William Kay: Banks must do more to help those people hit by the tsunami disaster

Since the tsunami disaster, much has rightly been made of the millions of pounds being donated by individuals and companies to provide the survivors with emergency relief. But British banks have been scandalously slow to mobilise the most powerful weapon at their disposal: finance.

Since the tsunami disaster, much has rightly been made of the millions of pounds being donated by individuals and companies to provide the survivors with emergency relief. But British banks have been scandalously slow to mobilise the most powerful weapon at their disposal: finance.

As luck would have it, the United Nations has declared 2005 its International Year of Microcredit, which is aimed at making financial services more accessible to poor and low-income people. It is intended to promote innovative partnerships among governments, donors, international organisations, the private sector, and microfinance clients.

Microfinance, or microcredit, is what it sounds like: small loans at low interest rates to enable poor people to better themselves by trading in anything from trinkets to mobile phones. Grameen Bank in Bangladesh has shown that it is possible to lend to the poor without charging penal interest rates or suffering from crippling bad debts. It has benefited millions of people in the Third World.

As the Year of Microcredit was signalled months ago most of the international banks have departments set up, some in India and South-East Asia. So you would have thought it would not be too difficult to divert this effort to the areas where finance is most urgently needed - on the battered shorelines, to help shopkeepers, café owners and fishers to restore their premises and boats. Several banks, including Barclays and Lloyds TSB, are using their links with Opportunity International, an American Christian microfinance group, to funnel money to the stricken areas. Beyond that, however, the ones I spoke to admit they haven't considered helping the area get back on its feet with finance to revive businesses that have long been profitable and are, therefore, a good credit risk.

This apparent caution is echoed by the banks' microfinance initiatives in the UK. Good work is being done at a local level, but beyond the flagship projects it is patchy. The banks' resources are such that you would think they could drive the loan sharks and doorstep lenders out of business. But the Office of Fair Trading and Department of Trade and Industry are constantly inquiring into an area of credit that is remarkably resilient despite being grotesquely overpriced.

It is bizarre that a public company such as Provident Financial can issue a credit card charging up to 60 per cent interest, while the banks slip money to credit unions and money advice centres to lend at heavily subsidised rates. Sharks routinely charge 200 per cent or more.

This suggests a combination of factors: ignorance, fear of banks, and scarcity of the cheap deals. You don't have to see every doorstep borrower as someone out of Shameless to argue that it is easier to borrow in the pub than go through the formalities that even a credit union requires. The UK banks' arthritic response to the financial vacuum left by the tsunami appears to be paralleled by their attempts at microfinance in their own back yard. Yet the need, in different ways, is just as urgent.

* I was flattered to see my old friend Edward Bonham Carter, the guiding light of Jupiter Asset Management, predicting that the hippo stock market I was the first to spot 15 months ago will wallow on into 2005.

The hippo is the modern successor of the traditional bull and bear markets. While they go up or down the hippo flounders around, occasionally breaking surface, mostly not doing too much. But it is time to move on.

I expect 2005 to be the stockmarket year of the cat. Curled up asleep for lengthy periods, every so often it will lazily stretch itself, jump up on a table, tiptoe along for a while, and then jump back to floor level again. And there is always the chance that it might find the door to the cellar.

Falling dollar brings golden opportunity

The latest relapse in the gold price could turn out to be an excellent opportunity to clamber aboard the yellow metal for what should still be a profitable ride this year. The price has come back from a peak of $453 an ounce to $428 on profit-taking, but this is being counter-balanced by fresh sources of demand coming into play around the world.

In China, the Caishikou department store has been beseiged by investors wanting to buy gold bars. And the State Bank of Vietnam has approved trading centres being set up in Hanoi and Ho Chi Minh City for formal gold trading. But the real success in opening up the gold market, previously the preserve of the privileged few, has been down to the introduction of Gold Bullion Securities (GBS). These are shares, each backed by a tenth of a fine troy ounce of gold bullion, held on trust in London vaults by a custodian.

GBS were first traded by the London Stock Exchange just over a year ago. But the big goal was to have GBS quoted in the US and Asia. With virtually no fanfare, trading began in New York in November and has already dwarfed the volume of business in London.

The next step is an Asian trading base. James Burton, the chief executive of the World Gold Council, tells me that will probably be established this year in Singapore, Hong Kong or Tokyo. While the US dollar keeps falling, demand for gold is likely to rise as investors scramble to put their assets in a portable, universally accepted store of value. Gold is still the favourite bolthole.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Marketing Services Manager - (communications, testing, DM)

    £32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

    Guru Careers: Finance Account Manager

    £Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

    Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

    £40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

    Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

    £45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas