ALEX BRUMMER In 2011 Bob Diamond told the Commons the bankers’ time for remorse is over - no it’s not

ALEX BRUMMER: In 2011 Bob Diamond told the Commons the bankers’ time for remorse is over - no, it’s not


A week after Mark Carney called for an end to ‘heads I win; tails you lose’ capitalism, Barclays finds itself back in the American dock, paying a fine of $150m for cheating its customers.

In effect it used software built to protect the bank against the evil of ‘flash trading’ (the abuse of high-speed communications) to get the best deal for itself on the foreign exchange markets.

The most damaging aspect of this wilful piece of bad behaviour is that it took place in the period 2009-2014, long after the financial crisis. It shows the bank had done little to renew what the Bank of England likes to call its ‘social licence’.

Hit hard: Barclays finds itself back in the American dock, paying a fine of $150m for cheating its customers

Hit hard: Barclays finds itself back in the American dock, paying a fine of $150m for cheating its customers

The fine is hardly the welcome present that new Barclays chief executive Jes Staley, officially due to take the helm next month, can have wanted.

Still, it could have been worse. His old bank, JP Morgan Chase, alongside Royal Bank of Scotland, is being pursued by the American Justice Department on criminal charges over the alleged selling of flawed mortgage securities. Investigators are seeking to establish that the two banks knowingly ignored warnings from people within the company that they were packaging too many dodgy mortgages into investment offerings.

Put another way, they sold products which they knew would blow up.

What is fascinating about these cases is that they are targeting so-far unnamed individuals at JP Morgan and RBS.

In spite of JP Morgan’s stellar reputation, it has been the most heavily fined of the Wall Street banks since the financial crisis. So while shareholders have picked up the bill, the cost of the penalties has been taken against profits and no individuals have felt the hot breath of the law on their collars.

It now looks as if that may be about to change, with the Obama administration apparently determined to have some heads on totem poles before it leaves office in January 2017.

The RBS and JP Morgan cases raise another important issue: that of internal whistleblowers.

Today, after eight long years of waiting, investors in HBOS will finally be exposed to the management and regulatory failures that led to the collapse of the bank and its forced merger with Lloyds.

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What we already know from the testimony of former HBOS employee Paul Moore is that efforts to appraise senior executives of risky loan decisions fell on deaf ears and the dissident was shoved aside. It now seems that similar cautions were offered by insiders at JP Morgan and RBS.

And I know of at least one other leading UK bank where a risk officer, who warned about dodgy lending, was dismissed and silence bought with a handsome severance package. One would hope that after the reforms of recent years, banking practices have been cleaned up and the army of compliance officers now employed have crushed the sharp practice. But we cannot be too sure. That is why we have to take the bankers’ whinges about taxation and the lack of regular dialogue with the authorities with a pinch of salt.

In 2011 Bob Diamond told the Commons the bankers’ time for remorse is over. No, it’s not.

Asset rich

Taxpayers and regulators rightly have been highly critical of banker pay, given the misery the financial crisis delivered to the rest of us.

But while most of the opprobrium has fallen on bankers, the asset managers, who look after nearly £7trillion of investments, generally have escaped scrutiny. That looks if it may now change.

The Financial Conduct Authority seems to have reached the conclusion that the £8.6bn the sector collects in fees each year is too much.

Indeed, as we learned this week, rogue fund managers are not averse to cherry-picking trades to boost their own bonuses at the expense of investors.

What is often forgotten is that fund managers are no longer lowly paid backroom staff, but highly paid executives rivalling the mainstream bankers with their rewards.

If the FCA finds that fees and commissions are too high, it might also conclude that pay has moved out of kilter too.

Losing streak

Too often, when faced with a merger, shareholders roll over and take the money and fail to ask the right questions.

It is refreshing therefore that maverick Irish billionaire Dermot Desmond publicly is questioning the proposed all-share merger of Ladbrokes and rival Gala Coral.

It has not been an easy time for bookies, with new gambling and gaming taxes putting pressure on the bottom line and challenges from online usurpers. But it is also worth noting that before he was replaced, former Ladbrokes chief executive Richard Glynn had, after a stumbling start, tackled the company’s online deficit.

A merger of two struggling franchises is a bad bet.

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