Barclays Diamond geezer, and the repercussions for the Coalition.

Diamond…formula for success?

Barclay’s decision on a new CEO is not exactly on-message.

US-born Bob Diamond was heralded as the new Barclays CEO yesterday. An experienced player in the merchant sector, Mr Diamond earns almost unimaginable sums as a successful gambler – for that’s what he really is – and is reputed to be pulling down some £45million per annum in his new role.

But Slog LibDem sources around Simon Hughes were furious last night. This may be purely because their hero Vince Cable made a long why-oh-why-oh-why phone call to Hughes yesterday on the subject of Diamond’s appointment (it flies in the face of Vinny’s desire to keep merchant and retail banking separate) but it seems that some of the Yellow Party see the Diamond appointment as an intended poke in the eye to them. If so, they overestimate their visibility on the Barclays radar…..but that this will cause further tensions inside the Coalition is a certainty.

“As long as they continue to be appeased, bankers will never learn to sniff the public mood,” said a backbench Labour MP yesterday afternoon, “and I’m afraid Osborne is by nature and background an appeaser of the City.”

An interesting remark given the unalloyed admiration Blair and Brown gave to the City for more than a decade, but the informant does have a point: the Slog understands that the Chancellor is stonewalling on the related subjects of both banking demergers in general, and systemic merchant bank abuses in particular. And of course Cable, as ever, is unhappy in the job and wants to spend more time with his Party.

Last week the Slog revealed that both Barclays and Lloyds had been found guilty (and heavily fined) by the US Justice Department for knowingly laundering Iranian terrorist money. If that doesn’t upset Osborne’s sensibilities then nothing will – but the Slog piece went almost totally unremarked in the corridors of the Treasury, where my popularity has waned somewhat in the light of Sir Humphrey bashing in recent weeks.

This morning, I note that the FT has Matthew Oakeshott, Liberal Democrat Treasury spokesman, saying: “He’s a great gambler but he has no experience of retail banking. It’s an extraordinary decision by the Barclays board.”

Well Matt old love, extraordinary decisions are what bankers make. Barclays will get theirs when the Berlusconi loan goes up the pictures, but in the meantime Bod Diamond’s accession to the post of blue touch-paper igniter is a done deal. And another nail in the Coalition’s coffin.

This coffin has more people working on its construction than would be considered normal. And while rumours of the Coalition’s terminal illness may well be exaggerated, after Laws and Cable have come Cameron and now Hague as emerging targets for the pen of Ben Brogan et al on the Tory Right. Ed Balls too is spraying spittle around the Commons chamber, while Ed Miliband is writing SWALK letters to Vince and his pals.

Over the next two months, the first effects of austerity and natural output decline will be coming through…and D-Day with the EU on pre-Parliament Budget monitoring will arrive. All of this will produce great gnashings of teeth among the Fluffies, and rumblings of knee-jerk discontent out there in the electorate. The slightest sign of fudging on either of these issues – especially the latter – and David Cameron will be at best becalmed, and at worst sunk.

BREAKING….new evidence blows stress test cheating wide open.

WALL ST JOURNAL BACKS SLOG REVELATIONS ABOUT UNDERSTATEMENT OF EXPOSURE.

NEW FEARS ABOUT STRESS TESTS HIT EURO FOR SIX

The EU’s recent stress tests of of major banks understated some lenders’ holdings of potentially risky government debt, a Wall Street Journal analysis confirmed today.

An examination of the banks’ disclosures indicates that some banks did NOT provide as comprehensive a picture of their government-debt holdings as regulators claimed. Some banks excluded certain bonds, and many reduced the sums to account for “short” positions they held—facts that neither regulators nor most banks disclosed when the test results were published in late July.

The Journal’s analysis of wide variations between formerly stated and current liabilities entirely supports the Slog exposee of August 24th last, when we pointed out the Barclays Bank Italian debt discrepancies in particular. The Journal piece today asserts that

‘the exposure to government debt of at least some banks, such as Barclays PLC and Crédit Agricole SA, was reduced by a significant amount, according to industry officials and financial filings made by the banks….the stress tests’ reported sovereign-debt levels differed, sometimes widely, from other international tallies and from some banks’ own financial statements.’

For the first time, the EU’s regulators are caught lying by this latest analysis. In the original spin accompanying stress-test publication, they claimed:

‘The disclosure of total exposures to sovereign debt by individual banks allows for a full assessment of their respective capital positions.’

This was quite simply untrue.

The new revelations have slammed into the Euro like a haywire truck. The buck began trading at 0.776 to the Euro this morning EST, but as I write is 0.783. So far mid pm BST, Sterling has risen from 1.196 to 1.204. The FT adds that ‘the reports have reminded investors that, at the least, the eurozone financial system still has the capacity to throw up the odd unpleasant reminder of the credit and sovereign debt crises – a concern all the more resonant on a day when austerity measures lead to France enduring another big strike.’

