I posted this thread on Twitter this morning:
I cannot be alone in being bored by hearing and seeing Nigel Farage in the media talking about the future of banking as if it was all about him, when that is anything but true. A thread...
I also do not much care that Nat West decided to close his bank accounts. I do not think this was woke capitalism. I think it was the result of perceived risk, ineptly appraised. That is a minor issue.
That said, the boss of Nat West was straightforwardly wrong to brief the BBC on his affairs. Bankers do not have that right.
But none of these matters are remotely close to the issues we really do have with banking in this country right now.
The big issue is that there are far too many unbanked people in the UK. As I have said time many times, that is the result of choices by the banks, not the unbanked. The banks will not provide what they consider to be unprofitable services, whatever the need for them.
They are now reinforcing this message by closing branches wherever they can, denying the more vulnerable and elderly with a service they need even if many of us (me included) have not been in a bank for years.
And, most critically, not only did we bail out the banks in 2008, but right now we are paying them over £40 billion a year in interest on the balances gifted to them since 2008 by the government that they never earned.
To describe the banks as exploitative would, in that case, be far too kind to them. They are stripping society bare for their own gain, and that of their bosses. They are parasitical, at best.
But does that mean Farage is right? No, it does not. This is not woke capitalism. This is hardcore neoliberalism. This is about profit above all else. This is about money ruling the roost. This is about total indifference to society at large.
What to do about it? That's obvious. If there are unbanked people in this country and banking is now essential to participate in society and banks will not meet that need then the state must.
It is not very hard to work out that what is needed now is a state-owned and run bank.
That bank would need a branch network. NatWest could, of course, have provided that at one time. The opportunity was missed. Now it will have to be built.
The good news is that every High Street already has premises ready and waiting.
There are also loads of trained people who would like to work in these branches. They have been made redundant recently by banks.
What this bank should provide are all the core services that a bank does, with none of the frills.
And that bank should seek to be the outlet for the savings services that this government provides. There is, after all, already around £300 billion saved with NS&I which is already a state-owned savings bank. That too should become part of this bank.
I am certain that if this bank offered straightforward products of this sort it would work.
And if it also offered savings products linked to objectives the government and people share - like climate, investing in health and education, or the region where people live - it would be even more popular.
Importantly, as this bank was state owned people would trust it. After all, no one now banks anywhere except for the fact that the government guarantees all bank deposits up to £85,000.
And most people have what might at best be described as a difficult relationship with their existing bank. They would be willing to move.
There is one other thing that this bank could do. It could be the place where central bank digital currency could be trialled if one was needed.
In other words, such a bank could be at the heart of the banking revolution that we need if the curse on the UK created by its banks and bankers is to be lifted.
That is what we need.
What we do not need is more from Farage. He is, as ever, acting solely out of self-interest.
This is a moment to think big and about what the country needs. He doesn't do that. We could. We could have a state bank.
That is what a courageous state would deliver right now.
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If I were to add two ideas.
Firstly what about using the Post Office, in effect a new Girobank.
Secondly there is the wider issue of Government services moving ‘on line’ so what about some sort of ‘Government Service Access Point’ where you can do things like talk to HMRC, apply for a passport, make a benefits enquiry etc all in one place? OK, you might need an appointment for some of these things but it can be done.
Paul Seddon has done some very interesting work about public service and its well worth a read.
Unfortunately, the Post Office is also disappearing
Your idea of a govermment access point is very good
Re the Government service access point, to some degree this is already in place. Just that it is not all joined up.
For instance you can apply online for a passport.
https://www.gov.uk/apply-renew-passport
Just go to https://www.gov.uk/ for all the services available.
I don’t know if you can actually talk to somebody on line, but most of the online service is already there.
I think the idea is to have it face to face, not offline
The Government owns 39% of NatWest; it only needs 11% more; and it owned around 84% after the Crash; so it has already blown a great opportunity, just so the Bank could make profit-for-nothing out of central bank reserves (that are only neded because the Government knows it can’t trust the commerical banks); and big fat bonuses-for-nothing for a management that, as we have seen, fails in its customary, expected obligations to customers.
