ALEX BRUMMER: British banks’ lack of risk appetite is hurting lending and the economy
The willingness of broker and investor platform Hargreaves Lansdown to throw itself at the mercy of any group of financial barons speaks volumes about the lack of ambition of British executives.
Given London is a leading global banking centre, the lack of vision from our own banks is pathetic.
Hargreaves co-founder Stephen Lansdown has reminded the company’s shareholders and clients that owning private equity and sovereign wealth funds may not be ideal.
Banks around the world are starting to look beyond the great financial crisis. In Spain, BBVA has been hostile in its pursuit of Sabadell, the owner of the British TSB.
Takeover: Hargreaves Lansdown’s willingness to throw itself at the mercy of any group of financial barons speaks volumes about the lack of ambition of British executives
After making a splash in Italy with its digital offering for consumer banking, BBVA will also offer its online service in Germany.
In Britain, newer Nationwide’s Debbie Crosbie is trying to offer consumers a wider banking choice with cross-ownership through her £2.9 billion offer to buy Virgin Money.
The deal was poorly handled because Nationwide’s members deserved a vote. But the objectives are commendable.
Compare this with the stultifying dullness of NatWest and Lloyds after the financial crisis and state shareholdings.
Lloyds long ago divested itself of state shareholding and NatWest has now moved far in the same direction.
Both appear to have become risk averse, which largely explains why the stocks are selling at deep discounts to their US counterparts.
Lloyds, under the late Brian Pitman, was always looking to expand its offering, buying insurers such as Scottish Widows and expanding its mortgage offering with the purchase of TSB.
The forced marriage with the bankrupt HBOS, where shadow chancellor Rachel Reeves once worked on mortgages, took place more than sixteen years ago.
By now it should have become much more of a risk taker. It is possible that Lloyds’ problems with fraud at HBOS’s Reading division and NatWest’s continued disgraceful behavior in the GRG restructuring have made both banks so risk-averse that they are damaging lending and the economy.
For example, if one of the clearing banks were to show an interest in Hargreaves Lansdown, which offers investment opportunities in growth funds, it could make a difference to Britain’s ability to create wealth.
It is high time that British banks freed themselves from the shackles of caution following the great financial crisis.
Boiled Goose
Did private equity firm Permira make a mistake in launching luxury Italian sneakermaker Golden Goose in Milan?
The EU’s unstable politics, in the wake of the European Parliament elections, in which the right made gains, has cast an investment shadow over the continent.
Luxury goods tend to be an exception, with France’s LVMH still the most valuable entities in Europe.
Shoe brands can be hopelessly fickle. Dr. Martens received an enthusiastic reception when the company listed in 2021, but is facing a nightmare: it is losing 86 percent of its value due to oversupply in the US.
Upmarket sandal retailer Birkenstock is doing well in New York, with shares up almost 25 per cent since a listing put a £9.4 billion value on the group.
Amid the unrest in the EU, Golden Goose, sneaker supplier to Taylor Swift, may have to opt for the relative calm of the London stock exchange.
After all, it has just regained its European leadership from France, despite the upcoming British general election.
Wilson’s return
Canary Wharf could do with an injection of new thinking as leading banks like HSBC leave. Working patterns since Covid-19 and the City of London’s backlash have left London’s second financial district with a problem.
Nigel Wilson, the resourceful former chief executive of insurer Legal & General, has agreed to take over, succeeding George Iacobescu who helped pioneer the Thatcherite dream of Wall Street on the Thames.
Under Wilson’s leadership, L&G forged a £4 billion partnership with Oxford University, diversifying into student accommodation and housing.
His ambition is to further develop Canary Wharf as ‘a city within a city’, showcasing British life sciences and providing more housing, shopping and leisure. Good plan.