Lloyds bank gallops towards the knacker's yardPosted by Alexander Hay
Remember the banks we poured all that money into? They're still making a loss
It's a hard life being a horse. Constantly asked where you're going, with your fetlocks blowing in the wind, the stable door is usually only bolted after you've fled and even after death someone will be there to keep flogging you.
Speaking of dead horses and flagellation, it seems Lloyds Bank is en route to the glue factory:
Lloyds Banking Group made a loss of £3.5bn for the year to 31 December after setting aside £3.2bn to cover payment protection insurance claims.
In 2010 the bank, which is 41% owned by the UK taxpayer, had made a pre-tax profit of £281m.
The bank said last year that it was setting money to cover claims over mis-sold PPI - loan repayment insurance for borrowers should they lose their job...
It's worth noting two things at this point. Firstly, we not only own 41% of the bank but therefore own 41% of the losses. Strangely, it seems we do not receive any of the profits the bank has made, however, and only a public outcry stopped the bank rewarding its top executives for failure in the form of bonuses in exchange for... Well, no one's quite worked that one out yet.
Secondly, the whole point of bailing out the banks was to stop them collapsing. It's hard to call this nationalisation since the organisations in question continue to operate as if nothing has changed, and their behaviour hardly reflects the public interest. Instead, we continue to shoulder the pain while the staff of this failing bank can look forward to an average bonus of £3900 each.
This is not however happening in a vacuum. The economy has once again shrunk by 0.2%, which is more in real terms once you factor in inflation. Manufacturing, likewise, is in decline, while the service sector is squeezed by the slow oblivion of the high street and the rapacious profiteering of big retailers like Tesco.
Nor is this necessarily inevitable. While attacked at the time, President Obama's bailing out of the US motor industry not only protected jobs in the short term, but the 'Big 3' manufacturers have begun to recover and even make profits again. The main difference was that the management over in Detroit not only had to work with the unions, but also knew this was a battle for survival. There was none of London's cosy banking complacency over in Motown.
Which brings us back to the financial sector, once a cornerstone of the UK economy, and now a liability. And yet, it seems there is no other show left in town. So we continue to underwrite the banks in exchange for next to nothing. In that sense, Lloyds isn't like a horse at all, despite its mascot. It's more like a cat, and a very fat one at that.
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