I think we all understand the point and motivational benefit of bonuses, however this story from a Bank that is almost a Government Department (70% government owned) takes insanity to a new level, if you are a taxpayer. The sheer size of the bonus pool of £4 billion is astounding. That represents just under 10% of the banks equity! I mention the government ownership because while we are used to investment bankers paying out such bonuses, one would have thought that their government overseers would have insisted on that £4 billion being used to boost capital, … Continue reading RBS pays out 10% of equity to investment bankers
