Banking reform: Culture wars

UK Only Article: 
UK article only

Issue: 

Migrant men and European women

Fly Title: 

Banking reform

Main image: 

20160116_brp505.jpg

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Bankers face a behavioural Big Bang—but only if new rules are obeyed

ACCORDING to KPMG, an accountancy firm, Britain’s banks handed over a whopping £38.7 billion ($56 billion) in fines and customer remediation between 2011 and 2014. This represented over 60% of their profits during the period. The scale of these payouts gives some idea of the toll that a succession of scandals took on the industry, from the manipulation of the LIBOR interest rate to the mis-selling of payment-protection insurance (not to mention the banks’ role in the financial crash of 2008). Once “masters of the universe”, bankers are now viewed with the same contempt that people reserve for politicians, and even journalists.
Particularly after the LIBOR scandal of 2012, a lot of the blame for what went wrong has been attached to a “failure of professionalism and ethics”, to quote the …

Banking for immigrants: Far-sighted

UK Only Article: 
standard article

Issue: 

The Saudi blueprint

Fly Title: 

Banking for immigrants

Location: 

NEW YORK

Main image: 

Bankers will also ask to see an ID

Rubric: 

Catering to foreign-born customers is a growing niche in finance

Bankers will also ask to see an ID

MOST banks wouldn’t lend to Roberta. She arrived in New York from Mexico with papers but no credit history. But Neighborhood Trust Federal Credit Union, which specialises in lending to immigrants, gave her advice and a $2,000 loan. She started out selling Mexican food from a cart. She now runs a food truck, employs five people and has plans to expand.
Many immigrants, like Roberta, want to save or start a business. But they struggle to get finance. In America 23% of households headed by a non-citizen, and 35% of households where only Spanish is spoken, have no bank accounts—compared with 8% for the population as a whole. There are multiple barriers: not just low …

Retail banking: Blunt elbows

UK Only Article: 
standard article

Issue: 

The Saudi blueprint

Fly Title: 

Retail banking

Rubric: 

There is less competition among banks than first meets the eye

HERE’S a puzzle: in bustling Manhattan, where bank branches abound, people pay much more for the privilege of stashing their cash than in sleepy Kansas. Greater competition should reduce charges and fees. Yet there is no sign of such a relationship. That is because much of the competition is phoney, according to a new working paper*.
Antitrust authorities typically gauge competition by looking at how many different banks operate in a given area. But the authors argue that this ignores the fact that a handful of big asset-management firms have large holdings in many of these “competing” banks (see chart). An investor who owns shares in two rival banks would naturally be reluctant for them to compete away profits. To please their shareholders, the banks might keep charges and fees high.

The authors calculate the extra degree of market concentration implied by American banks’ common ownership. In 2013 this …