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This is what's up with banks

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There is a problem with our banks. They are not passing enough to the end-user and paying too high bonuses to their traders. If we really understood banking, we'd demand far more from our banks and not complain about them as if they are such powerful institutions. A bank takes your deposited money and uses it your money to lend to businesses or individuals (e.g. a mortgage) and speculate in financial markets. You get paid for lending (the interest the bank pays you - if any!). Banks are too much focused on policy and protocol, like the NHS instead of creating real value and prosperity for customers, they are just keeping the elites in the business of creating extravagant bonuses. The big issue with the bonuses is that many of the financial employees I've met in one of the world's biggest financial centres don't know how to spend their money wisely or in a way that doesn't demonstrate exploitation of the poorer and middle classes. For example, when I met the chief of risk for a major bank, his biggest problem was that he had paid £45,000 for a new sports car that day when his wife had told him to spend £40,000 on a car she wanted. Going out at night, I'd see so many bankers getting wasted - but paying prices like £5-10 for one glass of beer. I kid you not, one glass of water was £8. This is abuse of our deposited money to be paying the bankers in this way so they can spend so frivolously. The answer is not in negative complaining, it's in taking positive action and thinking about how we can create prosperity, not change the world. One trader told me that when you pay in a cheque, some banks will literally double the value of the cheque in financial markets before the money even hits your account. Then you're told that 0.5% per month simple interest (Halifax) is a great offer for you as a customer. Banks know that most of their customers are not educated in the ways banks work and so they can make their customers into walking poverty jokes. Financial markets are there to allow consumers to make decisions so that they can borrow, lend and speculate at the desired level of risk to allow you to consume at the level you want in good times and bad. Anyone who calls them a casino, just doesn't understand portfolio management, corporate finance and banking and can't handle their own money professionally. You can slave your life away working and paying money to the bank and what you're doing is literally paying for the bankers and bank managers mortgages and dream lifestyles while you wonder why life's not fair for your whole life. It's your choice, so take some responsibility for God's sake! Don't blame others or the banks. Take 100% responsibility for your results because the banks aren't going to change them for you in case you hadn't realised already, neither is a financial advisor who is paid no matter what happens to your account.

 

I actually have a dream for Sheffield that it should become the new financial centre of the UK. Without financial institutions, there's no hope of real prosperity. Manchester, Edinburgh, London, they all have banks with trading floors, especially the City of course. We have NO TRADING FLOORS, NO HEDGE FUNDS, 1 PENSION FUND (that I know of, and I think that has relocated to Leeds - could be wrong). In other words, in reality, no matter how much pride we've got in Sheffield and the Steelworks and the working class B.S.!!!,, we are LOSERS guys. We gotta take massive action and put ourselves centre-stage. I've had enough...dang...I'm making a decision soon....

Edited by samuk1000

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Strange, I bank with HSBC and also use a different business bank and different ISA provider. They know this and have no problem with it.

 

I would think there is some competition law that would say they cannot prevent you from banking elsewhere too.

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No, I'll tell you what's wrong with banks.

 

In recent years, I've been 'invited' in as my current account had 'rather a lot of money in it'. (It didn't). I told them I was all ISAd up, consider stocks and shares to be the equivalent of walking into Ladbrokes and asked what their 'financial advisors' would suggest.

 

The first time, they said I 'ought to get payment protection insurance' (PPI)

 

The second time, they suggested Critical Illness Cover.

 

And, just before Christmas I was involved in the ATM scam at Crosspool. They cancelled my card, arranged another one and asked if I wanted to take out card insurance.

 

As anybody knows, each of these are commission-heavy wastes of time.

 

And later this year, my endowment mortgage is finished and I expect to pay thousands of pounds as they've managed to turn a very modest investment into a loss over 25 years.

 

What was once a (fairly) noble profession is now peopled with the equivalent of dodgy car dealers with no concern for the well-being of their customers. So it's not just Hester and Goodwin. I consider all bank employees to be further down the social order than paedophiles.

 

I feel your view is clouded a bit by your individual experience. The majority of people who work in banks don't make the rules, they just do their jobs. When I've been offered any 'extra services' by my main bank (who I've been with for 30+ years) I simply decline. I've never had a problem with them either online or when I go into a branch.

 

My OH and I had an endowment policy (via an insurance company not a bank) that lost money, so I took the trouble to go through the channels and eventually went to the ombudsman. We got an extra £4k bringing the payout to at least the minimum we expected. Might be worth a try in your case? Sadly endowments weren't the cash generators we expected. I'm a bit wiser now. ;)

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There is a problem with our banks. They are not passing enough to the end-user and paying too high bonuses to their traders. If we really understood banking, we'd demand far more from our banks and not complain about them as if they are such powerful institutions. A bank takes your deposited money and uses it your money to lend to businesses or individuals (e.g. a mortgage) and speculate in financial markets. You get paid for lending (the interest the bank pays you - if any!). Banks are too much focused on policy and protocol, like the NHS instead of creating real value and prosperity for customers, they are just keeping the elites in the business of creating extravagant bonuses. The big issue with the bonuses is that many of the financial employees I've met in one of the world's biggest financial centres don't know how to spend their money wisely or in a way that doesn't demonstrate exploitation of the poorer and middle classes. For example, when I met the chief of risk for a major bank, his biggest problem was that he had paid £45,000 for a new sports car that day when his wife had told him to spend £40,000 on a car she wanted.

Eh? Why is that the big problem with bonuses?

