Fishburn Hedges

14.06.2010

Bad feeling about banks has been gushing like a leak from a deep sea oil well for the last couple of years, and the Which? Future of Banking Commission is the latest piece of negativity to wash up on the banks’ doorstops.

I won’t go into the detail of the report – read any one of a couple of dozen pieces of analysis in the media – save to say that some recommendations banks can live with and some they will die in a trench trying to fend off.

The key to what the banks end up with is how they play their hand.  A public fight with the Commission would be the equivalent of a Robert Green fumble. Anyone sensible in banking knows that public trust in the institutions is at an all time low, while Which? is one of the most trusted bodies in the UK.  And Vince Cable, who chose not to stand down from the Commission when he joined the cabinet, is not only probably the only universally loved politician outside Brazil, but also somebody who has powers to greatly influence how banks are treated.

So as a collective group the banks are likely to fight the proposals in the corridors of Westminster, building on the poorly hidden sympathy shown by the Chancellor or the natural Civil Service tendency not to throw out the baby with the bathwater, while publicly pointing out only the most glaring of issues.

What will be interesting is how the banks operate individually. The interests of Barclays and HSBC, who took no UK government money and have investment banking operations to defend, are substantially different from Lloyd and RBS, who are part government owned and need to jettison some of their businesses, while challengers like Santander, Tesco Bank and the new minnows have a completely different agenda.