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.

John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing

Other places that have held independence referendums
Jonas Gutierrez (r) competes with Yaya Toure (l)

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'

Actors star in Woody Allen's 'Magic in the Moonlight'

peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's most starring part

Watch this commuter wage a one-man war against the Circle Line
We are phenomenally good at recognising faces; the study showed that humans have been selected to be unique and easily recognisable

Human faces unique 'because we don't recognise each other by smell'

Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
A male driver reverses his Vauxhall Astra from a tow truck

Man's attempt to avoid being impounded heavily criticised

Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
The Guildhall School of Music and Drama is to offer a BA degree in Performance and Creative Enterprise

Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs General

IT Portfolio Analyst - Prince2

£45000 - £50000 Per Annum: Clearwater People Solutions Ltd: Our client, a glob...

Project Co-ordinator - Birmingham - Permanant

£20000 - £25000 Per Annum Plus excellent benefits: Clearwater People Solutions...

Head of Maths

Negotiable: Randstad Education Group: Head of Maths position at a prestigious ...

Trainee Recruitment Consultant - Birmingham - Huxley Associates

£18000 - £23000 per annum + Commission: SThree: Huxley Associates are currentl...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week