As the FT notes this morning, Barclays Bank has announced a reorganization of its business as a result of which:
Barclays is ... planning to keep a tight lid on expenses, aiming for a cost to income ratio of 63 per cent this year, down from 67 per cent in 2023. By 2026 it wants the figure to fall to “high 50s in percentage terms”.
Let's unpack that.
First, they think interest rates should stay high. That's the easiest way to achieve this goal. You can be sure that the lobbying on the Bank of England is very intense as a result, at cost to us all.
Second, they want to screw their customers - not least those with mortgages and business loans.
And third, they will, no doubt hope to screw their staff. Expect AI to be a part of that plan.
The aim is to make £10 billion more available to shareholders over the next five years.
Never let it be said that rentier, extractive and exploitative capitalism is dead. It's alive and kicking in the City of London.
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The more I think about it, the more I believe that “interest rates” are the costs of doing business in the UK, paid as “protection money” from the government to stop the financial sector from having a strop. The financial sector and Tory supporters are all receiving their tribute from all of us. https://en.wikipedia.org/wiki/Tribute
The Barclays reorganisation may be new, but the commercial banks have been going down this road for years. The reason there are reorganisations, I submit is that they have already banked the low-hanging fruit; the banks have wiped out the branch network.
If you can find a bank branch anywhere, you will be directed to a screen and keyboard. The public is being psychologically conditioned to work for the bank (I keep thinking of Fritz Lang’s ‘Metropolis’). Of course they will wipe out as many staff as possible.They want to reduce banking to providing the customer with a screen and keyboard; basically do their own banking, and eventually, no doubt, carry all the risks. The bank just wants to handle money that allows the money to wash through their system and use big margins automatically attached to every pound, to clean out vast profits for negligible cost, and finally transfer more and more of the risk on to the customer (I suspect risk transfer will be the third stage in the journey to the dreams of avarice).
The only risk to banks will be that they are taken over by Big Tech. When Banks and Big Tech are one, we are all finished. Democracy will not matter.
John, you make an excellent point about Banks transferring risk from themselves to customers.
In the past a bank got robbed and it lost money.
Today, a customer doing internet banking on their phone or lap-top gets robbed and its their problem.
It has occurred to me that if Banks want customers to do internet banking then they should provide them with internet connected devices for which the banks take full security responsibility.
Produced by the million they would not cost much for an individual device and could receive regular software security up dates from the bank.
After all, isn’t providing security supposed to be what banks do for the money we allow them to look after?
Interesting idea
Mr Langston,
These are the issues that are being overlooked for the ‘God of the Internet’: consumer convenience. One click. To your door. Instant gratification. This is a seduction; and in the case of the banks, there is no incentive to keep the risks in-house, if they can transfer them to the user through the suasion of banking as a ‘one-click’ enterprise, and best of all, without anyone noticing. Who is noticing?
Children grow up conditioned to use and rely on the internet. They are, we are told ‘computer savvy’. But what do they know about computer audit, or intellectual property or privacy law? It is, I suspect, the case that they grow up in Britain expecting that someone, somewhere in authority has that under control; only to find oot; this is Britain, there is nothing there; the government is asleep at the wheel, and the appointed regulator, if there is one is the creature of the industry it serves; and the only person awake, you will discover, is just some avaricious chancer who has cornered the market, running riot, and ripping everyone off.
The banks are already using card readers and unique personal recognition features (new technology – but how robust is the technology, how long the the development and test protocols, before being pitched in to the ‘front-line’? Computer systems – faultless in their perfection, you think?).
Ian is correct really.
The system we live under is very feudal – as I pointed out myself recently – we live not ina kingdom, but a thief-dom.
You wouldnt know any of this from the BBC Today programme’s item on Barclays this morning.
Thank you, Richard and readers, especially John Warren.
Firstly, I worked at Barclays in the mid-teens and know some descendants of the founding families*. *They are aware of what Richard and John write about here and elsewhere and not happy about it, but they are no longer shareholders or work there.
Barclays is helping Labour write policy, in tandem with HSBC, Citi, Goldman Sachs and JP Morgan. One of the government affairs team, a blairite, stood for Labour in 2015 and would like to again. Enhancing the independence of not just the Bank of England, but giving the OBR greater responsibility and having business, financial institutions as they really mean, own and deliver more public services and infrastructure and influence planning and education is under discussion.
With regard to AI, last December, I fell into conversation with an asset manager’s HR financial controller. She talked about how AI will reduce the City’s labour and client servicing costs and the City will no longer provide the career paths that it does or did.
Further to John’s point about big tech, years ago, Bill Gates said we need banking services, not banks. Big tech is cannibalising banks, but doesn’t want or need to take the capital and liquidity risks, thus avoiding regulatory and political scrutiny. In the summer of 2021, I spoke to the head of compliance at Amazon. Said manager, a former financial services regulator, did not think that the giant needed to offer bespoke services to financial institutions even though they are regulated. Regulators are worried about the role of big tech and would like to regulate them like they regulate financial institutions, but the big providers are often US defence contractors and are protected by the US government. Outsourcing arrangements are subject to regulation, but that’s indirect rule. In the autumn of 2021, I was offered a job by the Bank of England to oversee such risks, but I had already accepted an offer (and better rations) from a continental bank, a decision I often feel pangs of regret about.
As there are relatively few big providers to the financial services industry, there is a concentration of risk(s). It feels like they are one or few. When one sees the revolving door between politics, technology, finance, media and even the NGO complex, democracy no longer matters. Our politics have never felt so small and risible when the challenges are so big, but that’s not just a UK issue. However, with regard to the UK, I think the public had opportunities to change course in 2017 and 2019, probably the last opportunities, but many, but not all, chose not to.
Thanks
This post hits a raw nerve for me. Yesterday I visited the local branch of Barclays to try to assist a lady friend who has dyslexia and is unable to use a computer or smart phone. They only had two staff in the place and were about to close at 3 o’clock. What’s worse, they don’t even open at all on Wednesdays. The “meet and greet” member of staff was clearly trained to get rid of people as quickly as possible which he did. Although I do have an account at Barclays I use Nationwide for the bulk of my banking and their branch staff are always extremely helpful. What’s more they’ve got two branches nearby and two more not far away.
We are losing our Barclays brach in April
So much for a focus on customer banking
Thank you, Richard.
You’re in East Anglia, their heartland, too.
The Thames valley is no better. Branches rarely have a member of staff around and are frequently fully or partially closed on Saturdays.
After a protracted issue with Barclays and Barclaycard login and general IT, back in 2019, I moved to Nationwide. Much better IT and great customer service.
My preferred bank
Thank you, Nigel.
https://www.nakedcapitalism.com/2024/02/banks-lock-horns-in-uk-santander-denounces-nationwide-ad-lampooning-out-of-touch-ceos-and-out-of-control-branch-closures.html may be of interest to Richard, readers and you.
I rather like that ad
“Barclays seeks to maximise profits whatever the cost”
And in other news, the Pope IS Catholic and bears DO…….. etc..
This is why we need a replacement for Girobank. It would lay down a benchmark for what level of service is acceptable and customers could “vote with their feet”.
I so agree
Thank you Clive and Richard.
I was at the banking trade body from the spring of 2008, so before the crisis that had been brewing since 2006 took a turn for the worse when Lehman failed in mid-September, to the autumn of 2012.
To avoid public pressure for a new Girobank, the government made sure that it did not nationalise RBS and Lloyd’s entirely. The issue of the EU treating these bail-outs as state aid came later.
Private banks also put pressure on the government to keep the rates on offer from NSI low.
What came to be known as 2008, the culmination of a model that began in the 1970s, has yet to be resolved. This includes banking. Lots of missed opportunities. I often wonder when that failure will return to bite us and, when I hear and see how New New Labour is sucking up to the City, I fear it will and it won’t be long.
Girobank is seen as the enemy of neoliberalism. It was destroyed early (1990). Alternatives to the joint-stock model became anathema. It is forgotten that there were alternatives; also obliterated. The Mutual fund; in banking the Jewel in the Crown was the TSB. Gone. In pensions: gone.
It is very difficult for a cadre of executives to strip out all the profits for themselves, and rip off the customers, the stakeholders, the shareholders and even the Government and tax authorities; if the joint-stock model has any viable competition; because business does not believe in competition, if it can possibly avoid it; by any means avaliable.
Eliminating the competition is the great, but overlooked purpose of neoliberalism. The cleverness of neoliberalism has been its Trumpism (but has a long history): exploit the inevitable superficiality of modern, digital, public discourse.
Claim that you are a passionate opponent of your real purpose and prime intention, but build your actions simply by publicly exploiting and repeating the paradox. It normalises chaos and supporters come to ignore the facts, believe the rhetoric, and view opposition as conspiracy.
It gets worse. I’ve just been into Barclays again today and they informed me that the branch is closing on the 6th March. Clearly they will eventually be online only and anyone who can’t use a computer will be discriminated against.
Barclays is closing everywhere…
Damning full list .
I’d move if still there
https://www.moneysavingexpert.com/news/2024/01/barclays-bank-branch-closures/
What other banking options do you have in your town Nigel?. Move there. Customers need to vote with their feet, it’s the only way the banks take notice
As I said earlier I do most of my banking with Nationwide. I only have an account with Barclays because I can’t be bothered to close it. There’s £10 in it. The only snag is that Nationwide is not actually a bank – it’s a mutual building society – so there are some transactions it can’t handle. I have the account at Barclays because I needed to process a US dollar cheque. (Should that be check?). Barclays will shortly have no branches in the town which is a sizeable conurbation. All the other mainstream banks do, but I guess that won’t last too much longer.