Big Four UK banks face further 'shake-ups'

bob-diamond.jpg
While banks are mired in fraud allegations, banks chief such as Bob
Diamond feel no need to resign

Scottish news: Big Four UK banks face further 'shake-ups'

by Gabrielle Wilson

In the wake of record £290m fine levied against Barclays, the chairman of the board, Marcus Agius has announced his resignation. Mr Agius, who described himself as the “ultimate guardian” of the bank’s reputation, is to be replaced by Sir Michael Rake. As interim chair, Sir Rake will oversee a whole-scale audit into Barclay’s practices, as well as, bring in a code of conduct for employees and a zero tolerance policy for unethical conduct by employees.

As chairman, Marcus Agius made £751,000 a year and could potentially receive 12 months of salary compensation. Last week, the CEO, Bob Diamond, announced he and three other executives will waive their millions in bonuses this year as a result of the scandals related to fixing interest rates and illegally selling financial products to individuals and small businesses.

However, even with these admittedly weak attempts to regain public trust, some are calling for Mr Diamond’s resignation and a full scale criminal investigation into UK banks. Gary Greenwood, an analyst at Stockbroker Shore Capital calls the resignation of the board chair insignificant and Sir Mervyn King declined a chance to offer his support to the tarnished Barclay’s CEO.

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As the £290m fine Barclays has received is considered to be the first of several fines charged to the big four banks, there will likely be more resignations in the weeks ahead as Barclays, Lloyds, RBS and HSBC attempt to mitigate the damage to their collective reputations.

However, when UK families are facing cuts to welfare benefits, public services and employment prospects in the name of austerity, the idea that a banking executive has the option to turn down a £1.2m bonus highlights the growing chasm between bankers and their customers.

The Bank of England’s head, Sir Mervyn King, has called for changes to the culture within large banking firms, but perhaps a little competition in the banking sector would be more effective. The exposure of multiple banking scandals comes at the same time as the Co-operative bank moves closer to purchasing 623 branches from Lloyd’s Banking group. The Co-operative group began as a food store that offered customers a chance to become members and share in the profits as well as business decisions, but has since expanded to offer a variety of consumer services including banking.

The acquisition of the former Lloyd’s branches will triple the number of Co-operative banks offering consumers a viable alternative to the so-called ‘big four’ of Lloyds, RBS, Barclays and HSBC, which currently account for 75% of the market share in Scotland. A non-profit organization, Move Your Money, has seen hits to its website increase by 500% in the past month suggesting that the big four banks still have a long way to go.

George Osborne is expected to announce plans for an independent inquiry at Westminster this afternoon that will investigate possible criminal charges, but will ‘stop short’ of the full scale Levinson inquiry into media conduct.

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published this page in News 2012-07-02 15:42:00 +0100