What has happened to the Greek banks?

This week the Greek banking sector has returned to the newswires. You might think that after the storm and all the bailouts it might now be if not plain sailing at least calmer waters for it. Here is ForeignPolicy.com essentially singing along to “Happy days are here again”

The Greek banking sector has totally transformed as a result of the financial crisis. Legislation, restructuring and recapitalization have led to a sector that is now internationally recognized for its high capitalization levels and for substantial improvements in stability, governance and transparency. As Professor Nikolaos Karamouzis, Chairman of EFG Eurobank and Chairman of the Hellenic Bank Association, states, “we have been through four stress tests – no other system has been stressed as much.”

However even a view drizzled in honey could not avoid this issue.

“The question of non-performing loans in the Greek banking system is a crucial one”.
Panagiotis Roumeliotis, Chairman, Attica Bank…….About €30-35 billion is tied up in the large NPLs of some 100 companies, who are on the books of all the systemic banks.

The problem with taking sponsored content is that it steps into a universe far.far.away.

In a first for the country, Attica Bank recently securitized €1.3 billion of its bad loans. A move that could be copied by others and which its Chairman, Panagiotis Roumeliotis, says will make it “one of the healthiest banks in Greece.” Initiatives like this mean that the country’s targets for reducing NPLs are being met or exceeded.

Also I note a couple of numbers of which the first gives us perspective.

Another big challenge is recovery of deposits, which flew out of the country until restrictions were put in place in 2015. Since then, €8.5 billion has been repatriated.

Whilst that sounds a lot, compared to the decline it is not especially when we consider the time that had passed as the data here takes us to February 2017. Next comes some number crunching which is very useful for someone like me who argued all along for Greece to take the default and devalue route. Which just as a reminder was criticised by those in the establishment and their media supporters are likely to create a severe economic depression which their plan would avoid!

The 4 systemic banks have undergone 4 stress tests and 3 rounds of recapitalization since 2010, for close to €65 billion.

With all that money it is a good job they are so strong. Hold that thought please as we move to a universe beyond, far,far away.

Unlike the subprime banking crisis of other countries, the crisis in Greece wasn’t due to any particular problem in the sector. Rather, it was a consequence of the Greek sovereign debt crisis that created contagion. Coming out of that crisis, though, the sector has been transformed.

Someone seems to have forgotten all those non performing loans already.

Bringing this up to date

If we step forwards in time to the end of August suddenly we were no longer singing along to Sugar by Maroon 5. From Kathimeriini.

Greek banks Alpha and Eurobank posted weak second-quarter results on Thursday, with Alpha swinging to a loss and Eurobank barely profitable as both focus on shrinking their bad debt load.

So not exactly surging ahead and whilst the amount of support from the European Central Bank has reduced considerably we were reminded yesterday that the problem created in 2015 has not yet gone away.

On 9 October 2018 the Governing Council of the ECB did not object to an ELA-ceiling for Greek banks of €5.0 billion, up to and including Wednesday, 7 November 2018, following a request by the Bank of Greece.

The reduction of €0.2 billion in the ceiling reflects an improvement of the liquidity situation of Greek banks, taking into account flows stemming from private sector deposits and from the banks’ access to wholesale financial markets.

So that is good in terms of the reduction but as I pointed out above bad in that some is still required. After all Greece has now left its formal bailout albeit that the institutions still keep a very close watch on it. But even more significant was the next bit.

The ongoing improvement of the liquidity situation of Greek banks reflects the improved condition of the Greek financial system. The recent stock market developments in respect of the banking sector are not related to the soundness of Greek banks and are due to purely exogenous factors, such as rises in interest rates internationally and in Greece’s neighbouring countries in particular.”

We have learnt in the credit crunch era that the blame foreigners weapon is only deployed when things are pretty bad and a diversion is needed. Rather oddly the Financial Times seemed to be giving this some support.

The turbulent conditions have hit European banks across the continent, as declines in the value of banks’ holdings of Italian debt eat away at their capital base in a dangerous spiral known as the ‘doom loop’.

That applies to Italian banks yes and to some extent to others but I rather suspect we would know if Greek banks had been punting Italian bonds on any scale. Yesterday Kathimerini put the  state of play like this.

Greek banking stocks have lost more than 40 percent so far this year, and the selling pressure grew in recent days.

All rather different to the honey coated Foreign Policy article is it not? Also in the rush to blame others some genuine concerns are in danger of being overlooked.