We already know nothing material will change. Heaven forfend that the opportunity of the commercial bankers to be subsidised by Government, and make rip-off, easy profits from both the state and the public should ever end under a Conservative neoliberal Government. Can we even guess what waffle Starmer would offer if elected PM, while he takes the easy way out; doing nothing of substance to change the current obscenity that is British commercial banking.
I am not sure a digital currency is required, if there is a State retail bank. Depositors will have the security over deposits only the sovereign Government and currency issuer can provide.
Extending the argument to funding renewables, Vattenfall (Swedish state-owned power company – funny how other countries have state-owned power companies)
has cancelled the development of a UK off-shore wind farm. Vattenfall CEO stated “Although demand for fossil-free electricity is greater than ever, the market for offshore wind power is challenging. Higher inflation and capital costs are affecting the entire energy sector, but the geopolitical situation has made offshore wind and its supply chain particularly vulnerable. Overall, we see cost increases up to 40%.”
Specifically: The offshore wind industry has seen cost increases up to 40% which in combination with increased cost of capital puts significant pressure on all new offshore wind projects.
A state bank could make loans at any rate it saw fit & keep in mind mosrt farms a funded through a 80/20 debt/equity ratio – thus the cost of debt has a big impact. Of course both the BoE and ECB don’t give a stuff. Lagarde head of ECB raised rates again this week. Pathetic stuff.
Agreed
We desperately need a democratically accountable national bank that only provides retail banking services.
The only serious problem I can foresee is that in a democratic system it is at some point likely to fall into the hands of the Tory party.
I shudder at the thought of my accounts falling into the hands of a bunch of arrogant, vindictive and venal incompetents like Cameron, Osborne, Johnson, Truss and Sunak.
As the inquiry into undercover infiltration of any non-right wing public or charitable organisation that does not support the Tory party has uncovered, the British Establishment will stop at nothing to maintain its grip on this country’s throat.
Maybe the Greens will take up the idea of a state bank?
I have banked with the Co-op Bank and Smile for decades now, and since the management debacle and sell off a few years ago have kept up with the effort by campaigners to keep the bank to its ethical standards. I fear it’s a lost cause however, and would welcome an alternative that would give me basic banking facilities. I am told there are other “ethical” banks available, and would switch if I felt confident, but inertia and other priorities have kept me from investigating them.
Why it is not perceived as obscene that banks and energy companies are profiting in the £billions at the expense of their customers is a mystery to me.
Farage has successfully spun his own personal gripe with Coutts and its parent NatWest into a media storm. Because it is all about him.
He has a kernel of a point – the communication with him was poor, the internal documents are not pretty (and no doubt complied by someone who did not think carefully about data protection and subject access right), and bankers should not be speaking to the press or other third parties about their clients (without client consent – even if the client is bleating all over the press) – but at the heart is the simple question of whether a bank as a commercial organisation is entitled to pick or drop its customers, or whether customers are entitled to demand services from someone who does not want to provide them.
There is the law around discrimination and protected characteristics, and regulatory rules alongside that, but within that regime, a bank can set its commercial criteria for accepting and continuing a customer relationship. That judgment will include issues of risk. Political views and other public pronouncements are not, as far as I am aware, a protected characteristic unless it reaches the level of a philosophical view. And I am not aware of any regulatory rule that says a bank must continue to provide services to an existing customer if it wants to take the commercial decision to end that relationship.
I expect the onboarding and offboarding decisions at Coutts go something like this. Does the person meet our commercial criteria (that is, will there be sufficient funds deposited, invested or borrowed, to give us a sufficient large commercial return)? If yes, are there reasons why we might nonetheless decline the business? And if no, are there reasons why we might nonetheless accept the business?
The published papers show the bank was aware that association with Farage might carry reputational and other risks, and there were also risks associated with terminating the existing relationship. They were willing to continue the relationship while he had a mortgage, but did not want to renew the mortgage, and then the relationship did not have enough commercial value for them. At that point, the default is to ask him to leave unless there are good reasons to keep him.
They missed a trick is not lining up a replacement arrangement with NatWest.
Farage seems to think freedom of speech means he can say what he likes without any consequences. That is not the case. Everyone is entitled to form opinions based on what he says and act accordingly.
