Say it ain't so!

Headline from the Weekend FT

"Banks make customers pay for lost profit"

Well, we saw that one coming! Banks have grown used to their super-sized profits and more importantly the executives have grown used to the super-sized bonuses, so they were never going to let their shocking investment decisions get in the way of their shockingly fat pay cheques.

We are hearing some interesting stuff on the street at present. Banks have started to mimic one of the other truly horrifically managed industries, the airlines. The airlines, almost without exception, have a customer service manifesto that reads like the Mafia code of Omerta. In almost all circumstances airline staff are coached to give away only the barest minimum of information. Nada. Name, rank, serial number. These people are taught to remain useless in the face of torrents of abuse from hard done by passengers.

Their constant repetition of the word sorry renders it useless (in fact, said enough times it starts to sound like "screw you")

Now it is becoming clear that on the street Banks (in spite of the deluge of credit crunch stories in the media) have adopted a standard message to clients of "with us, it is business as usual". The front line managers have been coached to admit nothing. The other guy might be squeezed, but we (the next bit is code for "they messed up but we didn't")have a solid capital base and continue to look for lending opportunities.

Only, it isn't quite like that. We are now hearing of many occasions where seemingly routine lending is getting all the way to the offer stage and then mysteriously falling over. "Nothing to do with the credit situation" borrowers are told....hmmm.

It's suspiciously like the airlines. You sit for five hours in a smelly, congested airport being told next to nothing and then all of a sudden they cancel the flight. Couldn't they have told you that five hours ago? You might have checked in to a hotel, enjoyed a refreshing shower, a cold beer at the bar and be settling into an excellent dinner. But no. You find yourself shouting at a bored looking Air Crud staff member (they always have that passive aggressive face on) who says "Sorry" every time you pause for breath.

And with the Banks. Leading you down the path thinking that you will be getting the loan, telling you that it is business as usual, only to be denied at the last moment. No hint on the way. No heads up or early warning that this isn't going to plan.

The trouble is that with a cancelled flight you might miss your dinner. With a cancelled loan you might lose your business.

Free Lunch (cancelled)

Well, it didn't take long. No sooner did we speculate about the end of free banking and hey presto, it's gone.

RBS broke ranks first with a rather confusing (read: deliberately misleading)series of comments introducing a new raft of small business fees starting with phrases like "this has nothing to do with the current credit crisis" and "this will only affect customers with legacy deals".

Legacy. What a great word. Until it was hijacked recently it meant anything handed down from the past, or a gift from a will. But in the modern way (read: American way)the word has been subtley disfigured. The deliberate use of the word "legacy" now implies that the old, inadequate or deficient proceedure no longer works in the current circumstance. Somehow, someway it is your fault.

A new computer system that doesn't work with old data performs poorly because of "legacy" issues (read: "your spanking new £150,000 system won't function properly because your last IT Twit built this using spit and chewing gum". "But...but.. it has worked OK for the last 10 years?" "duh....but you don't have the new DX50 super xenox gigachip with no-leak wings do you?...no you've got major legacy issues".)

Oh.

Always the not-so-subtle implication being that whatever came before is inadequate or flawed and that the inability of the present solution to function correctly is simply the fault of the previous buffoon.

And that brings us back to RBS. Now no longer prepared to offer their small business customers a small crumb of comfort in their banking relationship. Not good enough that the business man and woman is already under significant cost pressure in the market place. No, through no fault of their own (and significant fault from the bank in their indescribably cavalier investment strategies) long suffering small business is expected to take it on the chin yet again.

"I'd like to move my business account to you Mr. New Bank"

"And why have you decided to move from the Royal Bank of Scotland Mr. Businessman?"

"Legacy issues".

Banks need a holiday

This has been a difficult time to be a bank. Having had to fess up to losing bucket loads of cash they are now rebuilding their balance sheets by issuing more shares and thus diluting the poor saps who have continued to hold on to their piece of the pie. The sensible thing to do? Maybe, maybe not. The point is that they don't have many options. The investors who take up these new shares will of course be hoping that this will all go away quickly and that the banks will soon return to harvesting their "jabba the hut" sized profits.

Profits that, as any small business owner will tell you, are normally shaved from the client by way of fees, charges, excesses, overages, facilities, and assorted flim flammery.

But what now the banks have lost the first round in the fight against all these charges? How robust will the banks profits be going forward if they are forced to repatriate their clients with their cash. Well, it is a pretty safe bet the banks will react in a robust and mature manner, by taking their ball home.

Yes, although for all these years we have charged you thirty pounds to bounce a cheque, or charged you usurious interest for exceeding your overdraft facility, we are going to withdraw free banking options and not lend you any money. Nah nah nah nah nah.

Well, hello! If you were bouncing checks and going over your limit you weren't getting free banking anyway. So the only people to suffer are the goody goody customers. Go on. Punish them. That'll go down well.

Yes, the banks are definitely caught, to coin a phrase, between a rock and a hard place. This must be very trying times to be a bank, very stressful. A good time to take a holiday.