THERE has been more than a little fanfare around the UK Government’s exit as a shareholder of Lloyds Banking Group this spring, and a degree of triumphalism from both the financial institution’s top brass and the Chancellor.
However, it is well worth considering whether this exit is really any kind of big deal at all, certainly from the perspective of customers and employees.
Crucially, state ownership of both Lloyds and Royal Bank of Scotland has failed to prevent these institutions making tens of thousands of people redundant and closing hundreds of branches.
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Anyone who thought that the banks might somehow move to a more public interest perspective, as a result of their multi-billion-pound bail-outs by the UK taxpayer at the height of the financial crisis in late 2008 and early 2009, will surely have been disappointed.
The bottom line is that tens of thousands of employees, who were in absolutely no way to blame for the troubles that required these banks to be bailed out, have paid the price for the shambles, utterly unfairly, with their jobs.
And customers too have shouldered the bill, unjustly, as branches have been shut in major cost-cutting drives. Think, for example, of an elderly customer in a remote Scottish settlement where the last branch in town has been closed. Or the myriad rural businesses reliant on branches for a raft of services, including the banking of cash.
We have gone from a position where even a small number of branch closures was a political hot potato to a defeated acceptance that the banks will keep shutting up shop in villages and towns around the UK. And they will do this whether they are state-backed or not.
The banks, for their part, will flag up the rise of online banking, including a surge in the number of people who prefer to manage their finances using their mobile phones.
Ross McEwan, chief executive of Royal Bank, has been particularly enthusiastic about highlighting the increase in the number of customers of the Edinburgh-based institution who want to manage their accounts using their mobiles. And the banks will cite a fall in the number of branch-based transactions.
The rise in online banking is real, and is being seized upon as a convenient justification of the branch closures that form a central plank of all of the big banks’ cost-cutting efforts.
However, that does not mean that the branches being axed, and those under “review” both currently and in the future, are not vital for significant numbers of customers and communities. They are.
It is worth noting that, while Chancellor Philip Hammond has been celebrating the recouping of the taxpayer money put into Lloyds, he has also conceded that the state’s stake of more than 70 per cent in Royal Bank could be sold at a loss.
Royal Bank appears to have been hampered by pressure from the UK Government to sell off good overseas businesses, such as Citizens in the US. Had they not been sold, these businesses might have offered the potential for future growth.
There seems to have been a view that Royal Bank should be made to retrench to the UK, sadly at a time when the domestic economy’s performance has been so utterly miserable, in large part because of the Conservative Government’s ill-judged austerity programme.
The same UK obsession has not applied when it has come to cost-cutting, with trade union Unite having lambasted Royal Bank’s appetite for offshoring work to India to save money and enable redundancies.
And, in spite of the celebration of the return of Lloyds to full private ownership, we should not lose sight of the fact that it has taken years and years to get there. Much, much longer than most people would have imagined.
Executives of both Lloyds and Royal Bank, who were not at the helm when the institutions ran into trouble but have been tasked with restoring them to financial health, have in recent years been richly rewarded for their efforts.
This sticks in the craw, not just because the taxpayer had to come to the aid of these institutions but far more importantly on the basis of the sorry reality that executives’ efforts seem to have been focused sharply on cost-cutting. This focus has cost tens of thousands of loyal employees their jobs.
The small but steady disposals of the taxpayer stake in Bank of Scotland owner Lloyds, a holding that was at its peak around 43 per cent, came to an end this week.
The sale of the remaining 0.25 per cent holding took the taxpayer stake to zero.
And Lloyds certainly made the most of this event. Its website proclaimed: “Lloyds Banking Group returns to full private ownership.”
The bank declared: “The sale has returned £21.2 billion to the taxpayer, £894 million more than the initial investment, including over £400m in dividends.”
This is surely a very modest gain on the taxpayer’s stake in Bank of Scotland owner Lloyds, given the protracted period over which it has been achieved,
However, Lloyds chairman Lord Blackwell proclaimed on Wednesday: “Today marks the final step in the rescue and rejuvenation of Lloyds Banking Group.”
The big question is this: now that the entire UK Government stake in Lloyds has been sold, will there be any change from the perspective of employees, customers or top brass?
And it would seem reasonable to take the view that there will be no meaningful change at all. Jobs will continue to be cut, branches will be closed, and the top brass will reap rich rewards through fat pay packets, bonuses, long-term incentive plans et al.
On these crucial aspects, the albeit dramatic and huge state bail-outs of Lloyds and Royal Bank have reinforced the wisdom of a great French proverb: plus ça change, plus c’est la même chose.