Thanks
Much to agree with
It is rare that I would feel sorry for a bank. However, Anti-money laundering rules may mean they are required to suspend banking activities for certain individuals. They may be required to keep secret the reason for their decision so as not to impede an ongoing criminal investigation. How can they sqaure that with a requirement that they must be transparent about the reasons for suspending or closing accounts?
Having said that ther msut be a requirement that everyone is entitled to basic banking facilities (in fact I thought there was, with basic accounts). This https://www.theguardian.com/commentisfree/2023/jul/26/forget-nigel-farage-and-coutts-banks-have-been-locking-ordinary-people-out-of-accounts-for-years suggests there is no obligation on banks to provide a basic account. Presumably a state bank would fulfill that obligation. Amongst other things.
Farage did not want a basic bank account
IMO Natwest had the right to say no to him for anything else because of the risk he created.
Much as everyone here may grind their teeth, the upshot of this blunder by Coutts-NatWest is that, while before this PR banana skin Farage had become a somewhat reduced, peripheral political figure; the bank’s PR incompetence has managed to resurrect his career in a single day, and he is now the darling of the populist right; their national hero, riding to the rescue of the little man: by slaying the right’s very own greedy, sharp clawed dragons.
We are, in short living in a Whitehall farce; I keep seeing Rishi Sunak in the guise of an earnestly dull take on Brian Rix; sadly, totally bereft of the comic timing.
My attention has been drawn to regulation 18 of the Payment Accounts Regulations 2015.
https://www.legislation.gov.uk/uksi/2015/2038/regulation/18/made
These UK regulations implement the EU Payment Accounts Directive 2014, and prohibits discrimination “by reason of their nationality or place of residence or by reason of any other ground referred to in Article 21 of the Charter of Fundamental Rights of the European Union” when any EU residents “apply for or access a payment account”.
As defined, a “payment account” appears to be any bank current account, not just a bank account with basic features (which happens to be dealt with in regulation 19).
And then Article 21 of the Charter of Fundamental Rights of the European Union prohibits “Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation”.
Human rights apply to everyone, good or bad, but it is slightly amusing when someone on the right, usually so hostile to the rights of others, particularly a proponent of Brexit, finds they have to fall back on human rights implemented through EU law.
It is not entirely clear to me that a decision to close an account necessarily falls in this regulation, but there we are. At its broadest it suggests Coutts and every other bank has to give an account to anyone who asks for one, as any discrimination between potential customers (even on commercial grounds) is prohibited.
But money laundering risk can still be appraised
We’ve long needed a local banking network along the lines of Germany’s Sparkassen, or even North Dakota’s example, much praised by Ellen Brown, to provide support for SMEs in particular. These latest shenanigans just serve to highlight this so no bad thing there. I gather too Sir Anthony Stansfield is consequently going to be on GBNews talking about RBS/GRG which will further serve to inform about the banks’ bad behaviours and of course the part played by current BofE Governor Bailey. Again, no bad thing. Good from evil comes, one might say. It’s interesting too, changing tack, to hear that one of GB News owners, Sir Paul Marshall (GB News being a channel where Farage has his own show) has a hedge fund (Wallace Mace) which is currently hugely and very profitably shorting NatWest. Well!
“It’s interesting too, changing tack, to hear that one of GB News owners, Sir Paul Marshall (GB News being a channel where Farage has his own show) has a hedge fund (Wallace Mace) which is currently hugely and very profitably shorting NatWest. Well!”
Well, well, well, what a surprise. Get one of the right wing elite to whine about losing his bank account with Coutts, owned by NW, on a TV show owned by abother of the right wing elite who owns a hedge fund making huge profits out of the whole fuss. Corruption anyone?
And yes, we need a state run bank providing basic services at a very low cost for ordinary people. We had one once, National Girobank, operated through post offices. And very good it was too. For example, all postage with them was free.
Naturally, Thatcher sold it off to a building society; obviously it was far too good a thing for society for the wretched woman to allow to keep operating. I remember that one of the first things that changed was the free postage ended. And then, the BS, Alliance and Leicester was demutualised. Another tory ‘triumph’.