. I disagree with the statement below Greek banks used 23% of their “real” Tier 1 capital reserves to support the reduction of NPEs. DTCs as a % of total regulatory capital are now ~75%. Banks “burned” EUR 6.6bn of “real” CET 1 capital to reduce their NPE’s by EUR 16.8bn. ( @mnicoletos on Twitter )

As you can see the argument here is that the Greek banks are finding that dealing with sour loans is beginning to burn through their capital. Using the numbers above suggests that each 1 Euro reduction in bad debts is costing around 40 cents. We do not know that will be the exact rate going forwards but if we take it as a broad brush suddenly the “high capitalization levels” look anything but and no doubt there are fears that the capital raising begging bowl will be doing the rounds again.

Piraeus Bank

This had tried to steal something of a march on the others but this from Reuters last week says it all.

Piraeus Bank  said plans to issue debt to bolster its capital were on track on Wednesday as Greece’s largest lender by assets faced a near 30 percent share price fall.

Quite why anyone would buy one if its bonds escapes me but that was and may even still be the plan.

Piraeus Bank’s restructuring plan, which it has submitted to supervisors at the European Central Bank, involves the issuance of debt, likely to be a Tier-2 bond, among other measures.

But if you are willing to take the red pill from The Matrix then maybe you might be a believer of this.

analysts said the 29.3 percent fall in its shares to 1.16 euros by 1020 GMT was the result of negative investor sentiment affecting the whole banking sector,

Comment

There is a fair bit to consider here but let us do some number crunching. We can start with this from Kathimerini referring to yesterday’s report from Moody’s.

The ratings agency said asset quality remains the main challenge for local lenders, with assets at end-June adding up to 291 billion euros and NPEs at 89 billion euros.

So should the Non Performing Exposures eat up capital at the rate described above that would be another 35 billion Euros or so.  That of course is a very broad brush but one might reasonably think that troubles in that area might be much more of a cause of this than blaming Italy and Turkey.

The banks index has followed up its 24 percent slump in September with a fresh 15 percent decline in the first seven sessions in October, sending the capitalization of the four systemic banks below 5 billion euros between them, from 8.7 billion at the start of the year. ( Kathimerini )

So 69 billion Euros has been poured into them according to Foreign Policy and of course rising for them to be valued at less than 5 billion Euros? As to what they were worth well here you are.

 

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What should we do about the International Monetary Fund?

Yesterday’s events give us an opportunity to look again at one of the longest-running themes of my writing on here. This is the role of the IMF and to do so I would like to take you back to the 8th of June 2010 when I pointed out this.

1. It has plainly changed from an organisation which helps with balance of payments problems to one which helps with fiscal deficits. Whilst this may suit politicians, taxpayers and voters should in my view be concerned about the moral hazard of one group of politicians voting to increase funds available to help another group of politicians which may include themselves.

This was my response back then to the way that the Dominique Strauss-Khan who was Managing Director of the IMF at the time allowed it to get involved in the Euro area crisis. There was an obvious issue in a French politician doing this and of course the IMF has continued with French political heads. It worried me at the time on various grounds one of which was that poor third world countries were in essence financing a bailout of a much wealthier area overall which could afford to collectively pay for it. In my opinion the reason for this was that whilst Euro area political leaders ( including the French Finance Minister at the time one Christine Lagarde) were proclaiming “shock and awe” in fact the Euro area response was a mess. The so-called rescue vehicle the European Financial Stability Facility (EFSF) was anything but which my updates from back then show. Over time they have proved this as it was later replaced with the European Stability Mechanism or ESM.

But the fundamental point here was that a modus operandi which involved balance of payments problems was replaced by a fiscal one. This line could be covered up to some extent in Greece as it also had a balance of payments problem but not for example in Ireland which has surpluses pretty much as often as the UK has deficits!

Greece

This of course has been a debacle for the IMF where whatever reputation it had for economic competence has come a cropper as Greece was plunged even further into recession and in fact has yet to emerge from the economic depression created. This contrasts with the official view which I pointed out on March 30th of this year.

but from 2012 onward, improved market confidence, a return to credit markets, and comprehensive structural reforms, are expected to lead to a rebound in growth.

There was supposed to be economic growth starting in 2012 and then running at around 2.1% for two years and then pick-up to 2.7% in 2015.. Then once that obviously did not happen we got the “Grecovery” theme which did not happen either. Along the way we got a “mea culpa” from the IMF as well as something of a hand brake turn as the advocate of austerity became a fan of fiscal deficits.

However something was wrong and at least some in the IMF knew it’ Let me take you back again to the 8th of June 2010.

