Uncut’s boneheaded branch occupations are pointless
But Barclays’ Bob Diamond is just another snake-oil merchant.
There is something intensely irritating about watching a genuine social injustice being hijacked by the barmy brigade. This happened yesterday when UK Uncut invaded various Barclays branches across the UK, announcing to an insatiable media set that they planned to ‘turn the branches into libraries’.
The leaden irony of this ‘objective’ reflects the plodding syntax of Uncut’s site: ‘The brutal cuts to services about to be inflicted by the current Government are unnecessary, unfair and ideologically motivated.’ But as always, such demonstrations allow the Bob Diamonds of this world to jeer about ‘hairies’, and then continue gaily on their path of unthinking social destruction.
Why is it that so many radicals (and there’s nothing wrong with being justifiiably radical) would rather nut a 5-foot thick stone wall than send in a spy to steal the defence plans? I suppose it’s the hero thing: not for nothing was public Soviet art of the 1920s called ‘heroic’. But not only is this sort of thing more like the Blackadder futile gesture, it is an indefensible form of attack when the enemy is so open to subtly devastating attack.
A preferable alternative is to post-mortem the Barclays results in detail, and see why so many ordinary citizens far beyond the Uncut tendency have every right to feel angry about the Barclays business ethic.
In 2009, the bank reported a profit of £11.6bn, but the 2010 figure reported earlier this week was £6bn. So: profits fell by nearly half, then.
Er…no, this year’s reported results changed last year’s profit of £11.6bn down to £4.6bn, so this meant the bank could report a rise of one third in profits.
When I was a corporate myself, at times I was shocked by the ability of auditors to make up mean down, and now change then. Diamond explained away the ‘correction’ by saying this was the result of taking out the gain the bank made on its sale of BGI, and of comparing the performance of “continuing operations”. No, I’ve no idea what that means either: but the bottom line is that in 2009, it suited the bank to post big profits, and this year it suits the bank to shrink those past profits. It’s a three-card trick, pure and simple.
Equally shifty was Diamond’s attempt to show that, despite profits having gone ‘up’, pay and bonuses had gone ‘down’. Here, it is even easier to show that his claims are complete bollocks.
Using the bank’s own figures, last year total Group emoluments were 33% of all costs, and today they are 43% – what we bean counters call ‘a lot more’. Last year, the average Barcap salary was £165,345. This year, it is £235,807. Barclays results summaries make great play of the fact that at the group level bonuses were down 7%, and within Barclays Capital the total bonus pool compared to 2009 has fallen 12%. Without 50 footnotes and unfeasible manipulation, neither of these figures looks right: whichever way you cut it, bonuses overall have risen £400M.
As to the safety of the bank of which he is now the undisputed Head, at the results presentation this week even the Daily Telegraph sounded uncertain about Diamond’s attitude to it:
‘Questions around Barclays’ capital position were brushed away as Mr Diamond pointed to an anticipated core Tier One ratio of 11.55% over the same time period.’
This was almost exactly the level of Lehman’s liquidity when it collapsed hopelessly in 2008. The fact is that Barclays – like every other bank in Europe – has lobbied viciously against every Basel III attempt to raise that level to one more realistically equipped to deal with potential derivative sector disasters.
Whatever the taxpayers who underwrote the banking rescue might feel, it would be a mistake to think (as Uncut UK obviously does) that Diamond Barclays exists purely to grind the noble working class down. The bank’s own shareholders have every right to feel just as aggrieved about the incessant obfuscation that permeates every line of the company results.
“The challenge to the board is to explain why the structure is in the best interests of shareholders,” said David Paterson, head of corporate governance at the National Association of Pension Funds, on the eve of the results. It’s hard to believe Paterson was happy with what he heard the following day, when he learned that the bank’s five best-paid executive officers received around £25m. On a a parallel comparison, Barclays shareholders (with £37bn of capital at risk) will receive roughly the same as 100 bankers. This too is not exactly an equable share-out of either the spoils or the risk.
The simple fact is that Barclays continues to pull the wool over an almost inexhaustible collection of eyes: among regulators, select committees, business journalists, shareholders, Cabinet members….and even the Revenue.
To calculate a 2% tax rate on UK operations is not – as Barclays tried to suggest last Friday – ‘simplistic’, but rather to reveal a scandalous example of just how easily big corporate business, and its army of grubby accountants, cheat the civilisation they serve.
This is Uncut’s main beef, but only to the end of taxing all business to death until the almighty State and its admirable efficiency can take over. The tax issue is merely a very narrow take on the more malign medium-term business goals of the banks.
Bob Diamond wants to move as quickly as possible towards a situation where, with one mighty bound, he is free of all regulation: free to buy, sell and punt with abandon. To do this – and he is let’s face it an investment *anker born and bred – Bob the Banker will sell the retail arm to the first sucker who shows his face. Then he can relax, happy in the knowledge that there’ll be no branches for Uncut to occupy.
The Protium retail MBO is to be unwound (at huge cost) and in Russia the branches are also on the block. They were only bought in 2009, so divestment is also going to cost the shareholders dear (this too Diamond has flimmed and flammed about); but you see, that was before Cap’n Bob took the helm. So it has to go. And so in time will those in Britain, for one simple reason: you can’t sell stuff to customers who are broke. Thanks to taxes that helped bail out bankers. And unrepayable loans sold by bankers.
Arturo de Frias, head of banks research at Evolution Securities, says:
“Bob Diamond has been the main force driving the very successful expansion of BarCap. With him as chief executive, we can expect the investment banking angle of the bank to grow even more, to the detriment of the retail business“.