And then, I think because of the financial crash, A&L ended up with huge debts and went crawling to Santander and was bought for a nominal £1. Which is why I’m still with Santander; who aren’t particulary good of bad, but of course, are ultimately a Spanish private sector company.
So a perfectly good British institution was removed and replaced by a non British cpompany, all due to the ideological bigotry of the most anti-British organisation there is, the tory party. Not of course, that new labour or new new labour did, or will do, anything about this.
Hello Richard
In one of the replies Bill Kruse says
“one of GB News owners, Sir Paul Marshall (GB News being a channel where Farage has his own show) has a hedge fund (Wallace Mace) which is currently hugely and very profitably shorting NatWest”
I do not pretend to understand what a hedge fund actually does, or how ‘shorting’ works. I do know they provide hedge fund managers with extreme levels of wealth.
Maybe the connection between hedge fund, Farage and NatWest is true, maybe not.
A few, (but not exhaustive) questions that I think have importance are –
What do hedge funds contribute to, or create for, society at large?
Do the way hedge funds operate prevent, or in any way hinder, action on mitigating climate change?
Do hedge funds damage society by damaging businesses that society relies upon, and that otherwise would be profitable?
Do the actions of hedge funds increase the risk to public services, and further to this then require government intervention possibly in the form of bail outs?
Basically, what is a hedge fund?
Thanks.
Sorry
No time to do this today
Can you try this? https://www.investopedia.com/terms/h/hedgefund.asp
Do we need the? No, not at all
Wholeheartedly agreed about a state bank.
Harold Wilson introduced the Giro Bank which was run from post offices and seem to work ok. Probably too giopd for the Tories as there was no huge sharholder/executive profits to be made. Also the gradual closure of Post Offices has not helped the most vulnerable in society.
A state owned bank would run into competition issues with no doubt our major UK banks that have something approaching a monopoly on retail banking services complaining bitterly. That said providing the state owned bank’s retail market was carved out appropriately so that only the old, disabled, debanked and marginalised were the initial customers you could see the venture getting off the ground.
A more expansive bank would run into all sorts of problems. Not least with our elites.
So?
It might be helpful to move on from the term Neo-Liberalism to a more accurate one of Neo-Imperialism to describe capitalists and their politician hacks who deliberately plunder societies including their own without the overt use of military force.
Yes, agreed, a state bank is needed again to provide basic banking services for everyone. In order to get a good initial customer base, all government payments – benefits, state pensions, tax rebates etc should be processed through these accounts.
These should be easy to set up either online or in a high street branch and offer current account contactless cards and mobile phone payment systems. Those who wish to maintain their private bank accounts could simply transfer funds to them as necessary.
In time to come, if BoE introduces digital currency. these accounts would be able to handle this new system.
The commercial banks earn interest on central bank reserves they are required to hold for reasons of security against risk; their risk. They do nothing to earn this huge windfall (£40Bn at last estimate?). They failed society catastrophically in 2007. Managerially, they have just failed us. It makes no difference. Interest rates rise, windfall profits rise, but the interest paid on depositors balances remains a pittance. Commercial High Street banking in the UK is a failure.
The commercial banks are always protected by Government from their failures, no matter the adverse impact on the economy, or on society. The bank profits and bonuses are resurrected after every blunder, and roll on, unhindered. Everyone else in society pays for their failures. In addition every depositor in a UK commercial bank is provided with a guarantee by Government of up to £85,000; against bank failure. Why else would sensible people deposit money with them? Could someone tell me what the banks pay for this lavish suite of luxury subsidies (and immunity from harm, even self-inflicted harm) by Government, and the public?
No other industry is provided with this kind of comprensive, gold-plated feather-bedding. What possible grounds can there be for continuing this supposed “market” in High Street banking?
Community banking seems to be going in the opposite direction. The only bank fitting the description I can think of, the Hampshire Community Bank, which was waiting to get a banking license for years, appears to have given up. The web site’s gone (here’s a snapshot from the Wayback Machine https://web.archive.org/web/20210228013347/https://hampshirebank.org/) and most of the executive have resigned https://find-and-update.company-information.service.gov.uk/company/08997051/officers
Goodness me! Things are going backwards, not forwards 🙁