Square Mile magazine

Writing a satirical column under the nom de plume Chrys Ball

Summer games

Filed in: , banks, mergers and acquisitions, m&a, bids, humour

It’s a high summertime of holiday pleasures and sports. And there are so many games we could play.

Summer games

It’s a high summertime of holiday pleasures and sports. And there are so many games we could play writes Chrys Ball.

For example we could consider what chances there are of Wimbledon champion Goran Ivanisevic becoming prime minister or even king of Croatia. Then Tiger Woods has got to be hole-in-one for US president as some stage, hasn’t he? And turning our thoughts to domestic sportsmen, what’s happened to that nice Lord Coe who used to hover like a raven at the shoulder of that little bald chap with the attractive wife… What was his name Conservative Party chap, you know the one I mean…?

But speculation over which vacuous Conservative is to take the next step along his (or her) way to achieving his (or her) life long ambition is a very boring game. Let’s play something else to while away the long summer evenings.

I know, how about “buy the bank?”

In this game the pieces are all the British banks that have little or no competitive advantages or unique selling propositions and which are listed on the London Stock Exchange. There’s plenty of them, just read their names from your daily helping of junk mail. And all you have to do is guess who’s going to buy them.

The government, “accepting the findings and recommendations of the Competition Commission and the advice of the Director General of Fair Trading,” has set some new rules for this game lately so let’s recap.

It would be a foul, says the government (“accepting the findings…etc. etc.) if the result “would reduce competition in the markets for personal current accounts and banking services for small and medium sized enterprises, with the adverse effects in both markets of higher prices to customers and reduced innovation.”

In rough terms if your answer would result in four banks holding 77% of personal current accounts, or the deal you suggest means that one bank holds 27% of them, than that would not be a valid play.

Right then off we go. First question, who’s going to buy that huge, that massive, that whopping Barclays?

Too big for another big British bank to buy. So what do you reckon? The first major British clearer to be bought by a foreign bank since HSBC bought Midland? Who’s big enough, has little overlap in the UK domestic banking market and would relish Barclays foreign exchange and fund management businesses?

I know, what about Citibank? You say it could be a German or French bank do you? Alright, fair enough. This is all idle speculation anyway so only the future will tell us which of us is right or wrong.

Question 2 – National Australia Bank looks hungry. It could be quite exciting to guess which one of the building societies it could snap up like a Northern Territories’ croc swallowing a dingo?

I’ll go for Alliance & Leicester I think. That’s because it could clamp its jaws around Girobank, which is a really big handler of cash for the retail sector. That’d give it leg up into UK high street banking. And then the Aussies could perhaps thrash A&L’s boring mortgage business into some kind of shape just by ushering in some commonsense antipodean lending and customer service practices which would bring it into the 21st century.

Then there’s Standard Chartered. We haven’t had any bid speculation and rumour about that for a while. Such a great ex-colonial franchise to bolt on to some willing party. Why, we could bolt it on to Barclays or may be LloydsTSB; now there’s an idea.

Mind you although Standard’s shares are about 300p below their 52 week peak, it’s looking a bit expensive with a price earnings ratio of about 26 – that’s double that of Lloyds or Barclays. But a frisson of emerging markets turmoil ought to knock Standard’s price back to buyable levels.

But that still leaves several former building societies on the shelf. Who’d want to buy them?

What am I bid for Bradford and Bingley and Northern Rock? Market shares ripe for the taking or are they not yet fruitful enough to pick?

I reckon a bank with a strong credit rating capable of cheapening their cost of funds in the capital markets could bring some increased profitability to these mundane home lenders. The once mutuals can’t put up their prices because they’re locked into a permanent price war with their competitors so they have to lower their costs of doing business.

Then do away with branches altogether. Make an online offering to the mortgage market and raise the funds in the bond markets. “Over our dead bodies,” I hear the directors cry. C’mon guys, there’ll be a better profit related bonus scheme of course. We’re talking global banking industry here.

But whatever happens we customers must bring pressure to bear on the remaining banks following all this industry consolidation. We must do something to prevent them being given silly names.

HBOS. What sort of name is that for us customers to carry around on our cheque guarantee cards as a result of the merger between Halifax and Bank of Scotland? So unimaginative and jarring to the ear. At least Egg or Cahoot or IF have a certain zappy irrelevance to them.

There is nothing exotic about the initials H B O S. At least with HSBC there’s a waft of oriental charm and promise of riches that arises from the name “Hong Kong and Shanghai Banking Corporation.”

Given the vast sums of money you can charge as a brand consult to big corporations, I would like to offer myself as one who can turn a word or two into a successful name. For a six-figure sum, in pounds Sterling, it can’t be that difficult to come up with something.

“Bank of Halifax” would be politically incorrect. And anyway there may already be one in Nova Scotia for all I know. “Scottifax” sounds like a manufacturer of rolls of paper. Halliscot – like a breath freshener made in East Kilbride. No, I think I’ll put forward “MoneyDream” – “open an account with us and we’ll fulfil all of your financial services aspirations. “CashCow – we’ll lend when your account needs refreshing” – No, no, these are too mundane. Why not “Aspire”, “Challenge” perhaps the more ethnic “Neaps and Pud” “reflecting the culinary heritage of our two institutions.”

Yes, “buy the bank and give it name,” is a game that can help while away hours in Tuscany or the Auvergne while temporarily separated from our desks and from the endearing crunch of Church’s soles on City pavements. It is harmless fun and of course none of these fine upstanding, independent financial institutions will ever really disappear, will they?