And the troubles at the Co-op just keep coming
This time it's massive IT spending with no outcome
In March the Co-operative Bank admitted it had to write off £150 million ($229 million) of a planned £250 million ($382 million) new banking platform, which had to be junked.
In March, the Co-operative Bank said it is also having to account for an investment of £45 million ($69 million) relating to the Finacle computer software implementation project, which was commissioned and now has to be amortized over a period of 10 years.
Management stalled work on the Finacle system intending to move onto software from the planned Lloyds aquisition. They planned to reverse engineer their existing customers on to the proven Lloyds IT platform, which would be run for the planned enlarged Co-operative Banking Group "under commercial market terms."
In summary:
One failed implementation £250M
One stalled implementation £45M
One failed aquisition £??
and Co-operative and Britianna customers still being serviced on the original clunky old platforms. OUCH!!!!!
Stewardship not Hubris is what the UK needs from its banks
Tusmor at Transforming Finance on Friday 10th May
Tusmor announced they are starting theincubation of at least 4 new local, regional and specialist banks. The Information Daily interviewed Fiona Brownsell about the more philosophical aspects of how these new banks want to engage in the world of people and their money.
There are many buzzwords around banking and Fiona added a new and very important one.
STEWARDSHIP
Currently banks view themselves as 'owners' of their customers money rather than providing valuable services to their customers. Therefore the bigger the deposits and loans in a bank, the more important the bankers themselves are. That is what the current hubris is all about.
The new banks, which should be opening their doors in approximately 1 year (rather than the previously experienced 2 to 2.5 years) are all about stewardship.
A new age of banking is beginning!
Guardian says the Co-op problem is down to hubris
So the smallest of our big banks is in trouble because it wanted to play in the big league. In just a couple of weeks we have learned:
- It pulled out of the deal with Lloyds which would have made it three times bigger in terms of branch numbers
- Moody's downgraded it to JUNK status
- It has been allowed to reduce its capital ratio from 9.6% to 8.8%
- Its publicly traded bonds plunged by at least 20% on Fiday after the announcement that Barry Tootell had resigned effective immediately
- Its profits had plunged to a £600m loss
- Its initial growth from 109 branches to 340, fuelled by the purchase of Britannia's 245 branches, was never fully integrated even after 4 years!
Hubris indeed! See the Guardian's story here
We think it's all about becoming big enough to ensure implicit government subsidies worth billions so the bankers at the top can become immune from regulatory pressure and along the way personally become multi-millionaires.
Bankers used to have status and position as stewards of our money, they used to be respected by business and consumers alike.
We say it's time to build the new model of hundreds of respected and respectable local, regional and specialist banks and we are doing something about it!
This is what a Canadian Credit Union looks like....
Interesting insight into the different views on how to treat customers. In Canada a Credit Union branch has comfortable seats and restful music and coffee. Whereas in the UK about 10% of Royal Bank of Scotland's UK branches are likely to be axed, with the institution considering any closure of the last bank in town on "individual merits", Ross McEwan, CEO of RBS UK Retail Banking Division said.
More bad news for competition in banking. Time for a seismic re-structure?
Mark Carney and the Treasury Select Committee
Given all the noise in the press last week we thought you'd like to watch the actual meeting between the new Governor and the Treasury Select Committee.
Regulator Steps Up the Misselling Penalty
In another sea change the FCA announces that banks cannot hide behind 'caveat emptor'. This can only be good news for all the consumers and small businesses that have been stung in the recent scandals.
Bournemouth is changing the Future of Banking
Local government must act as an "engine house" and "the driver for growth investment and recovery" said Liz Wilkinson, Head of Finance for Bournemouth Borough Council at ECOBATE.
Local Authorities can change the Future of Banking
Tusmor CEO Fiona Brownsell, recently presented at the ECOBATE2013 .The conference theme wasThe Future of Banking in UK and there are a series of articles and videos from various sessions held throughout the day.
Fiona’s presentation outlined the role that local authorities can play in the roll out this year of the government’s welfare reforms and in particular how Tusmor solutions can help Universal Credit claimants deal with the problems of managing money as we move to a digital, cashless world.