TAXPAYER OWNED UK BANKS CONSPIRED TO LAUNDER $2 BILLION OF IRANIAN TERRORIST MONEY.

How a lone intelligence analyst and the US Justice Department caught Barclays and Lloyds red-handed.

The American authorities have just released details of an Iranian money-laundering sting. It’d be nice to think that it involved the Bank of Tehran, The Bank of Libya, the Bank of North Korea and other such miscreants. But this would be far from the truth.

In 2006, a US intelligence analyst named Eitan Arusy began studying a slim lead. Suspicious money was flowing to and from an Iranian ‘charity’ operating in a Fifth Avenue office tower in Midtown Manhattan. Mr. Arusy’s probe was later merged with a Justice Department inquiry, and ultimately widened to some of Europe’s top banks, helping spark a global inquiry that found those involved knowingly and actively evaded U.S. law in aiding sanctioned countries, banks or other enterprises move some $2 billion undetected.

Two of them – among the biggest culprits, in fact – are our very own Barclays and Lloyds. They have plea-bargained their way out of this self-created sink of iniquity – but been forced to cough up $300M and $250M respectively. The chief deal-makers Credit Suisse have in turn paid some $535M in fines.

They’re wonderful things banks, aren’t they? Charge you to get at your own money, spend your money stupidly, take your tax monies to stay in business, raise your charges to repair their balance sheets, pay themselves enormous bonuses despite all that, carry on doing the same things all over again….and bankroll terrorists.

In case the usual pedants grumbling about sources and links think I’ve made all this up, by the way, the full article can be viewed here….at the Wall Street Journal. I have made it a policy never to link to anything with Murdoch’s grubby fingerprints on it. But this is good journalism, so I’m making an exception.

RIDICULE: A TOUGH BANKING REFORM BY BARCLAYS

‘A new banking phone system will identify those with low credit approvals, and put them through to a call centre in India’. (Daily Mail)

It’s been far to long in coming, but at last Barclays has come out bravely and decided on a radical approach to the problem of dangerous credit-crunch causing customers with no money: they will be put through to the bank’s Bombay Confusion Centre.

The Call Centre will offer a counselling service, dispensing advice on how to live on 50p a month, insulate a straw roof, and deal with the plumbing problems encountered in river-houses built on stilts two feet above low tide level. Actually,I made that bit up as an ironic comment upon soi-disant Western ‘poverty’, but it’s not that daft as an idea. Certainly, it would be infinitely more useful than patching perhaps lifelong customers through to a screen-wallah who knows nothing about British life – so he can talk to somebody who in turn can’t grasp 90% of what he says.

I know I will stand accused of childish racism for that gag, but let’s not forget the last Barclays fiasco as the bank exited India three years ago. The reason for departure that the press room gave was – and I quote:

“A great many of our customers said they couldn’t understand the executives manning the Indian call centre, but we would nevertheless stress that we have the highest confidence in our Indian workforce”.

Now that is patronising racism.

The jaw-dropping thing about the Barclays proposal is the mindlessly blatant way customers genuinely in need of help and on-the-ground advice are to be thrust upon underpaid Indians who know nothing of UK culture, and even less about people so irresponsibly in debt they can’t even be given the piggy-bank key. It is so manifestly unfair to the poor sods on either end of the phone, it makes me want to take the Barclays HR and customer service directors and feed them to something. Preferably something with a voracious appetite, and effective but painfully blunt teeth.

Before the ‘commercial’ perspective police join the comment thread, I would simply like if I may to lob a couple of things into the corporate mindset.

First and foremost, no bank is an island. In fact, over the last two years we have all been taught this lesson in the most painful manner possible. Not only that, but these same banks hard-sold and direct-mailed those customers far too much credit, often simply upping their credit limits to meet arbitrarily set business targets – and thus encouraging them to sink deeper into a pit of indebtedness.

It is good community-chest PR (and wise insurance against lynch-mobs) to now recognise that they have a duty to help those they crippled. They don’t have to give them any monetary help: just advice that’s well-informed, relevant to their needs, and – who knows? – might help one day turn them into profitable customers again.

Second, Barclays are cynically passing customers (some of whom will be desperate) onto folks who can’t say yes, but can say no. Not only will this increase customer frustration and bitterness, it is almost certain to lay the Indian staff open to stressful abuse of a fairly predictable kind.

And finally, having publicly admitted that the Indian call centres are inadequate, Barclays now proposes giving customers a service even more impractical than the potty loans they sold them back in 2006.

Still, you always know where you are with banks: faced with a challenging but safe and moral option, they will always choose the effortlessly dangerous and sociopathic one.