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APRIL 2012AlegríaWin two ticketsto see Cirquedu Soleil atDublin’s O2See Pages 56-57O2 WHAT A CIRCUS!
NEWS REVIEWwww.iboa.org.ukshortsdirectSHORT CUTSSPECIAL FOCUSNATIONAL IRISHCHEQUES OUTAIB CUTS FREEBANKINGNational Irish Bank will no longeraccept cheque lodgements atits 28 branches in the Republicfrom April 23.See Page 4AIB is tightening its “free banking” facility for the majority ofits personal current accountcustomers.See Page 5REGULATINGSHADOW BANKSUK FACES NEWMIS-SELLINGSCANDALNEWS REVIEW Errant banks to be namedand shamed AIB implicated in planningscandal by Mahon Tribunal Macho culture harmsBritish banking Guerilla art focuses on crisisSee Pages 10-17SPECIAL FOCUSComplex financial products mayhave been sold to small businessesby leading British banks.See Page 7 Getting Back to Lending? Who is regulating theregulators? Goldman Sachs in Muppetshow O’Leary for Taoiseach? Health and safety at workSee Pages 18-27GOING ROGUEIBOA NEWSIBOA THE FINANCE UNIONwww.iboa.ieA major international consultationis under way to devise newmeans to regulate “shadow”banking entities worldwide.See Page 6IBOA2Spectrum is published by IBOA – The Finance Union,IBOA House, Stephen Street Upper, Dublin 8and 29, Malone Road, Belfast. BT9 6RU.Telephone: 00353-1-4755908 and0044-28-90200130info@iboa.ie www.iboa.ie www.iboa.org.ukGeneral Secretary: Larry BroderickHonorary Secretary: Tommy KennedyCommunications Manager: Séamas SheilsAdvertising enquiries to Anna O’Dohertyor Louise O’Donnell in IBOA House.Spectrum is printed on recycled paper and wrappedfor posting in oxy-degradable polythene at W & G Baird,Antrim, Northern Ireland.SPECTRUMapril 2012As a London-based trader pleadsguilty to fraud in New York,regulators are probing UBSclaim of 1.5 billion losses dueto unauthorised deals by KwekuAdoboli (above).See Page 9 Bank Secretaries to meet inGalway Broderick intervenes in RBSbonus row Training up – accreditationand new courses IBOA in CongressSee Pages 28-37
NEWSWORK AGENDAWORK AGENDA No agreement on changeat Bank of Ireland Pay deal for majority inNorthern Bank Ulster Bank demands 950more job cuts AIB restructuring planSee Pages 38-45LIFE & STYLEARTS & LEISURENomoremisterknightguyARTS & LEISURE The Hunger GamesCirque du Soleil’s AlegríaThe Little Big ClubFrom Jack to TrapPrize Crossword, PictureBoard and Sudoku UltraVioletSee Pages 54-63The former Chief Executiveof Ulster Bank’s parent company, the Royal Bank ofScotland, Fred Goodwin,was stripped of his knighthood recently by the BritishGovernment as a publicrebuke for his role in causingBritain's financial crisis.Goodwin was forced tostep down as chief executiveIn October 2008 and takeearly retirement after thebank was bailed out by theBritish State – which nowowns 82% of RBS.For many RBS staff – andespecially former staff – thepublic humiliation of the exCEO offers little comfort.Goodwin was originallyhonoured with a knighthoodafter implementing a ruth-less job-cutting programmewhich earned him the nickname of “Fred the Shred.”And of course, since thebanking group was broughtto the point of collapse as aresult of Goodwin’s blindpursuit of the disastrous takeover with ABN Amro, manythousands more redundanciesare being implemented acrossthe RBS group as the newmanagement team attemptsto repair the group’s balancesheet as quickly as possible.The poster boy for theboom has now become theposter boy for the bust – eventhough, of course, he wasnot solely responsible for thecrash. Indeed, some commentators have come closeto expressing sympathy forGoodwin as the scapegoatfor the reckless behaviour ofother senior executives facilitated by lax regulation.Among the other keyplayers in the British bankingcrisis under the spotlight areSir Victor Blank, who was incharge at Lloyds TSB when itwas also rescued by theBritish State, and Sir CallumMcCarthy, chairman of theUK’s regulatory body, theFinancial Services Authorityfrom 2003 to 2008, who hasbeen criticised for failing totake action to avert the