Monday, 30 March 2015

Lloyds Bank CEO £11.5 million bonus

I have written before about Lloyds Bank's attempts to cheat bondholders out of their savings.  The case is now likely to be determined in court.  I wrote to the CEO, MPs and regulators.  I have yet to receive a reply from Mr António Horta-Osório.  

Today we hear that the Chief Executive is in line for a £11.5 million bonus.  It has to be agreed at the annual meeting on 14 May.

The bank has sacked 50,000 members of staff and now boasts a rising share price (after years of zero dividends for shareholders.)  As one investor points out, the rise in share price is due more to Quantitative Easing than his skill as a banker.  His bonus is paid in shares, so he is one of the biggest beneficiaries of the debasement of our currency.

I have seen a steady decline in the standard of retail service at Lloyds Bank.  I am unsure what the CEO thinks he has contributed to the bank during his time in post.  He had an extended period of leave because of stress, presumably on full pay.

I wonder what the unemployed former employees think about his value to the bank?

It seems that the Bank of England is out of synch with the European Banking Authority's ruling against top-up payments.  The EBA will issue formal guidelines on bonuses, with which all bank regulators in the EU must comply.  Andrew Bailey has argued against the fixed cap, saying it will force up fixed pay levels.  

Thursday, 26 March 2015

Lloyds Bank ECNs and 21st century Robin Hood

I've written before about Lloyds Bank and the attempt to boost its finances by redeeming ECNs.  These are a new financial instruments forced on bondholders when the bank was bailed out by the Treasury.  Lloyds plans to pay less than the going rate for ECNs.

Our modern Robin Hood is Mark Taber.  He voluntarily stepped in when bondholders were about to be fleeced by institutions such as Bank of Ireland (running Post Office banking) and the Co-operative Bank.  These banks decided that their customers could be pushed around.  Successive politicians have relaxed regulations on banks, so that they no longer depend on the relationship with retail customers and small investors, but generate more income from speculative investments.  The regulators ensure that the Treasury gets its money back with interest, but seem to ignore malpractice and actions on the edge of the law against customers.

Mark Taber has mounted campaigns to rally bondholders, worked tirelessly with banks and regulators behind the scenes and done what he can to ensure elderly savers and investors do not lose their savings when no one stands up to the City of London.  He does NOT steal from the rich, but helps protect the poor and those who were deceived into believing that banks would honour the contract they signed.

Today Mark Taber announced that a leading QC has studied the case and told him that Lloyd's plan to redeem the 'enhanced capital notes' for less than their market value had 'no proper basis for a redemption'.  Taber is seeking a 'declaratory judgement' in court, so that a decision is made in a contractual dispute before any action is taken.  The decision of the court is binding.

Court costs may affect the action, as Lloyds could claim £10 million + in legal fees.  This would be absurd if it applied to misselling of Payment Protection Insurance, for example, and should be ruled out in the instance too.

This is not limited to Lloyds Bank, but another financial institution is planning to pull the same stunt and would not hesitate to follow if Lloyds were allowed to proceed and effectively steal from its customers.

After my previous post, I wrote to the regulators, various MPs on the Treasury Select Committee and the Lloyds Bank CEO, António Horta-Osório.  I received standard replies from 2 of these people.  However from Lloyds Bank CEO - answer came there none.

Friday, 13 March 2015

How statins make you stupid

Imagine this conversation between me and Mr Big the Property Developer over dinner:

Mr Big:  Sorry I just have to take my tablet.

Me:  Let me have a look... mmm statins.  So tell me, when did you have the heart attack?

Mr Big:  What?  I haven't had one.

Me:  Oh I see... so the stroke, when did that happen?

Mr Big:  What stroke?  I haven't had one.

Me:  Right, so when were you diagnosed with Familial Hypercholesterolaemia?

Mr Big:  With what?  Never heard of it and I haven't got it, as far as I know.

Me:  Tell me then, why is your doctor prescribing statins?

Mr Big:  Because my cholesterol is too high.

Me:  If your site foreman came and said 'You have too much building material' what would you say?

Mr Big:  I'd want to know what building material specifically.  Is there too much sand, cement, bricks, piping, tiles, slabs... or what.  If there was too much of something, we could send it back or divert it to another project.  Sometimes it's useful to have some stuff in reserve in case there are problems.

Me:  Right, then why don't you ask your doctor to specify what is meant by 'cholesterol'?  What's the reading for your HDL, LDL and triglycerides?  Some of that is helpful and some not.  Trigs can vary wildly, so it's not a great idea to reach for drugs after one reading.

Mr Big:  Are you a doctor?

Me:  No.

Mr Big:  Why should I listen to you?

Me:  You shouldn't listen to me or anyone else without checking the facts.  Let me run a couple of scenarios by you.  Let's imagine you have a building site for a new block of flats.  It's a wealthy area but notorious for thefts from building sites.  How do you secure the site?

Mr Big:  If I could erect secure fencing on site, I'd do that.  I might have a camera and alarm system.  The most useful is to have a watchman on site from dusk to dawn.

Me:  What if your doctor suggested installing Exocet missiles at the perimeter?

Mr Big:  What!!!!??? That would be way over the top and not very effective.  Anyway we'd never get it past planning and building control in the local council.

Me:  Let's imagine when you were younger you had an offer to migrate with your young family to South Africa.  You'd have a bigger home, great climate and opportunities to increase you wealth.  On the other hand you might face the risk of attack to you, your family and home.  How would you secure your property?

Mr Big:  I'd erect a secure fence, install burglar alarms and good locks, have a camera system.  I might have guard dogs and live in help to act as security guards also.

Me:  What if your doctor suggested installing nuclear warheads around the property?

Mr Big:  You're crazy!  They're not appropriate for the job and would damage my family as much as any burglars or attackers as well as wiping out half of South Africa.

Me:  That is crystal clear to you because it's in an area you know and understand well.  Your doctor is doing the equivalent of this in managing your health, but you don't recognise it.  Statins may help prevent thrombus formation in the lining of your blood vessels, but the side effects are drastic.  Other drugs can achieve the same effect without such bad side effects, not to mention implementing simple dietary and lifestyle changes.

Mr Big:  My doctor wouldn't prescribe these drugs unless he thought they were necessary.

Me:  Hmm have you ever heard of a plumber called to sort out a central heating problem, who sucked his teeth and said the whole system would have to be renewed, when in fact a single part needed changing?

Mr Big:  Yes, there are cowboys in the building trade who want to make a quick buck.

Me:  Do you know what NICE is?

Mr Big:  The government health body that oversees health care standards.

Me:  In theory yes.  In practice they seem to be the mechanism by which drug companies make a load of money from the NHS.  At present doctors are heavily incentivised to prescribe statins to healthy people and patients who will not benefit from them.  In other professions, such as finance, advisers are supposed to disclose the fees they make from selling products.  Doctors don't have to tell you about the cut they make from prescribing drugs on the NICE guidelines.

Mr Big:  Oh.

Me:  As I said before, do your own research.  I imagine you wouldn't let someone rip out a perfectly good central heating system, just because they said it was necessary.  Then why would you let your doctor persuade you to take damaging drugs that may not lengthen your life by one year, just because he says it's a good idea.

Mr Big:  How do I keep my heart healthy?

Me:  Everyone is different.  This is what I'd do in your situation:  Have some more butter and lay off the sugar, bread and pasta.  Reduce your stress, take some enjoyable exercise and get enough good quality sleep.