Lloyds have announced the closure of a call centre which is located in an office tower in Southend on Sea. 850 jobs will be lost by the end of the year.
There will be a total of 15,000 job losses from Lloyds Banking Group by the end of next year. A total of 40,000 since Lloyds took over HBOS in 2008.
In recent days Lloyds has also announced a significant return to profitability. A £2 billion profit during the first quarter.
HSBC has also been successful recently and we all know about Barclays £7 Billion profit for last year. The fact that the banks are moving back in to profit should be good news. But the problem is we know that little has changed over the last couple of years as far as retail banking is concerned. We know that few people are still receiving mortgages. We know small businesses are still struggling to get loans. So how are they earning their money?
Well the closure of the call centre is a clue to what surely must be going on. Along with the other jobs that are being shed. It's clearly a reduction in the size of their retail banking sector. The investment banking sector however is being preserved. This is not good news because it just means that the banks are more interested in deals on a wholesale level. Lending millions and billions rather than the mere £100,000 we might need to buy a home.
Here's another bit of news on Lloyds. Fairly random. It's from a couple of weeks back;
Lloyds Banking Group has sold it's 25.3 % stake in the Marussia Formula 1 Team after it had made huge losses and failed to perform on the track.
The team is Russian.......Joined F1 in 2010.......Has not scored a single point since !
The funding came from LDC, Lloyds Development Capital. This business is owned 43% by the tax payer.
In 2009, LDC invested £10 Million in the team. In 2011, LDC handed a loan to Marussia of £38.4 Million. By this time total debts amounted to £77.7 Million.
Considering this was only a short time after the financial crisis you could may be think; "Strange financial decision.","Casino banking Idiots.", "They're gambling our money so they can jet around the world to corporate boxes and behave like celebrities.", or "A great investment seeing as it's been funded by the tax payer."
It's difficult to see the logic to this deal without thinking along the lines of the above.
To me though the fact that Lloyds have invested in a team that had the odds stacked against it isn't the only concern. There is an other. Lloyds Development Capital is a private equity company owned by Lloyds. The growth of these private equity companies within banking organisations has been on the increase. Barclays Capital is a big part of Barclays' business these days. This is also a Private equity company.
The problem is in how private equity companies work. Basically any debt that is supplied by Lloyds will be handed over to a client, but there will be little risk to that the bank even though the investment may be risky. This is because a pension fund that collects cash regularly from investors will be used to make regular mortgage payments on the debt. The private equity company then collects payments from the business being invested in. It is these payments from the business (Marussia) that will determine how well pension investors will be paid back. In this particular situation this was very questionable at the beginning and pensions invested in Marussia will have suffered a substantial loss. You have to also take into account that private equity companies charge a fee to pension funds, regardless of how successful or unsuccessful they are. So they will be paid before the pension investor receives a penny. The people who run these businesses can earn individually in the tens of millions of pounds, annually. It's even possible for these private equity firms to lose all your money, then send you a bill for their services !
Any way, what this example really high-lights is;
1...How irresponsible bankers can afford to be whilst they pipe their money through private equity companies.
2...Employees and business owners paying into pension funds really need more control over the debt their funds are being used to guarantee. I'm sure their money would be safer this way if this was the case. (Some may well want to take a bit of a gamble but they should be consulted. )
3...This is the one that is the biggest concern. These private equity companies within the the banks are growing. They obviously do form a reasonable safety net to the banks. Just as long as this safety net is not abused though we are obviously far from being guarantee'd that. The problem is we are seeing a reduction in retail banking and it is looking like a permanent one. By far, the majority of job losses have been on the retail banking side. Where as the investment side has grown substantially in many of the banks in recent years. The reason this a worry is private equity companies are still able to access the same money you or I may want for a mortgage or a loan for a small business. Us individuals are therefore in direct competition for the same money as the private equity companies who finance not just Formula 1 teams, but Formula 1 it's self. It's owned by an other private equity company. They are also involved in lots of buyouts of mobile phone companies, food companies, building companies and high street stores. Due to the pension funds being used as a safety net for the debt of these big businesses, the banks favor these deals in preference to lending to the retail market of mortgages and small business loans.
Whilst the bankers are in control of our money, they will be able to choose how it is used. The fact that Lloyds is 40 per cent owned by the tax payer potentially could lead to an opportunity where we could influence these decisions. But it doesn't look like that will happen. Not under the current government. This is a real shame I feel. An opportunity is about to pass us by. Once it is sold off, our only real chance of a retail lender is if we create it our selves. If that was to happen it would then be in competition with the banks that our money had saved.
I find this a totally mind boggling situation. There is so much that could be done. But Osborne and the bankers in charge are sitting on top of their big salaries, when they are there to be doing a job for the people.
Banks are moving into profitability not because they have been of good service but because they have been profiting from gambling in still unregulated financial markets. Also adding debt to big businesses where the bankers and private equity firms can see potential in increased turnover by charging the public raised prices. The banks just have to visualize their debt in the gap between current prices and the future one after adding debt. There's no rocket science here. And where this 'profit gap' isn't quite so clear, it's always nice to know their are plenty of pension funds who will foot the bill when you deviate off the straight and narrow onto a bendy more precarious Formula 1 circuit.