crisis.While losing his knighthood has probably come asa blow to Goodwin’s pride,it will no doubt be offset bythe fact that his very lucrativepension remains intact.Cover Picture: One of the performers in Cirque du Soleil’s Alegría – which will play at Dublin’s O2 arena laterthis month (See pages 56-57 for more details).april 2012SPECTRUMwww.iboa.ie Consumption of fast foodlinked to depression Positive steps to reducecancer risk Two books examine variousaspects of the banking crisisSee Pages 46-53Fred the Shred loses knighthood –but holds onto generous pension!IBOA THE FINANCE UNIONLIFE & STYLEwww.iboa.org.ukJust plain Mister: Fred Goodwin.3
SHORT CUTSNEWS REVIEWUS banks strike 25bn deal onhousing abuseswww.iboa.org.ukUS government officials havereached a 25bn (E18.7bn)deal with five banks – Bank ofAmerica, Citigroup, J P MorganChase, Wells Fargo and AllyFinancial – over alleged abusesin the housing market.Analysts have suggestedthat the agreement may provide help to home-owners innegative equity with up toone million people now likelyto have their debts reduced ortheir loans refinanced at lowerrates.The deal is also expectedto give banks immunity fromcivil lawsuits over so-called“robo-signing” cases – wherelenders rushed through paperwork in order to speed uprepossessions.SPECIAL FOCUSIBOANational Irish Bankcheques outNational Irish Bank wroteto thousands of itscustomers recently to saythat, from April 23, it will nolonger accept cheque lodgements at its 28 branches inthe Republic even thoughit will continue to providethem with cheque books.The Danske Bank subsidiary stopped taking cash inits branches at the start of2010 – citing concerns oversecurity and the cost of handling cash.NIB customers were advisedto use An Post offices to lodgeand withdraw cash from theiraccounts. An Post has nowagreed to handle cheques forNIB customers, too.NAB orders review of future ofClydesdale and Yorkshire banksNNational Irish Bank, College Green, Dublin.IBOA THE FINANCE UNIONwww.iboa.ieational Australia Bank (NAB) is reviewing the future of its two Britishsubsidiaries – Clydesdale Bank and Yorkshire Bank – in the light of subduedeconomic growth in the UK and the ongoing sovereign debt crisis in the eurozone.4The one-time owner ofNorthern Bank and NationalIrish Bank, NAB bought Clydesdale in 1987 and Yorkshire in1990 and operates a total of300 bank branches employing 8,500 staff.Michel BarnierEU Commissioner for InternalMarket and ServicesEU to reviewbanking payThe EU Commission is considering new measures toregulate bankers’ pay, including a limit on how muchsenior executives are paid inrelation to junior employees,and a fixed ratio of bonuses tosalary, according to MichelBarnier, the Commissioner forInternal Market and Services.SPECTRUMBelfastBankers’ClubUntil recently NAB hadbeen considered as a potentialbuyer for other bank branchesbeing put up for sale in Britain.The strategic review is dueto conclude in time for thebank’s interim results in May.If NAB decides to sell itsBritish holdings, analysts havesuggested that NBNK, thenew bank run by formerNorthern Rock chief executive,Gary Hoffman, may be interested in acquiring them.Isn’t it time youjoined the club?OPENING HOURS:The Club opens at 5:30pm from Monday-Friday.AVAILABLE FOR PARTIES:Available for parties on request (any day).There is no charge for parties and room booking.31 Malone Road Please phone 02890-382866 after 5.30pm orBelfast BT9 6RU e-mail: bankers.club@ntlbusiness.comapril 2012