Mr.Boutros-Ghali (Egypt’s Finance Minister) went on to give us some idea of one of the areas he feels that trouble and hence further demands for funds might come from. He told the Reuters news agency that Greece’s problems were not over yet and there were doubts about its ability to implement the reforms demanded by the IMF and European Union in return for a 110 billion euro aid package.

 

“We are not out of the woods,” he said in the interview. “The measures they have been required to implement are fairly tough. And there are in some areas doubts whether they are able to continue implementing such tough measures.”

He was of course correct and it is a sad indictment of these times that official sources are still claiming progress on reforms when reality has been very different. After all Greece would not be in the state it is in if they had worked or even been applied. In my opinion there is something worse than the mistakes which is the way that there has been deliberate dissembling and misrepresentation of not only what is going to happen but what is happening at the time.

The implication that the IMF is free

Another feature of IMF aid is the way that it is presented as a type of SPV and sadly not the Spectrum Pursuit Vehicle driven mostly by Captain Blue in my and many other’s childhoods. These official SPVs ( such as the EFSF) are off-balance sheet vehicles which allow politicians to obfuscate about the state of play. Back to June 8th 2010 again.

Politicians should stop implying that the help provided by the IMF is in effect free. For example US Treasury Secretary Geithner suggested that moves to expand the IMF “wouldn’t cost a dime”. This is one of those superficially true statements that are very dangerous. If you are liable for something it does not cost anything until it goes wrong. Just to quote the IMF itself there are “doubts” over Greece. Any proper accounting system allows for the possibility of things going wrong. After the experience of the last two years we should know the implication of sticking your head in the sand like an ostrich and assuming there are no problems around…

In other words it is presented as “free” until it isn’t at which point phrases such as “this could not have been reasonably expected” and words such as “counterfactual” are deployed as weapons. Missing from the conversation is how people who were are regularly told are so intelligent and thus need to be paid highly have been wrong again! This of course brings us to the concept of responsibility.

Christine Lagarde

I have been critical of the IMF’s Managing Director quite a few times on the grounds that she has been intimately involved with the disastrous bailout of Greece via her roles as French Finance Minister and Managing Director of the IMF. Not everyone has spotted this as the Financial Time has proved this morning as it reviews her.

a blow to her previously unblemished reputation for managerial competence

But even the FT which appears ever keen to stand firmly behind any establishment vehicle has to admit this.

A conviction for negligence is somewhat at odds with a commitment to “the highest standards of efficiency and technical competence”.

Mind you perhaps something in the past has influenced this.

The Financial Times therefore argued earlier this year that she deserved reappointment for a second term on merit.

Is negligence the new definition of merit? I will have to update my financial lexicon for these times. This next bit is full on internal contradictions and effectively self-critiques.

It found her guilty of negligence because she did not appeal against the eventual decision — but it has not imposed any sentence, and the verdict will not result in a criminal record. Short of full exoneration, this is the mildest possible verdict.

This is an unusual verdict from an unusual court. Politicians who sit on the special tribunal may well have wished to avoid a tougher ruling that would have deterred ministers from making delicate decisions in future.

Comment

There are a litany of issues here. We see yet again that the more important you are the less you are apparently responsible for anything. Someone lower down the scale would have received punishment if they had been found guilty of negligence yet the leader of the world’s major financial organisation apparently can shrug it off. Punishment is for the little people only it would seem.

This leaves the IMF as a whole in an even bigger hole. As the economic world shifts east towards places like India and China it looks ever more like a western and to some extent French fiefdom. At the same time more of its bailouts have gone rogue of which Greece is the most extreme example. The worst part is the way that this is all covered-up and the truth is bent and miss shaped.

The only hope we have is that this statement from the IMF turns out to be like one about a manager from a football club’s board of directors.

In this context, the Executive Board reaffirms its full confidence in the Managing Director’s ability to continue to effectively carry out her duties.

Oh and “outstanding leadership” also needs to go into my financial lexicon for these times. Although we do need perhaps to go through the Looking Glass of Lewis Carroll.

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

 

 

Shouldn’t our banks be helping the economic recovery and not hindering it?

The last 8 years or so have seen the development of the symbiotic nature of the relationship between governments and banks. Much of this has come about by the way that central banks have set monetary policy to help banks more than the real economy. We may have seen an example of that this week from the Bank of Japan which is worried about the impact of a -0.1% interest-rate on the Japanese banks and so decided to not ease again. There we have a problem as of course they have never really recovered in the lost decade period. Another version of the symbiotic relationship is the amount of sovereign or national debt banks hold especially in the Euro area. What could go wrong with giving sovereign bonds a zero risk rating? You will not be surprised to see who is leading this particular pack. From Bloomberg.

