What a carry on. Half a decade ago, Santander was set to buy the 307 branches that Royal Bank of Scotland must sell to comply with the EU-imposed terms of its taxpayer-funded 2008 bailout. By 2012, the Spanish bank thought the process was taking too long and pulled out.
The following year, RBS cooked up a complicated plan to bring in private equity partners, plus an investment wing of the Church of England, to speed up the branches’ progress towards a stock market flotation. The chancellor, George Osborne, spoke fondly of how this new “challenger” bank, to be rebadged as Williams & Glyn, would give a leg-up to competition and diversity in UK banking.
Now, after RBS has spent £1.5bn trying to design and install software at Williams & Glyn, we’re back at square one. A sale is once again the preferred option and Santander is one likely name in the frame, along with Virgin Money.
The timescale for this forced disposal is farcical, of course. It is evidence of the shocking level of under-investment in IT at RBS in its pre-crisis years. It should not have taken this long to achieve this little. The old software was too rigid and too antiquated.
Yet, despite the circuitous journey, it is good news that there is interest in buying Williams & Glyn. The uncomfortable truth is that, despite cheerleading from Osborne, few people expect any of the new crop of “challenger” banks to alter the competitive landscape. Most of the new banks are too small, or too specialist, to create serious bother for the big four of Lloyds, RBS, HSBC and Barclays. Sceptics suspect backers’ real goal is to be bought out, rather than to challenge.
If that is so, it is probably better that Williams & Glyn skips independent living altogether. It has more chance of contributing to competition if it is adopted by a second-tier player with ambitions to join the big league. Virgin has a respected management team. Santander, along with Nationwide, is a bank capable of throwing a few punches that are felt by the big beasts. A purchase by either would be preferable to pushing Williams & Glyn into an uncomfortable standalone existence. Just hurry up, please.
Mild weather cold comfort for Bonmarche
Sooner or later a retailer was bound to grumble about how the mild weather is making it hard to flog winter coats and jumpers, and the dishonour goes to Bonmarché. Cue a 29% fall in the share price as the womenswear chain predicted pre-tax profits would be £10.5m-£12.0m, versus £12.4m a year ago.
Weather – too hot, too cold, too rainy – is the oldest complaint in the retailing book, but one shouldn’t be overly cynical on this occasion. A new coat is a deferrable purchase for most shoppers; if the deed isn’t done by mid-December, the saving is mentally banked, or spent on something else. It’s a safe bet that Bonmarché will not be the last clothing retailer to warn on weather.
Mind you, retail executives are also muttering about other supposed difficulties. The Black Friday madness has changed buying habits; there was a drop-off in visits to shopping centres after the terrorist attacks in Paris; when Christmas Day falls on Friday, consumers always leave their buying to the final week; etcetera.
Just the usual pre-Christmas nervousness in boardrooms? Possibly, but it feels more intense this year. Share prices are generally a decent guide and, with exceptions like Dixons Carphone, they’re weak.
Saxo Bank’s magical predictions bad news for Silicon Valley unicorns
Saxo Bank has the right approach to making forecasts for the year ahead: make them outrageous and try to provoke a debate.
Inevitably, most turn out to be wide of the mark, as with last year’s crop. The European Central Bank’s president, Mario Draghi, did not resign in 2015, Russia did not default, UK house prices did not crash and Ukip did not become the third-largest party in parliament. But one or two of Saxo’s punts are usually proved right, or half-right. For example: China did devalue the yuan, albeit not by 20%, and investors have started to run away from junk bonds.
So, what about 2016’s forecasts? Well, a landslide win for the Democrats doesn’t really fit the “outrageous” tag. The oil price to return briefly to $100 a barrel definitely does. The Olympics turbo-charging a Brazilian recovery? Unlikely but, yes, plausible. But the canniest may be the prediction that some of those high-valued Silicon Valley startups – so-called unicorns, with lots of users but vague business models – will fall to Earth. That’s surely got to happen one of these years.
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