Archbishop slams City 'bank robbers'

Click to follow
The Independent Online

Traders who cashed in on falling share prices in troubled bank HBOS were branded "bank robbers" and "asset strippers" by the Archbishop of York.

In a wide-ranging and critical speech, Dr John Sentamu spoke of an "Alice in Wonderland" market, in which "the share value of a bank is no longer dependant on the strength of its performance, but rather on the willingness of the Government to bail it out".

Speaking at the Worshipful Company of International Bankers' annual dinner last night, Dr Sentamu said: "To a bystander like me, those who made £190 million deliberately underselling the shares of HBOS, in spite of a very strong capital base, and drove it into the arms of Lloyds TSB, are clearly bank robbers and asset strippers.

"We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland.

"Our country has built its financial strength historically on the manufacturing of goods, where money was the medium of exchange.

"In the last week we have seen its systems come close to ruin because now money is no longer being the medium of exchange for goods, but rather is the very item that is being traded."

The practice of short-selling, in which a trader or fund sell borrowed shares, gambling on a fall in price which would allow them to buy the shares back more cheaply, and so make a profit on the loss, has been widely criticised in the wake of the collapse of US bank Lehman Brothers, and the rescue of HBOS by Lloyds TSB.

Sharp falls in the price of shares in banks have been blamed on short-selling by speculators hoping to drive the prices down further. A temporary ban was introduced on the practice by City watchdog the Financial Services Authority last week.

The Archbishop also spoke of the contrast between the bail-outs being given to beleaguered investment banks, and the lack of funding for the United Nations Millennium Development Goals being discussed in New York today.

Prime Minister Gordon Brown will be among the world leaders meeting in the US to mark the halfway point in the 15-year project to reduce poverty around the globe.

The eight Millennium Development Goals - ranging from promoting gender equality to combating HIV and Aids - were agreed in September 2000 and adopted by 189 countries.

They were intended to provide challenging but achievable targets which could be measured to check whether progress was being made.

But the first aim - to halve the number of people living on less than a dollar a day by 2015 - is now unlikely to be met in sub-Saharan Africa, an official report warned earlier this month.

While the Archbishop acknowledged the importance of having "stable financial institutions" to prop up relief efforts in developing countries, he criticised Government bail-outs being handed to banks.

"Without a solid global economic base to work from, the eradication of world poverty would be an even greater task," he said.

"One of the ironies about this financial crisis is that it makes action on poverty look utterly achievable. It would cost five billion US dollars to save six million children's lives.

"World leaders could find 140 times that amount for the banking system in a week. How can they tell us that action for the poorest is too expensive?"

Comments