FSA and Treasury Announce Game Changers
The new way of working will be introduced in full when the Financial Conduct Authority and Prudential Regulation Authority take over from the FSA on 1 April 2013.
The FCA and PRA today publish their proposals for leveling the playing field for new entrants.
They have addressed all the issues around the Authorisation Process and the Capital and Liquidity requirements and have truly signaled that
THE UK IS NOW OPEN FOR NEW BANKS OF ALL SHAPES AND SIZES ON THEIR MERIT!!
Over the next few days we will be following up with in depth analysis of the key changes and what they mean but we wanted to share right now so you can start your own research.
The press release is here:
http://www.fsa.gov.uk/library/communication/pr/2013/030.shtml
and the substance is here:
http://www.fsa.gov.uk/static/pubs/other/barriers-to-entry.pdf
We’d also like to express personally our grateful thanks to all those involved both in highlighting issues to us and those in the FSA, Treasury, BIS, Commission on Banking Standards who were open to
listen and then be proactive about change.
At Tusmor it feels like all our Christmases have come at once! The turkeys didn’t get a vote!
The Treasury today publish their proposals for a competition focused payments regulator with real power to level the playing field for new entrants.
THE UK IS NOW OPEN FOR NEW BANKS TO OFFER FULL SERVICE BANKING!!
The press release is here:
http://www.hm-treasury.gov.uk/press_31_13.htm
Government Business Bank Announced
Tusmor supports the Government’s intention to set up a Business Bank and the bold timetable that suggests it will be fully operational before the next election. In a forward to the recently released March 2013 Business Bank Strategy update, business secretary Vince Cable wrote:
The business bank is not just a response to the deep structural downturn the UK faces originating from the severe crisis in the banking system and the subsequent tightening of credit conditions for SMEs. It is a core part of a new Industrial Strategy, the essence of which is long-term support for long-term investment and growth in the UK. It is also into the Government’s ambitions to promote diversity and competition in the business finance markets. The UK is now the only G8 country without an institution of this type and it is simply not acceptable for us to fall behind our competitors in this way.
The business bank will not directly lend to or invest in businesses nor use taxpayers’ funds to prop-up businesses with little chance of success. It will work with the private sector to support and increase the capacity of current channels of finance, rather than simply replace private sector provision.
The full report can be viewed here:
Welsh Government Report on Credit Unions
A newly released Welsh Government report exposes tensions in the run up to the introduction of Welfare Reforms. The report notes that feedback from credit unions suggests that:
“The current funding structure and a focus on delivering services to financially excluded groups, will not necessarily lead to the formation of financially sustainable organizations. Indeed, several credit unions suggested that “battening down the hatches “ and seeking to serve a core market of more reliable savers, was significantly more likely to lead to financial sustainability than the current Welsh Government-led strategy of seeking to expand services to financially excluded groups.”
This is an unresolved conflict in other parts of the UK and highlighted in Tusmor’s Elephants in the Kitchen series of articles. Resolving these tensions is something Tusmor is actively solving.
The full report can be downloaded from here :
HM Opposition call for New Banks
In the run up to this years Budget there are a number of solutions being proposed that might help to kick start the economy. Some have even been called radical .
Set against the background of the spluttering Funding for Lending scheme is the call for new bank entrants to get involved with the initiative .
In addition the interest in creating a smaller regional bank network, so successful in the German economy, seems to be gathering cross party support with today’s announcement from Ed Miliband, Leader of the Opposition .
Tusmor aims to help the growing new bank sector by applying our unique experience to help them launch and grow with the very best technology and strategy to succeed.
Chancellor wants to remove barriers to entry
Perhaps we are getting over-excited but we definitely heard the Chancellor talk about changing the structure of the UK Payments Systems........
The Chancellor supports removing barriers to entry and enabling competition
Bank Accounts for Universal Credit recipients not fit for purpose
Universal Credit is to be applauded but not the lack of suitable bank accounts says Fiona Brownsell of Tusmor . She is calling for a new type of bank account and explains why it matters in this article :
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