There will be a total of 15,000 job losses from Lloyds Banking Group by the end of next year. A total of 40,000 since Lloyds took over HBOS in 2008.In recent days Lloyds has also announced a significant return to profitability. A £2 billion profit during the first quarter.
HSBC has also been successful recently and we all know about Barclays £7 Billion profit for last year. The fact that the banks are moving back in to profit should be good news. But the problem is we know that little has changed over the last couple of years as far as retail banking is concerned. We know that few people are still receiving mortgages. We know small businesses are still struggling to get loans. So how are they earning their money?
Well the closure of the call centre is a clue to what surely must be going on. Along with the other jobs that are being shed. It's clearly a reduction in the size of their retail banking sector. The investment banking sector however is being preserved. This is not good news because it just means that the banks are more interested in deals on a wholesale level. Lending millions and billions rather than the mere £100,000 we might need to buy a home.
Here's another bit of news on Lloyds. Fairly random. It's from a couple of weeks back;
Lloyds Banking Group has sold it's 25.3 % stake in the Marussia Formula 1 Team after it had made huge losses and failed to perform on the track.
The team is Russian.......Joined F1 in 2010.......Has not scored a single point since !
The funding came from LDC, Lloyds Development Capital. This business is owned 43% by the tax payer.In 2009, LDC invested £10 Million in the team. In 2011, LDC handed a loan to Marussia of £38.4 Million. By this time total debts amounted to £77.7 Million.
Considering this was only a short time after the financial crisis you could may be think; "Strange financial decision.","Casino banking Idiots.", "They're gambling our money so they can jet around the world to corporate boxes and behave like celebrities.", or "A great investment seeing as it's been funded by the tax payer."
It's difficult to see the logic to this deal without thinking along the lines of the above.
To me though the fact that Lloyds have invested in a team that had the odds stacked against it isn't the only concern. There is an other. Lloyds Development Capital is a private equity company owned by Lloyds. The growth of these private equity companies within banking organisations has been on the increase. Barclays Capital is a big part of Barclays' business these days. This is also a Private equity company.
The problem is in how private equity companies work. Basically any debt that is supplied by Lloyds will be handed over to a client, but there will be little risk to that the bank even though the investment may be risky. This is because a pension fund that collects cash regularly from investors will be used to make regular mortgage payments on the debt. The private equity company then collects payments from the business being invested in. It is these payments from the business (Marussia) that will determine how well pension investors will be paid back. In this particular situation this was very questionable at the beginning and pensions invested in Marussia will have suffered a substantial loss. You have to also take into account that private equity companies charge a fee to pension funds, regardless of how successful or unsuccessful they are. So they will be paid before the pension investor receives a penny. The people who run these businesses can earn individually in the tens of millions of pounds, annually. It's even possible for these private equity firms to lose all your money, then send you a bill for their services ! Any way, what this example really high-lights is;
1...How irresponsible bankers can afford to be whilst they pipe their money through private equity companies.
2...Employees and business owners paying into pension funds really need more control over the debt their funds are being used to guarantee. I'm sure their money would be safer this way if this was the case. (Some may well want to take a bit of a gamble but they should be consulted. )
3...This is the one that is the biggest concern. These private equity companies within the the banks are growing. They obviously do form a reasonable safety net to the banks. Just as long as this safety net is not abused though we are obviously far from being guarantee'd that. The problem is we are seeing a reduction in retail banking and it is looking like a permanent one. By far, the majority of job losses have been on the retail banking side. Where as the investment side has grown substantially in many of the banks in recent years. The reason this a worry is private equity companies are still able to access the same money you or I may want for a mortgage or a loan for a small business. Us individuals are therefore in direct competition for the same money as the private equity companies who finance not just Formula 1 teams, but Formula 1 it's self. It's owned by an other private equity company. They are also involved in lots of buyouts of mobile phone companies, food companies, building companies and high street stores. Due to the pension funds being used as a safety net for the debt of these big businesses, the banks favor these deals in preference to lending to the retail market of mortgages and small business loans.
Whilst the bankers are in control of our money, they will be able to choose how it is used. The fact that Lloyds is 40 per cent owned by the tax payer potentially could lead to an opportunity where we could influence these decisions. But it doesn't look like that will happen. Not under the current government. This is a real shame I feel. An opportunity is about to pass us by. Once it is sold off, our only real chance of a retail lender is if we create it our selves. If that was to happen it would then be in competition with the banks that our money had saved.
I find this a totally mind boggling situation. There is so much that could be done. But Osborne and the bankers in charge are sitting on top of their big salaries, when they are there to be doing a job for the people.
Banks are moving into profitability not because they have been of good service but because they have been profiting from gambling in still unregulated financial markets. Also adding debt to big businesses where the bankers and private equity firms can see potential in increased turnover by charging the public raised prices. The banks just have to visualize their debt in the gap between current prices and the future one after adding debt. There's no rocket science here. And where this 'profit gap' isn't quite so clear, it's always nice to know their are plenty of pension funds who will foot the bill when you deviate off the straight and narrow onto a bendy more precarious Formula 1 circuit.
A couple of weeks after I wrote this post RBS announced another 1000 plus redundancies, again in retail banking !
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