In Europe, the issue is particularly important in Italy, where domestic state debt accounts for 10.5 percent of banks’ total assets, well above the euro-area average of 4.2 percent.

Royal Bank of Scotland

Another example of the symbiotic relationship between governments and banks has been demonstrated this morning in the interim statement by Royal Bank of Scotland or RBS.

An attributable loss of £968 million included payment of the final Dividend Access Share (DAS) dividend of £1,193 million to the UK Government.

So we see that RBS has done its best to help bail out the UK Public Finances as Chancellor Osborne finds himself able to trouser nearly £1.2 billion of extra revenue. he is probably singing Dionne Warwick.

That’s what friends are for
For good times and bad times
I’ll be on your side forever more
That’s what friends are for

Of course the UK taxpayer bailed out RBS in 2008 and ended up owning 78.3% of RBS. They were let down then because for that money they could have insisted on 100% ownership but the establishment preferred to be able to claim that the bank had not been nationalised. More recently some of the shareholding has been sold but for a loss. Currently the share price is at 243 pence compared to the 407 pence that the government claims is a break-even level. So RBS got a bailout and this year the figures of Chancellor Osborne have got one. But the taxpayer seems to be staring at losses which of course are the opposite of the profit promised back in the day. From the then Chancellor Alistair Darling.

The taxpayer, therefore, will be fully rewarded for that investment………ensuring that the taxpayer is appropriately rewarded…….

In the same statement “fully” had morphed into “appropriately” and it has been on that declining journey ever since.

The Outlook

The official view on RBS ever since this has been on the lines of the outlook is bright. If anyone has actually believe that then they must by now have been very disappointed as bad news has followed bad news! These days banks produce a litany of different profit figures an issue I raised earlier on Morning Money on Share Radio but the sentence below sums the state of play up best I think.

Adjusted operating profit(4) of £440 million in Q1 2016 was down from £1,355 million in Q1 2015 primarily due to Capital Resolution and the IFRS volatility charge.

You might reasonably think that as we are three years into a boom that banks would be doing well especially as that boom has centred on boosting mortgage lending and house prices. Indeed one might reasonably expect the numbers below to be up rather than down.

UK Personal & Business Banking (UK PBB) adjusted operating profit of £531 million was £54 million, or 9%, lower than in Q1 2015.

Still one area is booming.

Buy-to-let new mortgage lending was £1.5 billion compared with £0.8 billion in Q1 2015

If we look at the impact of RBS on the UK economy we open in troubled fashion as we note the growth of buy-to-let. But surely after all the help its has received and the UK economic recovery RBS is fit to help us back? Well not by boosting employment.

RBS remains on track to achieve an £800 million cost reduction in 2016 after achieving a £189 million reduction in the first quarter.

And this.

Capital Resolution remains on track to reduce RWAs to around £30 billion by the end of 2016 following a £1.4 billion reduction in Q1 2016.

All these years later we have job losses and deleveraging as opposed to the brave new world promised. Oh and there continues to be something of a sword of damocles hanging over it as this tweet sent to me earlier indicates.

I’m optimistic about Today we launch our action against them 4 funding/counsel in place ( @efgbricklayer )

RBS has remained what we might call accident prone as it was caught up in the Panama Papers problem and this morning this emerged as well. From the Guardian.

RBS said the Swiss regulator, the Swiss Financial Market Supervisory Authority, had “opened enforcement proceedings against Coutts & Co Ltd (Coutts), a member of the RBS Group incorporated in Switzerland, with regard to certain client accounts held with Coutts”.

It feels like a bottomless pit does it not?

Monetary data should be good for banks

Our Martian economist might reasonably expect it to be boom time as he/she peruses this morning’s data release from the Bank of England. Let us start with mortgage lending.

Lending secured on dwellings increased by £7.4 billion in March, compared to the average of £3.6 billion over the previous six months. The three-month annualised and twelve-month growth rates were 4.7% and 3.4% respectively.

Quite a surge as we presumably see the impact of the higher Stamp Duty charge on Buy To Let purchases which is now in place but was not then. But if you really want to see numbers which are motoring take a look at this.

Consumer credit increased by £1.9 billion in March, compared to the average of £1.4 billion over the previous six months. The three-month annualised and twelve-month growth rates were 11.6% and 9.7% respectively.