LIFE & STYLEAIB withdraws ‘freebanking’ for manyLloyds aimsto cut 1,600more jobsLloyds Banking Group hasannounced 1,600 more jobcuts across a number ofdivisions as part of its plan toremove 15,000 staff from thepayroll over three years.Condemning the proposedcuts, unions have accused thebank of ”making employeespay for the fault of others.”RBS and Goodwin suedby angry investorsPhoto: Gareth Chaney/Photocall IrelandUlster Bank’s parent, RBSand a number of formerdirectors – including ex-CEOFred Goodwin and ex-Chair,Sir Tom McKillop, have beenserved with a 2.4 billiondamages claim by angryinvestors in the Bank, whichis now 82% State-owned.The RBOS ShareholdersAction Group claim thatthe Bank misled investorsin the prospectus for its 12 billion rights issue tofinance the take-over of theDutch Bank, ABN Amro, justfive months before it wasbailed out by the State.Lloyds hitsex-chiefs’bonusesBonus payments worth 2.2mhave been clawed back fromthe former Chief Executiveof Lloyds Banking Group,Eric Daniels, and three of hisformer colleagues as a resultof the losses arising from themis-selling of payment protection insurance.The former senior executiveswere due to receive the bonusawards for their roles in theintegration of HBOS into Lloydswhich involved cutting 28,000jobs.www.iboa.ieAIB is tightening its “freebanking” facility for personalcurrent account customers inorder to save costs – includingthe “significant” cost of providing money transmission services.Currently, to qualify forfree banking, customers withcurrent accounts must complete at least one transactioneach quarter using an AIB debitcard and at least one paymentusing phone or internet banking.But from May 28 customersmust keep their credit balanceabove E2,500 for a full quarterto avoid maintenance and transaction fees.AIB says that 40% of itspersonal current account holderswill still qualify after the change– including holders of studentaccounts, graduate accountsand over 60s’ accounts.Describing the decision asan ‘insult,’ Ann Fitzgerald, theChief Executive of the NationalConsumer Agency, said she isasking the Financial Regulatorto rule if AIB has breached itsconsumer protection code.Meanwhile AIB staff mustonce again bear the brunt ofcustomer anger.ARTS & LEISUREwww.iboa.org.ukWORK AGENDAHyho.ie provides a rangeof special deals for IBOAmembers.Check the IBOA websites for details of the latestsoffers on holidays for destinations worldwide, as wellas specialised golf trips andsports packages.For every booking madeon the Hyho site or viaour dedicated call centre,Hyho.ie will donate between10% and 20% of its agencycommission to a charity,school, club or communityorganisation of your choiceat no extra cost.Check the latest offersthrough www. iboa.ie/s/7 orwww.iboa.org.uk/s/7/.You’ll need your IBOAmembership number to logon!april 2012SPECTRUMIBOA THE FINANCE UNIONNEWS5
SHORT CUTSNEWS REVIEWSPECIAL FOCUSIBOAUK’s biggest banksreceive hiddenState benefitsworth 45bnwww.iboa.org.ukAs well as direct State investment enjoyed byindividual banking institutions in the UK – likeRBS, Lloyds and Northern Rock – Britain’s‘Big Four’ banks also benefitted from anindirect ‘subsidy’ worth nearly 45bn in 2010because they were considered to be too bigto be allowed to fail.The figure – calculated by the New Economics Foundation following earlier researchby the Bank of England – reflects the fact thatBarclays Bank, HSBC, Lloyds Banking Groupand RBS were able to borrow money at lowerinterest rates because of the widespread belief that the UK Government would interveneif the institutions got into difficulty.The independent think-tank reckons thatthese lower interest rates were worth a total of 45bn to the UK’s ‘Big Four’ banks.Regulating the financial fringesGlobally they account for over E45 trillion or just under 38 trillion.Although they are not banks, they sometimes act like banks. So“shadow banks” could also create the same risks as ordinary bankswithout necessarily being fully covered by the same regulation as them.www.iboa.ieIBOA THE FINANCE UNION6Shadow boxingSpecial Offer forIBOA membersFor individuals:Save E3 off full admission priceFor families: Supersaver deal of E20for family of 4 (normal price E35)Offers may not be used in conjunctionwith any other offer or promotion.National Sea Life Centre, Bray Seafront, Bray,Co. Wicklow. Tel. 00-353-1-2866939www.sealife.ieSPECTRUMapril 2012Shadow banks havebeen defined as anybusinesses that engagein activity involving “creditintermediation outsidethe banking system.”They include moneymarket funds, conduits,securitisation