In the City
The banks' dilemma
To Rudd
Mrs Thatcher's government now have another small but powerful group of enemies, namely the chairmen of the clearing banks, upon whom Sir Geoffrey has recently imposed, in his latest budget, a specifici svvingeing tax. They are angry at having been specially selected for this treatment, because they had already been having conversations with the Government with a view to taking on some burden, for instance Shouldering part of the cost of subsidised export finance. However, apparently, these, conversations did not bear fruit and so the Treasury took their unilateral action by Imposing a level of tax which does seem to have caught the banks by surprise. Hence their anger. But they were undoubtedly ready to be angry. For no sooner had the offending words dropped from Sir Geoffrey's lips during the budget speech than sharp and fairly lengthy messages of condemnation began to chatter across the tape machines in the City. Clearly all had been prepared and only waited upon the Press of the supervisor's thumb in the bank's telex room. From the Government's point of view it Was of course an expedient thing to do. The banks aren't particularly popular, making profits at times of economic distress for the rest of us. And it may assuage certain feelings of guilt within Whitehall; after all, the tax means that the Government is i clawing back some of the windfall profits t has created by its own monetary policy and, consequently, high interest rates. But to the banks the principle involved must be anathema. First, the imposition of the tax is equivalent to changing the rules in the middle of the game, the very essence of unfairness'. Furthermore, once started down this slippery slope governments (of Other political hue) may be tempted to take further swipes at the banks and indeed Other financial institutions. Nobody knows Where they are from now on, it can be argued, Secondly, the banks can and do argue thatthey actually earn and need their Profits. They are not charitable foundations (except by accident) and fulfil a vital, function not just to the financial community but to the whole commercial world in the °untrY. Maintaining this financial network Is extremely costly in terms of both over-I heads and staff. Admittedly in good times (at least for the banks) it makes money, but in bad it barely pays its way. To slice off the Peaks and not to compensate by filling in the valleys is not only unfair, it could do harm The to the whole apparatus. banks have a case. Their labour costs are rising fast and they are under extreme union pressure to keep them going that way. It can also be argued that the banks do not make the monetary policy of the country; if the Government like to fight inflation with high interest rates that's their choice, not that of the clearers. If it produces windfall profits for the latter then somewhere round the corner it will certainly be producing windfall losses too.
On the other hand the banks could be said to be their own worst enemy (which perhaps they are not while the Government's around). They somehow don't look like the Tolpuddle martyrs. In the same way that nobody seems to have seen other than prosperous farmers around these past few years, who can really say he has seen an indigent banker? (And when you get bankers who are farmers as well it's doubly difficult to have sympathy for their plight.) Those huge board rooms, those huge boards, those massive edifices, those suave exteriors all combine to produce a really popular victim, the organisations which they love to hate. Once upon a time the local manager was your pal, he went to the cricket match, was seen in church, was indeed the pillar of local society. Today? Well, to be fair, some of the younger ones are exactly that, doing a remarkable job in their communities. But somehow the whole thing-gets a little lost in the middle reaches of the banks.
Then there are management teams, and little task forces of tough men. We've seen it in the City. There were for example Stock Exchange branches maintained by the clearers (only one of which now remains) who specialised in a personal service cater ing for the very specific demands of that particular community. When one of the better known of these branches recently closed and its manager went into retirement there was a feeling that the clearer concerned would really rather have liked to , erase the memory of the whole thing by razing the entire edifice to the ground and giving the site to a property developer. From the customers' point of view it feels always that there is a tug-of-war going on between the man who is actually giving the personal service (and often doing a successful job) and the efficiency boys with their computers and rules who are just interested in getting the right answer for the bank.
Doubtless this criticism will be regarded as unfair amongst clearing bankers. But the fact has to be faced that bankers are not as popular as they were. Their job is to look after their customers first of all. No customer wants to hear about the bank or (least of all) about what the Chancellor is asking the bank to do. It's mainly a public relations problem. For the underlying fact is that the clearing bankers have been remarkably helpful to commerce and industry during this recession. Had they not been so, the mind boggles at the mayhem which would have resulted, the massive number of receiverships there would have been on top of those which have actually occurred. But perhaps this is something that the banks don't feel able to tell the public. Why? Because the Government would be angry with them if they did? If that's the case then don't let them bothei about it. Popularity in Whitehall is clearly going to get them nowhere. The moral of this whole episode. I the taxing of the banks and their selection for this discriminatory treatment, is that their only potential friends who can do them any good in the long run are their customers.
Previous page