 

For that matter you realise that the trading and retail divisions of banks are generally separate (and that's going to be more stringently enforced with legislation going forwards), so your deposited money isn't used by traders

Going out at night, I'd see so many bankers getting wasted - but paying prices like £5-10 for one glass of beer. I kid you not, one glass of water was £8. This is abuse of our deposited money to be paying the bankers in this way so they can spend so frivolously.

I'm finding your entire objection to bonuses to be very surreal.

The answer is not in negative complaining, it's in taking positive action and thinking about how we can create prosperity, not change the world. One trader told me that when you pay in a cheque, some banks will literally double the value of the cheque in financial markets before the money even hits your account.

He lied, your deposits are not used for trading.

Then you're told that 0.5% per month simple interest (Halifax) is a great offer for you as a customer. Banks know that most of their customers are not educated in the ways banks work and so they can make their customers into walking poverty jokes. Financial markets are there to allow consumers to make decisions so that they can borrow, lend and speculate at the desired level of risk to allow you to consume at the level you want in good times and bad.

You realise that the risk is real and that you could well loose money, there's no magic to allow you to consume what you want.

Anyone who calls them a casino, just doesn't understand portfolio management, corporate finance and banking and can't handle their own money professionally. You can slave your life away working and paying money to the bank and what you're doing is literally paying for the bankers and bank managers mortgages and dream lifestyles while you wonder why life's not fair for your whole life.

Which is actually why people complain about bonuses, that and the fact that a lot of banks lost so much money speculating that they needed tax payers money to stay afloat and that the bonus structure incentivises short term risk taking.

It's your choice, so take some responsibility for God's sake! Don't blame others or the banks. Take 100% responsibility for your results because the banks aren't going to change them for you in case you hadn't realised already, neither is a financial advisor who is paid no matter what happens to your account.

What results are you talking about?

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Which is actually why people complain about bonuses, that and the fact that a lot of banks lost so much money speculating that they needed tax payers money to stay afloat and that the bonus structure incentivises short term risk taking.

 

It is true that the bonus structure incentivises short-term risk taking and it can also incentivise questionable accounting to imply short-term profits which will translate in to huge losses the following year nottomention a flagrant disregard for risk in short-term risk taking (such as investing in subprime mortgages and derivatives projects and borrowing short-term to finance such projects and other longer term projects, like Lehman's did resulting in the financial crisis).

 

The problem with the bonuses are that they are too high and my point is that the money should go to the investor/lender, not to the employee trader. This makes mugs out of the customers (lenders), leading to angry discontent. I don't support a hedonistic and greedy lifestyle of banking employees whose bonuses are clearly too much for them to handle (or else why would they be going out destroying themselves and people around them night after night). If their income were somewhat reduced, it might force them to change their gratifying consumption habits and allow end-user banking customers to enjoy a bit more for their depositing.

 

Mine is not a complaint about bonuses per se. And I'm not trying to take anything good away from financial managers, traders or any other well-performing employee. It's more about integrity, honesty and giving more value back to the end-user instead of making them bear the brunt of the mistakes of the elites in addition to their successes. Surely this is unethical and dishonest?

 

Big bonuses funding a lifestyle which can be purely hedonistic is the point I was trying to make. If these guys were using their money to create businesses or provide more value to everyone in society it would be ok. You can argue their spending in such enterprises (like bars, pubs) is good for the economy anyway. My view is it's unethical use of money which could be going back to shareholders and customers.

Edited by samuk1000

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Retail customers of a bank are not funding it's trading activities or paying the bonus of the traders, the divisions of the banks are separate.

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The divisions may be separate, but if the retail customers weren't providing deposits, the banks would have no means to make money with which to trade, if that is what you are saying the money the banks do use to trade comes from. Money deposited doesn't get stored in a vault does it? The point of a bank is to act as an intermediary in financial markets, so the depositor gets a per centage of the return on the interest made by the bank by lending the money. It's not rocket science.

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Banks are required to keep separate the finances of the retail and trading divisions (more so now than previously).

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I went in to HSBC to enquire about opening an account. I was amazed to be told "we don`t allow customers to bank elsewhere, so we would expect you to close any other accounts you hold with other banks, and do all your banking here". Yeah right...

 

I which point I'd tell them to p*** off!

 

If there's one thing I can't stand it's banks trying to sell products. I've avoided by banking online and telling them I don't any marketing calls. It's worked.

 

Years ago I banked with First Direct who were generally good but phoned non-stop trying to flog stuff so I switched accounts. Maybe if more people did this they would get the message.

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The divisions may be separate, but if the retail customers weren't providing deposits, the banks would have no means to make money with which to trade, if that is what you are saying the money the banks do use to trade comes from. Money deposited doesn't get stored in a vault does it? The point of a bank is to act as an intermediary in financial markets, so the depositor gets a per centage of the return on the interest made by the bank by lending the money. It's not rocket science.

 

Oh so people dont actually buy shares in banks then. People dont actually use investment accounts then? Businesses dont have deposit accounts then? variable source savings accounts? Pension trusts? Local council and government investment schemes?

 

There is far more income to banks than just current account customers :roll:

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Bank with HSBC myself. It can be hugely inconvinient but its mainly to protect against fraud, so can't complain much.

 

The thing is about HSBC they dont make most of their money on personal accounts. Rather they make billions trading internationally, the UK customer side is just a front facing operation. We're not that important to them, just enough to keep them in the game.

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The problem with our banks is that they are insolvent. They are leveraged way beyond even the politicians wildest nightmares.

 

Instead of going for the bonuses, we should have independent auditors in them, working out the assets and then the liabilities (and not one of the big four accountants whom are in the back pockets of the banks). Then, if they are deemed to be insolvent (which is a given) we should take the directors to court for trading the company criminally.

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