It's Double, Not Quits, for UK Bank CEOs

Guess who said this yesterday:

"Our strategy is clear. It is to achieve good growth through time by diversifying our business base and increasing our presence in markets and segments that are growing rapidly."

Clue: he's a chief executive of one of the banks that has today asked the UK taxpayer for a helping hand.

Give up?

You're right. Perhaps he should, along with the other heads. Surely it's worth considering that the CEOs who oversaw the unbridled expansion of recent years are the wrong people to restore confidence to the banking system? Citigroup made the change almost a year ago, after all.

Where is shareholder activism when we need it most?

I'd also argue that banks (and insurance companies, for that matter) have demonstrated that they are in fact ill-equipped to commit very much in the way of capital, if any, to 'rapid growth' opportunities...

The Great PPI Robbery

It's stunning enough to see yet another hefty fine for misselling "payment protection insurance", or "PPI", let alone one that costs Alliance & Leicester £7m of precious capital in these troubled times.

But, worse still, the findings suggest that the FSA let this go undetected for 2 years, leaving 210,000 consumers to find the extra £1200, plus interest in the meantime.

Meanwhile, the Competition Commission has also waited until now to get tough on banks who it alleges have raked in a combined £1.4bn in "excess profits".

Given the pace of enforcement to date, is it conceivable that A&L will be the last bank caught ignoring financial regulation?

PS: the FSA fined Egg £721,000 in December 2008, for mis-selling 106,000 PPI policies to its card customers at an average of £156 each for the period Jan 2005 to Dec 2007.

A Rower's Revenge

Finally, after about 50 weeks of steady training, I had my revenge yesterday. It was indeed a dish served cold, with lashings of rain and mud. White kit would not have been my first choice, but then I'm raising money for Prostate UK, not a rehab unit for super models.

I'm pleased to say that the rain and local flooding did not prevent me beating my 2005 time - run on a cool dry day - by about 10 minutes, coming in 49th in 1:42:50.28. Proving not only that you can get younger, but also that a 2007 Bianchi road-racer with clip-in shoes is a much faster mode of transport than a 1997 Trek hybrid, even with mud guards and pannier racks removed.

And I must add that it was a special pleasure to repair (quite literally) to the warmth and hospitality of the George and Dragon with my father, on his much anticipated visit from Oz, for an excellent steak and ale pie and about 7 years worth of aimless conversation.

A Counter-Cyclical Week

The last week saw me bouncing around London, Oxford and Slough, attempting to speak at two conferences while negotiating a deal, before landing in a surreally crunch-proof hotel in Eze to celebrate the completely voluntary and utterly joyful marriage of two investment bankers.

Yes a happy, willing marriage, when we're told that divorce amongst the financial elite is all the rage, not to mention shotgun weddings involving either JP Morgan Chase, Banco Santander or Citigroup.

But the most counter-cyclical moment for me came last night, as I finally collapsed in front of BBC television 24 hour news to watch the US Congress dither over the suspiciously definitive $700bn bail-out package. Barack Obama's message to Congress from his Denver rally was to "get it done", but with one tantalising, ironic condition: to ensure that the taxpayer "gets paid back"...

Civil Law View of State's Role Slows EU Growth

Last Tuesday, I played a very small part in the closing panel discussion at the Society for Computers and Law 3rd Annual Policy Forum. The focus of the Forum was the European Commission’s painful review of the 15 or so Directives it has set up to regulate retail communications (and content/e-commerce) over the past decade.

It was an excellent event, and here is the link to the presentations.

Huge credit goes to Chris Marsden for persuading a stellar line-up of international speakers over the 2 days. Credit is also due to Mark Turner of Herbert Smith and Caroline Gould of the SCL for hosting the event and taking care of the endless practicalities.

For what they are worth, the points I made during the closing discussion were:

• The European Commission continually states its belief that regulation is required to catalyse cross-border retail markets in Europe. As it was explained to me in International Comparative Jurisprudence at law school, that’s because the European, civil law, view of the world is that people should only do what the State says is acceptable, whereas the common law view is that the law should follow to regulate commerce/behaviour as necessary to resolve market problems.

• However, while national e-commerce has surged, the evidence of the past 10 years is that the EC’s approach to cross-border markets hasn’t worked and will not do so until more the more practical obstacles to cross-border trade are cleared. As set out in my previous post, Civic Consulting found that these include language, culture, consumer preference for national products, lack of shared data on creditworthiness, tax/employment differences, difficulty in penetrating foreign markets, differences in consumer demand, lack of confidence in foreign brands, different stages of market development, lack of adequate marketing strategy.

• Regulators can play a role in early market phases. In fact, they would gain the trust and the buy-in of market participants to any regulatory measures that may eventually be required if they first helped facilitate market participants’ efforts to remove the practical obstacles to cross-border trade and learned something about the markets they’re trying to regulate along the way. Regulating first will either prove futile, or risk creating further obstacles. In the meantime, it will needlessly interfere with national markets.

Because of the jurisprudential difference I mentioned, these points seem to find favour with the common law members of the audience, rather than our civil law friends. Ironically, EC officials don’t seem to see it as within their remit to care whether or not regulation actually will deliver a single market. They simply have a mandate to churn it out in line with the EU’s single market policy, and fuss around with reviews when it doesn't work out. The practicalities are ignored. As a result, we are doomed to wait a much longer period of time for cross-border retail markets to develop, if they ever really will.