lendingoperations and repos.Some analysts haveargued that the absenceof transparency in theshadow banking systemcontributed to the financial crisis.So the G20 and theEU want to make sure allbusinesses in the shadowbanking sector are properly supervised andregulated to address therisk of them causing orcontributing to a financial crisis in future.The European Commission launched a GreenPaper consultation inMarch setting out whatis already contained inEU law to tackle theserisks and seeking viewson what more needs tobe done.UK financial regulatorychief, Adair TurnerThe EU consultationis linked to a global process being overseen bythe international FinancialStability Board under theauspices of the G20.Reflecting on thechallenge of regulatingshadow banks, AdairTurner, the Chairman ofthe UK’s Financial ServicesAuthority, noted recentlythat shadow banking isnot “something parallelto and separate from thecore banking system, butdeeply intertwined with it.”Among the variousrecommendations nowbeing considered internationally to address theissue are capital chargesand curbs on a bank'sexposure to shadowbanking entities.
LIFE & STYLEARTS & LEISUREDutch pension fund UK banks face newsues Goldman Sachs mis-selling scandalover mis-sellingSThe Dutch civil service pension scheme, ABP, haslaunched a law suit against Goldman Sachs Groupover the sale of mortgage-backed securities.One of the largest pensionschemes in the world withassets of E246bn, ABP claimsthat Goldman Sachs sold itcollateralised debt obligations(CDOs) which were far riskierthan the investment bank hadsuggested.Indeed in the formal complaint against Goldman, ABPclaims that the investmentbank knew that the loanswere destined to fail.A spokesman for ABP said:“Goldman Sachs knew thequality of the underlyingmortgages from the start tothe end and must have beenaware they did not deserve aAAA rating.”The pension scheme hasinitiated similar suits againstJ P Morgan, Credit Suisse,Deutsche Bank and GMAC, thefinancial branch of GeneralMotors.Doubly sorry: Barclays CEO, Bob Diamond may have to apologiseto customers once again (Photo: Daniel Lewis)ome of the UK's leading banks are facing allegationsof mis-selling complex financial products to manysmall businesses without providing them with sufficientinformation on what they were being sold.Barclays, HSBC, Lloyds and RBS are facing legalaction which may ultimately cost billions in damages.FSA boss to quit soonThe Chief Executive of Britain’s Financial ServicesAuthority, Hector Sants, is to leave the regulatorybody in June.His imminent departurehas come as a major surprisesince Sants was expected toHector Santshead up a new banking supervisory body as part of amajor shake-up of the regulation of British banking duein early 2013.The FSA is due to divideinto two – the PrudentialRegulatory Authority (PRA)which is to be part of theBank of England (with Santsoriginally designated as thePRA’s head), and the FinancialConduct Authority, a separateconsumer watchdog.The resignation of theformer Credit Suisse banker isthe latest in a series of departures by senior FSA staff.A large number of smalland medium-sized enterprisesclaim that they were forcedto take out highly complexderivatives as a form of insurance against interest rate rises.These instruments – whichwere highly profitable for thelenders – resulted in substantiallosses for the borrowers wheninterest rates fell.According to the SundayTelegraph, Michael Dempster,Professor Emeritus at CambridgeUniversity’s Centre for FinancialResearch believes the claimsfaced by banks could run tobillions of pounds.This latest incident followsa major scandal over PaymentProtection Insurance (PPI) – inwhich UK banks and insurancebrokers could face bills of up to 3 billion after mis-selling PPI toas many as 12 million customers(see Spectrum May 2011).april 2012SPECTRUMwww.iboa.org.ukJersey sore and may be getting sorer: The Goldman Sachs Towerin Jersey City, New Jerseywww.iboa.ieWORK AGENDAIBOA THE FINANCE UNIONNEWS7
