Banks: don'tcha hate 'em?

I opened my first bank account with Lloyds when I was 18. I once issued a cheque before the supporting funds had been paid in. The manager, Mr Hudson, met my dad in the street and mentioned this, and the old man put in the necessary. Would that happen today? Nope. There are no Mr Hudsons anymore. Instead, I would have got a stiff letter that would cost more than the amount of the cheque plus an interest charge of 32%.

I had an account with Glyn Mills when I was in the army, because it was the officers’ paymaster. They would never bounce a cheque for a small amount because they knew this would have meant the officer having to resign his commission. Not today, I fear.

I have had my present  account since 1964. When I approached them for a mortgage, I got a ‘yes’ over the phone without hesitation. Twenty years later when I asked for an overdraft to cover short-term funding on a house move I eventually got a form  about 12 pages long. It went in the shredder. They had been taken over by RBS.

So what has changed in banks’ attitude to their customers that makes banking such a reviled profession now when it was once the epitome of probity?

Well, it began long before the seismic events of the last four years.

We used to have a variety of independent banks – Lloyds, Barclays, National Westminster, the Midland, Standard Chartered, Bank of Scotland, RBS, Williams & Glyn, Coutts and many more plus a mutual Building Society in every sizeable town (note; since QE, building society mortgages have increased by 40%, banks by 4%). There was real competition. We had choice. They had High Street branches everywhere. They had managers who knew their customers not just per se but also through the Golf Club, Rotary etc.

Then the banks started to merge into ‘too big to fail’ behemoths that we have today. This rapidly manifested itself in ‘improvements’ to service, like closing High Street  branches, getting rid of branch managers, charging for everything whether writing a letter or sending a statement, treating their customers like dirt and generally making themselves thoroughly disliked.

Hutber’s Law: ‘All improvement is deterioration’.

Then came casino banking, enabling the Masters of the Universe to punt with your money and keep the winnings while you took the hits, followed by the first runs on banks for nearly 150 years, requiring billions in taxpayers’ money for bail-outs out of which the bosses continued to pay themselves obscene bonuses. Rewards for failure indeed.

Recently we have had the RBS computer fiasco. They said it was caused by a junior erk in Bangalore or somewhere who wiped a mass of data during a routine upgrade. Spherical plural! When the banks merged they cobbled together the existing systems which have remained a creaky muddle ever since. RBS has cut 2,300 back-office jobs since 2009. It has axed 1000 IT jobs and off-shored another 500.

Now we have the LIBOR scandal which at least will give us the pleasure of watching all these big-shots eating their own entrails.

So what’s it all about? Morality, that’s what. Nigel Lawson reckons that the banking system world-wide has been corrupted.

On a lighter note, here are a couple of anecdotes that might illustrate how our mores have changed.

When Mrs H was nursing many years ago a local bank manager was brought into theatre for an op in the underpants department – appendix or something. When the op gown was drawn back, the surgeon noted that the patient was hung like a grandfather clock. So he called all the nurses over to admire this magnificent portion. These days they would almost certainly complain of sexual harassment.

Our own bank manager received an attractive young woman in his office who wanted to discuss an overdraft. As the interview progressed, she started to remove her clothing. When his secretary came into the office, she was presented with a totally starkers woman and a manager cowering under his desk. Of course, it was a set-up by colleagues who had hired a strippergram for his birthday. Wouldn’t happen today. No manager, for starters.

‘There are bad times just around the corner,

The horizon is as gloomy as can be,

There are blackbirds over

The greyish cliffs of Dover,
And the rats are preparing to leave the BBC’.

Late news from next Friday's economist:

'Barclays is striving hard to distinguish two sorts of misconduct relating to LIBOR. The first kind—the doctoring of borrowing quotes in the hope of benefitted the bank’s trading positions—was clearly wrong. But lowering its LIBOR quotes to calm fears about Barclays’ own financial health might be considered more forgivable: why tell the whole truth about your borrowing costs if others are lying about theirs? And that is especially so if you believe the central bank has leaned on you to do just that'.