City: Out of credit

BANKS have always been unpopular; recession has turned them into some of the most hated institutions in the land. Who's to blame? In large part, according to Sir Jeremy Morse, chairman of Lloyds, it is the Government and the press. Last week, he accused them of encouraging the 'biggest wave of anti-bank sentiment in Britain since the 1930s'.

To a degree he is right. Politicians are brazen about it; any opportunity to deflect blame for the recession from themselves on to someone else is grabbed shamelessly. Bankers make easy scapegoats. For the press too, banks are obvious targets when the going gets tough. But come on, Sir Jeremy. Are not bankers just a teeny weeny, little bit culpable? Did they not bring most of this on themselves?

The first wave of bank-bashing came when the press started publicising the complaints of small business customers. Bankers appeared to be overcharging and in some cases foreclosing unnecessarily. That in turn unleashed a wave of pent-up anger from ordinary current account holders, milked to pay for a catalogue of lending disasters. Forget Maxwell, Brent Walker and the thousands of other lesser cases of reckless lending laid bare by recession; last week alone there were two rather more immediate examples.

Barclays was forced publicly to announce the provision of pounds 240m against a pounds 422m exposure to Imry, a property company whose best known achievement was concreting over the remains of Shakespeare's Rose Theatre in Southwark, south London. The site is now occupied by a vacant office block (since sold) that nobody wants to use, with the original theatre buried somewhere in the basement. Much of the lending to Imry took place at the very moment the commercial property market went into a nosedive; it appears to be a classic case of banking misjudgement and mismanagement. How could Barclays have allowed itself to become so exposed to a single borrower? According to Barclays, the Imry loans were vetted in the normal way, and went through all the usual procedures. If this was normality, you have to ask yourself what that means for the rest of the bank's pounds 8bn property portfolio. And Andrew Buxton, who was in a key management position when the Imry loans were made, still wonders why institutional shareholders are so fiercely opposed to him combining the role of chairman and chief executive? If he had nothing to do with the Imry decision, as Barclays says, why on earth not? Is it the habit of senior managers at Barclays not to get involved in major lending decisions? Either way, Mr Buxton has a lot of explaining to do.

The other example is the Gateway supermarkets chain, now into its third or fourth refinancing (sorry, one loses count). Three years ago, Gateway was the subject of a highly leveraged pounds 2.1bn buyout, most of it financed by the banks. Since then just about everything that could go wrong has done. The original management has long since departed, collecting pay-offs along the way that by any standards looked obscene ( pounds 1m in the case of David Smith, the man who persuaded the banks to back this grand folly), and the company itself staggers from one debt-induced crisis to the next. In the course of it all, the banks have lost a packet.

One way or another, it is you and me who end up paying for this ballooning money-go-round. We have every justification in feeling aggrieved. If there is one thing that can be said with certainty about the present round of bank-bashing, it is that without it the situation would be a good sight worse. At least it has knocked some complacency out of the British banking system.

Yet in his speech last week, Sir Jeremy suggested that there was something dangerous in such sustained criticism. A successful modern economy was dependent on a sound banking system, he said, and he warned of the consequences of renewed attack. 'In the case of most business products, the more you can sell the better. But this is emphatically not true of bank loans.'

Quite so. It's only a shame Barclays and others that pursued growth for the sake of it in the late 1980s were not more alive to such principles when they might have done some good.

Start your day with The Independent, sign up for daily news emails
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
James May, Jeremy Clarkson and Richard Hammond in the Top Gear Patagonia Special
tv
News
Claudia Winkleman and co-host Tess Daly at the Strictly Come Dancing final
people
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
Elton John and David Furnish will marry on 21 December 2014
people
Sport
SPORT
News
people
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
Arts and Entertainment
J Jefferson Farjeon at home in 1953
booksBooksellers say readers are turning away from modern thrillers and back to golden age of crime writing
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
News
Stacey Dooley was the only woman to be nominated in last month’s Grierson awards
mediaClare Balding and Davina McCall among those overlooked for Grierson awards
News
Twitchers see things differently, depending on their gender
scienceNew study shows that birdwatching men have a lot in common with their feathered friends...
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
i100
Arts and Entertainment
Christopher Biggins as Mrs Smee in Peter Pan
theatreHow do the men who play panto dames get themselves ready for the performance of a lifetime?
News
i100
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.

iJobs Job Widget
iJobs General

Austen Lloyd: Senior Private Client Solicitor

Excellent Salary: Austen Lloyd: SURREY - An outstanding high level opportunity...

Austen Lloyd: Construction Solicitor - London

Very Competitive Salary : Austen Lloyd: NICHE CITY FIRM - We are making a disc...

Austen Lloyd: Construction Solicitor - London

Very Competitive Salary : Austen Lloyd: NICHE CITY FIRM - We are making a disc...

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick