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http://blogs.independent.co.uk/openhouse/2008/10/barclays-preens.html
Barclays preens while others face reality
By Sean Farrell, business correspondent
Monday, 13 October 2008
When the Government said last week that banks taking part in its rescue scheme would have to support lending to small businesses and home buyers and limit executive pay many in the City thought this was just window dressing to justify bailing out the financial system. How wrong they were.
In taking stakes in Royal Bank of Scotland, HBOS and Lloyds TSB, the Government has laid down that the banks will actively market loans to homeowners and small businesses at 2007 levels and give extra support to people struggling to repay mortgages. There will also be no cash bonuses this year and no cash dividends until the lapsing of the preference shares it will buy. The banks will also have to constrain balance sheet growth in line with either GDP growth or average balance sheet growth for UK banks over the last 20 years.
No wonder Barclays has pushed so hard not to take part in the Government's scheme. John Varley, Barclays' chief executive, could barely conceal his glee this morning. Those to whom capital support was made "forcibly available" will be "more constrained in their strategic flexibility than those who remain independent", he said.
The nationalisation of RBS and HBOS sets the seal on the rise of the Scottish banks that started with Bank of Scotland's hostile bid for NatWest in 1999. Back then BoS and RBS were small but highly regarded companies that held their bigger English rivals in some contempt. Both gained the national networks they craved, with RBS beating its rival to get NatWest and BoS merging with Halifax. But temptation proved too strong and both went on growth splurges in corporate banking. With Barclays preening itself, the pain must be immense.
Barclays preens while others face reality
By Sean Farrell, business correspondent
Monday, 13 October 2008
When the Government said last week that banks taking part in its rescue scheme would have to support lending to small businesses and home buyers and limit executive pay many in the City thought this was just window dressing to justify bailing out the financial system. How wrong they were.
In taking stakes in Royal Bank of Scotland, HBOS and Lloyds TSB, the Government has laid down that the banks will actively market loans to homeowners and small businesses at 2007 levels and give extra support to people struggling to repay mortgages. There will also be no cash bonuses this year and no cash dividends until the lapsing of the preference shares it will buy. The banks will also have to constrain balance sheet growth in line with either GDP growth or average balance sheet growth for UK banks over the last 20 years.
No wonder Barclays has pushed so hard not to take part in the Government's scheme. John Varley, Barclays' chief executive, could barely conceal his glee this morning. Those to whom capital support was made "forcibly available" will be "more constrained in their strategic flexibility than those who remain independent", he said.
The nationalisation of RBS and HBOS sets the seal on the rise of the Scottish banks that started with Bank of Scotland's hostile bid for NatWest in 1999. Back then BoS and RBS were small but highly regarded companies that held their bigger English rivals in some contempt. Both gained the national networks they craved, with RBS beating its rival to get NatWest and BoS merging with Halifax. But temptation proved too strong and both went on growth splurges in corporate banking. With Barclays preening itself, the pain must be immense.
