One for Ritchie to chunter about

Bankers not being fined for bankrupting their bank. Clearly, this is something that the Lord High Tax Denouncer and all around economic expert will be quick to condemn. For a bank has been let off a £120 million fine purely on the basis that they’ve not really got the cash to pay for it.

So what? They did wrong, there’s no favourtism in RitchieWorld, the guilty must be punished:

The …. Bank has escaped a fine from regulators for management failings in the years leading up to its near collapse in 2013.
The Bank of England’s Prudential Regulation Authority, which oversees Britain’s biggest banks, criticised internal procedures at the bank that led to the discovery of a £1.5bn capital hole in 2013 and the lender being bailed out twice by investors including hedge funds.
….
There were “serious and wide-ranging failings in …. Bank’s control and risk management framework during the period from July 22 2009 to December 31 2013,’’ the PRA said.
“….. Bank had a culture which encouraged prioritising the short-term financial position of the firm at the cost of taking prudent and sustainable actions for the longer-term,’’ it said.
Still, the PRA waived a potential £120m fine on the grounds that it would hinder the bank’s efforts to boost its financial strength. The Financial Conduct Authority, a separate regulator, also waived a potential fine.
“The serious failings in this case merit a substantial financial penalty,’’ the FCA said.

Hmm, what’s that? It was the Co Op? Where Ritchie said it was discrimination by the regulators to insist that the board had at least someone on it who had the first clue about banking?

Might be waiting a bit for that condemnation, eh?

8 thoughts on “One for Ritchie to chunter about”

  1. I sometimes point out that Murphy is so stupid that he would defy a Swift to satirise but the most apposite quote is from Orwell…

    ‘All men are equal, but some are more equal than others’

  2. The fine has been waived because to impose it would derail the capital plan agreed with the PRA when the Co-Op Bank failed the Bank of England’s stress tests last year. Since the PRA agreed to let it live last year despite the stress test adverse scenario showing that a housing crash would wipe its entire capital and some of its unsecured debt too, it would be completely insane to undermine it with a fine that would increase its losses by another £121m.

  3. Frances,
    Other banks have had to pay significant fines, and shareholders have had to carry the burden. They have also had, and continue to have, their future plans affected.

    The new majority owners might be regarded as blameless, and we don’t want to discourage future rescues. However, simply waiving the fine does seem to set a dangerous precedent.

  4. Given that the point of fines from regulators us to curb adverse behaviour then waiving seems to be the wrong message.
    Some form of deferral or staggered payment would be preferable to highlight the issues.

  5. Frances is right.
    If you want to impose penalties to restrict bad behaviour impose them on those who behaved badly, such as Paul Flowers and Gordon Brown

  6. Paul Flowers, the Crystal Methodist, a Labour tale almost beyond parody. It ticks every box. Appointed by Ed Milliband to be chairman of co-op banks in 2010 based on a whole four years experience of banking early in his career. Due dilligence presumably not troubled by the fact that the Rev Flowers had previously; had to stand down as a Labour Parliamentary Candidate when it turned out he had a criminal record, for Gross Indecency in a public toliet and had been vice Chairman of Rochdale Social Services at the time of the Satanic abuse trials and the failure to take action over the ‘paedo sweetshop’ school frequented by Cyril Smith. Before the evil Daily Mail revealed his penchant for Coke, Crystal Meth and rent boys, it turns out he had quietly resigned from Bradford Council for having indecent images on a council laptop and was under investigation by a charity he worked for for fiddling his expenses. I am sure the lack of oversight had nothing to do with the co-op bank donating 50k to Ed Ball’s political campaign.

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