Bankers: The New Estate Agents

The world is still rocking on its foundations from the seismic shocks in the banking industry and few of us are unaffected in some way or another. Even if we are not the real unfortunates who have lost their life savings or jobs, given the economic gloom now settled on Britain and elsewhere, few are likely to escape completely.

Small wonder then that banks and bankers have replaced estate agents as the most hated people in the land, especially when we hear examples of reckless behaviour coupled to huge unearned rewards. Take the salary of £4.1 million paid to RBS boss Sir Fred Goodwin whose disastrous decisions and acquisitions led to the bank’s downfall and subsequent rescue by the government.

The US, as ever, tops that with the pay of Dick Fuld, the CEO of Lehman Brothers who, “earned,” $60 million. Questioned by a Congressional Committee, Fuld denied additional rewards of $480 million but admitted to taking another $250 million out of the company, which he described as, “still a large number.” These figures did not include his houses, just one of which was valued at $40 million. His US and UK employees are now in the dole queue.

Most are angry at a system that allows such blatant excess whilst ordinary people lose everything but there is also an emerging mood of wider dissatisfaction with British banking generally. Even at the level of normal domestic accounts, we don’t much like our banks.

For years now many of us have been unhappy at the vast profits banks made whilst increasingly chipping away at the service they once provided; usually justifying the increasing facelessness and call centre mentality on cost grounds. Now seems to be the moment for that disaffection to express itself.

Anybody over the age of forty will remember the branch of their local bank as a very different place to the one they use now. If you can remember Britain 20 years ago, try and make some comparisons. Do you remember seeing the same people every time you went into your bank back then? Did they all look like normal people who had yet to lose their personas in the blandness of a corporate uniform?

Was there a branch manager who you could speak to and who could be relied upon to know your personal circumstances and consider them rather than shoving this week’s promotional, “product,” in your face? Could you simply ring up and speak to the person you saw in the bank this morning?

If you can answer yes to a few of those questions, then to bank in Spain in 2008 is to feel as if you have just stepped out of the Tardis.

In this recent crisis, Spain has escaped the banking turmoil largely unscathed and it is no coincidence either. The Spanish bank I use is cash rich and along with others, now well known in Britain, it is picking up juicy opportunities with its carefully managed wealth.

There is much about Spanish banking that has the feel of time travel about it.
I see the same people every week when I go into my bank. My bank manager volunteered his direct email address as well as his mobile phone number and I can call him or any of his staff, simply by phoning the branch. How does that stack up against the experience of your current high street bank?

I am no big financial wheel either, simply an ordinary domestic customer using the same bank my wife has used for 20 years. Of course I walk into a modern chrome and glass building with – strangely to British ears – soft music playing in the background and the modern electronic equipment seen in any 21st century bank but that is where the similarities end.

In terms of how the bank feels to do business with and the way we all know each other, it is pure 1970s Britain and this is not the only similarity either.

Behind this cosy atmosphere lurks the Bank of Spain, who regulates the industry with iron conservatism. There is no 1980s style deregulation here and no sub-prime mortgages either. Certainly Spanish banks loaned money up to 100% of property value but that was pretty radical for them and only those with sound finances got the money.

More important are the rules covering bank’s loan to asset (and cash) ratios, which prevented Spanish banks from over extending themselves by law. You could say that naked greed is illegal here. Emilio Botin, the owner of Banco Santander (and so Abbey and Alliance & Leicester) was asked about his bank’s exposure in the sub-prime market. “We don’t have those strange things,” was his reply. I’ll bet there are bankers aplenty who wished they didn’t either.

So, where does this leave banking in dear old blighty? Apart from the obvious answer, that it still reeling from the shocks, perhaps now it is acceptable to put the boot in whilst the victim is down. All those with accounts in high street banks should make our feelings known. They’re desperate for our money right now and if a branch manager, direct phone access and good quality service is demanded by enough people, banks will have no choice but to listen.

It has long been said that banking’s attitude to the public is to loan you an umbrella and then demand it back when it starts raining. Well two can play at that game. We should all demand our umbrellas back or else – our money is off to sunny Spain; they take pounds willingly enough.