SHORT CUTSNEWS REVIEWwww.iboa.org.ukIBOAOnly five “ethical” banks in world!Scope of EUbank stresstests may beexpandedwww.iboa.ieSPECIAL FOCUSEuropean Union regulators mayexpand the scope of the bankstress tests in 2013 to includechecks as to whether banks’business models are too risky orvulnerable, according to theReuters news agency.The European BankingAuthority (EBA) has alreadyheld a “brainstorming” sessionto explore ideas for next year’stests.Among the new elementsreported to be under consideration are evaluations of howthe banks’ business models areevolving after off-loading assetsto reduce their need for capital.The stress tests may alsoinclude assessments of whetherthese institutions can survivewithout ECB funding when itneeds to be paid back; as wellas the schedules for repayingfunds.Only five banks worldwidehave made the 145-strongWorld’s Most Ethical (WME)Companies list for 2012, produced by the EthisphereInstitute (EI) – an internationalthink-tank, based in New Yorkand dedicated to the “creation,advancement and sharing ofbest practices in businessethics, corporate social responsibility, anti-corruption andsustainability.”The five banks selectedfor the honour are NationalAustralia Bank (Australia),Old National Bank (USA),Rabobank (Netherlands),Standard Chartered Bank(UK) and Westpac Group(Australia).The EI awards the titleto those companies which“show leadership in promoting ethical business standardsand practices by exceedinglegal minimums for compliance, introducing innovativeideas that benefit the publicand forcing their competitorsto follow suit.According to the Institute, the chosen companies“demonstrate how corporatecitizenship is undoubtedlytied to the success of a company’s brand and bottomline.”Tesco Bankdelays moveinto currentaccountsIBOA THE FINANCE UNIONT8esco Bank is reported tohave postponed the launchof its current account facilityuntil next year.It had previously intendedto launch current accounts thisautumn.Explaining the delay, Tescosaid that the launch was beingdelayed to allow for the introduction of new industry-widesystems in the UK to enablecustomers switch betweencurrent account providers moreeasily.SPECTRUMGreat savings and offers for IBOA members in Great Britainand Northern Ireland from Thomas Cook –including a 6% discount on thousands of holidays.Check the Members Only Section ofthe IBOA websites for more information.april 2012
The global nature of international finance wascaptured in a recent court case in which a Londonbased banking executive employed by a Swiss bankfaced trial in New York.David Higgs, a managingdirector at Credit Suisse inLondon in 2007 and 2008,pleaded guilty to criminalcharges that he and somecolleagues inflated the valueof mortgage securities in thebank’s portfolio in order toboost their bonuses.The fraud was perpetratedby Higgs, Head of HedgeTrading, and his boss, KareemSerageldin, Head of StructuredCredit Trading, along with twoNew York-based Credit Suisseemployees, Faisal Siddiqui andSalmaan Siddiqui (no relation).State-ownedRBS spent 4mon lobbyingUS lawmakersUlster Bank parent company,RBS, spent 4.13m on in-houseand commercial lobbyists toinfluence US federal legislatorsbetween October 2008 andDecember 2011, according todocuments released by the USGovernment recently.The bank lobbied US Congress representatives on consumer protection laws – likethe Consumer Overdraft Protection Fair Practices Act andthe US Credit Card Act – aswell as on the Dodds-FrankWall Street Act – intended toreform the US banking system.This activity has raisedmajor concerns in Britain sinceRBS is 82% owned by the State.ARTS & LEISURESwiss and Britishregulators launchprobe into UBStrading lossesThe UK's Financial Services Authority (FSA) and theSwiss Financial Market Supervisory Authority (FINMA)have both launched enforcement investigations intothe 1.
Cirque du Soleil’s Alegría The Little Big Club From Jack to Trap Prize Crossword, Picture . For many RBS staff –and especially former staff –the public humiliation of the ex- . longer accept cheque lodge - m e nt sa i28b
