by Daphne Liddle
BRITAIN’S big banks announced their half-yearly figures this week - a year after the global banking crisis - and presented a mixed bag of results and evidence that no lessons have been learned and that global casino capitalism will continue regardless of future inevitable crashes.
Meanwhile the effects of last year’s crisis on the working class continue to mount, with rising unemployment, homelessness and gaping holes in pension funds.
The first bank to report was Barclays, joyfully proclaiming pre-tax profits of £2.98 billion. It has flourished on the back of Government guarantees against toxic debts and buying up a large part of the operation of the failed American investment bank Lehman Brothers.
In every capitalist crisis some companies grow bigger by devouring their failed rivals. But within its American acquisitions
Barclays has taken on a lot of hidden toxic debt, set to become a future headache for Barclays or the British taxpayers, depending on Government policy at the time.
Nevertheless Barclays announced that the good figures justified a return to the big bonus culture.
bad result?
HSBC followed by announcing pre-tax profits of £2.98 billion - the same figure as Barclays but in this case if was presented as a bad result - just half of the profits for the same period last year.
The drop is attributed to rising bad debts in the US, Europe and Asia, which forced it to write-off $13.9 billion - 39 per cent more than the same period in 2008.
HSBC is in the process of closing most of its retail lending operations in the US, having taken hefty losses from mortgages which went unpaid.
Then came Northern Rock, rescued and now owned by the Government, with losses of £724.2 million, largely a hangover from the days when Northern Rock was granting 125 per cent mortgages and now growing numbers of borrowers are unable to keep up the payments - probably because they are losing their jobs because of the credit crunch.
The Newcastle-based lender said that 3.92 per cent of its mortgage loans were more than three months in arrears, well above the national average of 2.39 per cent. The first bank to seek emergency aid, it was nationalised in February 2008, and owes the Government £10.9 billion.
With the housing market still in the doldrums this bank will take a long time to recover, if it ever does.
The Lloyds banking group announced a loss of £4 billion and blames this on its Government-sponsored takeover of HBOS. Lloyds claims HBOS was in a lot worse state than it realised at first - like Northern Rock its mortgage failures are increasing as the recession bites the borrowers.
bad loans
The 43 per cent state-owned bank took a charge of £13.4 billion, mainly for bad loans, 80 per cent of which came from HBOS.
But now most of these shaky loans are to be guaranteed by the Government and we will all shoulder the future losses so that Lloyds doesn’t have to.
Lloyds said it was in talks with the Government about the insurance scheme, which is known as the Asset Protection Scheme.
It would insure Lloyds against further losses from bad loans, but would probably lead to the Government increasing its stake in the bank, probably to about 60 per cent.
One of the most serious effects of the crash has been the gaping holes that have opened in private pension schemes, which held a lot of shares in the banks.
Consultants Lane Clark & Peacock (LCP) said firms listed in the FTSE 100 stock index had a combined deficit last month of £96 billion - the largest on record. This compared with a £41 billion deficit in mid-July 2008 and a surplus of £12 billion in the same month of 2007.
LCP warned that the growing deficit meant even more final salary pension schemes were likely to close.
Last month the Pension Protection Fund (PPF) calculated that all Britain’s 7,400 defined benefit schemes had seen their collective deficit rise to £200.1 billion by the end of May.
Only three of the top 100 companies - Cadbury, Diageo and Tesco - still offer final salary pension schemes to new members and more final salary schemes are expected to collapse.
Small businesses are suffering as banks are now refusing new loans and foreclosing existing loans.
About 12,000 independent shops and nearly 7,000 branches of major chains have closed so far this year in England and Wales, according to the Local Data Company (LDC), which says the average retail vacancy rate (proportion of empty shops) has risen from four per cent a year ago to almost 12 per cent now.