Bank Profits and Charges
So, with some recent bad press about bank profit numbers and charges i thought that it may be worthwile giving my opinions as a bank staff member on the subject.
This week Barclays Bank PLC, 1 Chruchill Place, Canary Wharf, announced record profits of 7 billion pounds. That is £7,000,000,000 for those not good with big numbers, and in terms of profits, it is pretty damn big. It is the first of the major banks to announce 2006 profits, and it is widely expected that the others will follow suit with massive, growing profits.
Firstly, it is necessery to point out that a hefty amount of these profits, approx. £4bn have come from the Investment Banking arm, Barclays Capital.
When it comes to profits, i am not too bothered. It would be good if the bank offered a slightly higher dividend to shareholders perhaps but aside from that it is a business that sets out to make money like anyother service providing business such as Tesco, who make massive profits off the back of unfair trade, or BP, who despite high oil prices and taxes still make increduously high profits.
Now, to charges. It has been suggested that the charges people incurr are a massive slice of the banks profits, and i am in no way denying that they seriously beef them up. Some of the stats however are incorrect.
The BBC one o'clock news on profit results day, 20/02/07 claimed that Barclays makes £200.00 a second from charges. This would amount to just over £6,400,000,000 if my mathematics is correct. This being slightly under the amount of profit we took in total, excluding the 4bn in capital profits and any profits we got from loan/mortgage intrest etc can mean that it is in no way correct, but anyway, onto the point of whether bank charges are ethical.
This argument i divide into two parts, a) are they extortionate? I answer yes, I and many other bank employees agree that the charges we give to customers who go over their agreed overdraft limit are in fact too high. But we believe there should be a charge; this is where the second part comes in; b) Jon, are charges right to begin with? I answer yes to that too. For the simple fact, and it all boils down to this, the fact that the customer is using money that they do not have. In effect, it is stealing. Buying without the funds. This of course generates a lot of work for the bank and a charge is definatly necessery. But this again leads us back to the magnitude of the charging. I think there has to be some severe loosening of the rules. I personally believe that it should be calculated each week, at a time decided by the customer when they open the account. They say "I would like close of business friday to be my charge evaluation time" and if they were over their limit at this time a charge would be incurred. Though obviously lower than £30.
Currently Barclays refunds the charge if it is the first time in 12 months you have been over your overdraft limit. There is pleanty of time for someone to come in and organise an overdraft if they are worried that it may be an issue in the near future.
Also, finally i think it is a good sign that their are many people who should simply learn to manage their accounts and finances better and not spend money when they are not sure they have the funds to back them up.
Peace out dudes. Jon
This week Barclays Bank PLC, 1 Chruchill Place, Canary Wharf, announced record profits of 7 billion pounds. That is £7,000,000,000 for those not good with big numbers, and in terms of profits, it is pretty damn big. It is the first of the major banks to announce 2006 profits, and it is widely expected that the others will follow suit with massive, growing profits.
Firstly, it is necessery to point out that a hefty amount of these profits, approx. £4bn have come from the Investment Banking arm, Barclays Capital.
When it comes to profits, i am not too bothered. It would be good if the bank offered a slightly higher dividend to shareholders perhaps but aside from that it is a business that sets out to make money like anyother service providing business such as Tesco, who make massive profits off the back of unfair trade, or BP, who despite high oil prices and taxes still make increduously high profits.
Now, to charges. It has been suggested that the charges people incurr are a massive slice of the banks profits, and i am in no way denying that they seriously beef them up. Some of the stats however are incorrect.
The BBC one o'clock news on profit results day, 20/02/07 claimed that Barclays makes £200.00 a second from charges. This would amount to just over £6,400,000,000 if my mathematics is correct. This being slightly under the amount of profit we took in total, excluding the 4bn in capital profits and any profits we got from loan/mortgage intrest etc can mean that it is in no way correct, but anyway, onto the point of whether bank charges are ethical.
This argument i divide into two parts, a) are they extortionate? I answer yes, I and many other bank employees agree that the charges we give to customers who go over their agreed overdraft limit are in fact too high. But we believe there should be a charge; this is where the second part comes in; b) Jon, are charges right to begin with? I answer yes to that too. For the simple fact, and it all boils down to this, the fact that the customer is using money that they do not have. In effect, it is stealing. Buying without the funds. This of course generates a lot of work for the bank and a charge is definatly necessery. But this again leads us back to the magnitude of the charging. I think there has to be some severe loosening of the rules. I personally believe that it should be calculated each week, at a time decided by the customer when they open the account. They say "I would like close of business friday to be my charge evaluation time" and if they were over their limit at this time a charge would be incurred. Though obviously lower than £30.
Currently Barclays refunds the charge if it is the first time in 12 months you have been over your overdraft limit. There is pleanty of time for someone to come in and organise an overdraft if they are worried that it may be an issue in the near future.
Also, finally i think it is a good sign that their are many people who should simply learn to manage their accounts and finances better and not spend money when they are not sure they have the funds to back them up.
Peace out dudes. Jon
Vlogged by Jon at 10:23 PM
3 Comments:
Your comment
'it is a business that sets out to make money like anyother service providing business such as Tesco, who make massive profits off the back of unfair trade, or BP, who despite high oil prices and taxes still make increduously high profits.'
Is not valid. Maybe Tesco do make money from unfair trade, but that does not justify anyone else doing it. And the point that BP makes bigger profits is irrelevant. There are some people out there who are saying that it is unfair that Barclays make so much money, and that is silly. People make money, deal with it. But making money not from unfair trade, but from illegal charges, is a different matter.
In something similar to a political come-down where a politician retracts a statement that they may have made previously that for example may have caused offense, i am retracting my line where i compare going overdrawn to stealing. It is a view held by some bank staff, but i suppose myself, i would not like to put so harsh a word on it.
Right, in answer to robs comment, here goes.
I am not saying that Tesco set out to make money from unfair trade, just as the barclays directors and chief executive do not go "well this year we will rely on our bank charges to make our profits, lets not worry about anything else".
They go out aiming to make profits from more positive means, but the charges do come into the equation just as Tesco go out to make most of their money from Price Targeting, but unfortunatly, an amount of the profits that they make does come from unfair trade, as is the case with many other supermarkets in a severely non-perfect system.
That is what i meant to get across. And the BP thing, i was just highlighting another business that makes a profit, as i was always taught in english, when making a comment involving examples, try and get at least three.
Jon
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