If our banks cannot make money out of this when can they? That is a little ominous as we note lower mortgage approvals on the month as the Buy To Let surge fades away.

Barclays

It too seems to be failing to do its bit for the UK economy. From Bloomberg.

Following these disposals, which include the sell-down of its 62 percent stake in Barclays Africa Group, McFarlane said the bank expected group full-time employees to reduce by around 50,000 people, resulting in a total headcount of 80,000 – almost half the staff employed at its peak.

Oh and this bit could have come straight out of an episode of Yes Prime Minister.

McFarlane said he had “a lot of sympathy” with the issue of high levels of banker compensation but that Barclays was not among the highest payers in the industry and the payouts were necessary to retain top staff.

Comment

Back in 2009 the then Chancellor Alistair Darling was reported in Hansard as saying this.

They will mean strong and safer banks that are better able to support the recovery,

Actually the story of the credit crunch was that we continued to support the banks via less explicit moves that were still bailouts. For example Quantitative Easing offered them profits on government bonds and similar assets. Then the summer of 2012 saw the Funding for Lending Scheme which gave quite a subsidy to both their mortgage books and mortgage lending. So the theme of us helping them continued rather than us getting much back.

Also I note that back in 2008/09 many of the moves were badged as being to help UK businesses via bank lending. So if we add in the FLS above it should be booming right? I will let readers make up their own minds after perusing this morning’s numbers.

Net lending – defined as gross lending less repayments – to large businesses was -£1.9 billion in March. Net lending to SMEs was £0.1 billion.

We appear to have copied Japan and our version of kicking the can has left us with a banking sector which the Cranberries provide a theme song to.

Zombie, zombie, zombie
Hey, hey
What’s in your head, in your head
Zombie, zombie, zombie

Some of course seem to be even worse off. From the Financial Times

Contributions to Italy’s bank rescue fund undershoot

On The Radio

 

What is wrong with our banks? After all the bailouts started seven years ago…

The story of the credit crunch has been one of our banking industry. Who would have thought that more the seven years after the collapse of Northern Rock and nearly seven years after the collapse of Lehman Brothers that there would be so much doubt about the state of our banking industry? If we look back to before then we saw a UK banking sector which bestrode the world stage like a colossus with Royal Bank of Scotland (RBS) in particular making ever grander deals and becoming the largest bank in the world by assets and the fifth largest by market capitalisation. Sadly for RBS it bought a share of the ill-fated ABN Amro  just in time for the crash to happen in a disastrous move and many of the spinning plates crashed to the ground. Were we fully aware then that banking life would not be the same again?

Economic life was also affected back then because in my opinion profits and economic growth were recorded which were in fact more accurately described by the band Imagination.

It’s just an illusion, illusion, illusion

Could it be that it’s just an illusion
Putting me back in all this confusion?

There were all sorts of economic impacts from this. In the banking sector there was over-recording of profits which of course subsequently turned to dust and in some cases stone but there was also over-recording of economic output. This poses a problem for knowing where we stand as the conventional analysis released on Tuesday is therefore wrong.

In Quarter 1 (Jan to Mar) 2015, GDP was estimated to have been 4.0% higher than the pre-economic downturn peak of Quarter 1 (Jan to Mar) 2008.

That peak was, in my opinion, not as high as officially recorded back then and this has other consequences. If we return to the Financial Times research on productivity that I discussed on Tuesday we see that pre credit crunch growth cam from five main areas.

professional services, manufacturing, banking, retail, and information and communication.

My contention is that much of the recorded growth in banking was based on asset inflation based on debt rather than actual growth. This no doubt would have knock-on effects for professional services and communication. Thus the present “productivity gap” can be partly explained by fact that the previous peak relied  on conjuring tricks and of course the magic show then ended. As our establishment of all political hues sucked up to our banking establishment then -you can invariably find politicians bathing near the money flow- there is no appetite for proper reform and what we have in the form of the Vickers Report was like a can kicked to 2019.

Together with other reforms in train, it would put the UK banking system of 2019 on an altogether different basis from that of 2007.

Too little too late?

Economic policy

To cover up the lack of reform our establishment has twisted economic policy so that it favours the banking sector. We still have an emergency Base Rate of 0.5% and we still have some £375 billion of QE (Quantitative Easing) which the Bank of England added to try to reduce longer-term interest-rates. Ironically the latter would have fallen anyway in the dash for yield and indeed almost any yield we have seen in the last couple of years.

However even such moves were apparently not enough so we got the Funding for (Mortgage) Lending Scheme or FLS introduced by the Bank of England in July 2012. This provided a multitude of subsidies for the banking-sector.

The FLS incentivises banks to boost their lending by reducing bank funding costs

Well it did the latter bit anyway! You see in its original form they got some £41.9 billion of cheap funding in return for increasing lending by £10.3 billion. As the economy was expanding they may well have done that in the normal course of events. But by allowing them to lower mortgage-rates a boost was given to mortgage business. Also the overall effect was to drive up house prices which improved the position of the banks loan books. What was not to like if you were a bank?

Today

So after all this help our banks should be bursting with vim and vigour. After all we have had two years of pretty solid economic growth to back up all the aid and subsidies they have been receiving.

RBS

This morning however the promised nirvana of a future of profits and gains saw yet another setback.

An attributable loss of £446 million for the first quarter of 2015

When you factor in the positive economic situation and the subsidies both explicit and implicit which have been poured into the banking arena we should not still be having disappointments. So what was the cause?

restructuring costs of £453 million and £856 million of litigation and conduct charges.

As ever our banks are pouring out money in fines for past bad behaviour. A bit much 7 years after the “reform” was supposed to have happened! An odd situation as we as taxpayers bail them out and then fine them and take money back. Would it not be better if the individuals responsible were punished for their actions? Sometimes it gets even stranger as international fines mean that in effect the United States for example is fining the UK taxpayer who owns the bank. And the responsibility of the average UK taxpayer for all of this is? The word responsibility only applies these days to individuals who are not members of the establishment.

We might think from the report that today’s numbers are a freak but if we look back we see this.

RBS reports an attributable loss of £3,470 million in 2014, compared with a loss of £8,995 million in 2013…….2012 pre-tax loss of £5,165 million, after £4,649 million

Most of these came with promises that a corner -presumably into profit – was about to be turned whereas the road has proved to be ramrod and indeed Roman straight. Back in 2013 we were told this.

Since 2009 RBS has cleaned up the world’s largest bank balance sheet by removing more than £1 trillion in assets. This was a remarkable achievement, born of absolute necessity, but delivered with exceptional skill.

You may note that bankers always refer to themselves as delivering “exceptional skill” even when they are making or correcting a mistake. The customers do not seem to agree at least in Scotland as the satisfaction ratio in today’s results is a measly 10% there and there is a lack of ambition as the target is a mere 11%. Still target achieved bonuses all round?!

If seven years of losses which total in the mid-forties an oddly similar number to the original taxpayer bailout are getting you down why not try the red pill?

Finance director Ewen Stevenson said: “Overall, we’re very pleased with progress.” (The Guardian)

Adjusted operating profit(2) was £1,634 million, up 16% from Q1 2014.

Adjusted presumably means if we do not count any losses….

Comment

If we look at the overall situation we can see that for RBS the beat goes on where promised profits turn to stone and become yet more losses. In the current favourable economic climate that is quite an anti-effort! Also there are mines in the water awaiting our banks. From Reuters.

Britain’s biggest banks face another 19 billion pounds ($29 billion) of charges relating to past misconduct over the next two years, ratings agency Standard & Poor’s (S&P) said in a report on Monday.

S&P said Britain’s banks and customer-owned lenders had incurred 48 billion pounds in misconduct and litigation charges over the past five years.

Those are extraordinary sums when you note the shortage of bankers in jail for all of this. That is a rather round number especially when we consider that vastly smaller amounts of fraud in the benefits arena do lead to prison terms. Also there was a discussion earlier this week in the comments about an economic depression, well UK banking is stuck in an economic depression and shows little or no signs of escaping.

So we plough on but with a feeling that nothing has been resolved and that Johnny Mathis was right to sing that Too Much (help) has been given to banks in return for Too Little Too Late. Or as South Park gloriously put it about money put into the banks “It’s gone”

Bank Clerk: Hello Mrs. Farnickel. How are you, today? Making a deposit, are we? Greeeat. We can just put that into your retirement account and make it go to work for you aaaaand it’s gone.

Mrs. Farnickel: Whaaat?

Bank Clerk: Sorry, yeah, it’s gone. Please step aside for people who actually have money with the bank. Next please!

Later

Newsreader: Just how far will the economy fail? We asked economic reporter, Dan Banks, for his assessment.

[Dan pulls out a gun and shoots himself, followed by a loud thump as he falls]

Newsreader: [pause] We’ll have the rest of Dan’s interview tonight at ten.