UK bank shares: not for widows or orphans

No-one earning their bonuses right now.

The half yearly reporting season for UK-headquartered banks is almost upon us.

Following nine years of record profits, UK-based but Asia-Pac focused Standard Chartered is likely once again to be the strongest sector performer. It reports on 1st August and no major surprises are expected. StanChart’s shares remain the strongest performer of the UK banks; as of this morning, StanChart’s share price has fallen by a mere 10.8 per cent in the past 12 months.

The day before on 30 July, HSBC reports its first half profits. Notwithstanding all the understandable hullabaloo over its extensive anti-money laundering failures, the market is likely to be in forgiving mood. HSBC’s share price, in the past 12 months, is down a relatively modest 14 per cent.

The reporting season kicks off with Lloyds Banking Group (LBG) on Thursday. Expect to hear positive noises about profits growth in 2013 and earnings being boosted in 2014 as a result of the Project Verde sell off having been scaled down in terms of assets sold. LBG’s share price, by the by, is down a whopping 35.6 per cent in the past 12 months.

Barclays will report on Friday and will attract a great deal of attention, following its role in the LIBOR scandal and the departure of Bob Diamond. It may even report an increase in underlying profits of up to 10 per cent year-on-year in the six months to end June. The plunging share price of Barclays seems to have played little more than a peripheral role when it has come to determining bonuses at Barclays. In the past year alone, the Barclays’ share price is down by a whopping 33.6 per cent.

Bringing up the rear, in more ways than one (share price down by 45.4 per cent in the last 12 months), Royal Bank of Scotland reports on 3 August. RBS continues to hemorrhage money in Ireland via its Ulster Bank operation. It remains very hard to foresee RBS returning to profit in 2012. The IT shambles earlier in the summer plus media rumours of an involvement in the LIBOR scandal, means that good news relating to RBS is some way off. There will be analysts that suggest that RBS’ share price has now sunk so low  - down from £3.63 to £1.98 in the past year - that it represents an attractive punt.  That may well be the case: but it is not one for widows or orphans.

Just in case any of the UK banks dare to suggest that a collapse in bank share prices is a disease afflicting banks around the world and that they really are earning their bonuses, don’t believe them.

Two of the largest US-based banks – US Bancorp and Wells Fargo – have enjoyed strong double-digit share price growth in the past year; Westpac and National Australia Bank have also shown a rise in their share price while Canada’s largest lender, Royal Bank of Canada’s share price is flat.

Meantime, the results have been released today of the latest UK Customer Satisfaction Index (UKCSI) by the Institute of Customer Service. 

In the banking sector, the UKCSI shows – yet again – that first direct ranks top. With a certain degree of predictability, the Coop Bank ranks second.

The survey will really deserve a greater degree of comment if and when first direct and the coop do not come out at the top of the poll of 26,000 customers.

For the record, Yorkshire Bank ranked third, just ahead of Nationwide and HSBC in fourth and fifth places respectively.

London at night, Photograph:Getty Images.

Douglas Blakey is the editor of Retail Banker International

Photo: Getty
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In the fight against climate change, humanity has a choice of two futures

We must fight man-made climate change, says Patricia Scotland. 

So here we are at this fork in the road. On one path, the risk of a future of chaos. A new world map with miles and miles of stormy ocean where there were once islands and schools and playgrounds, businesses and life.

A globe with acre after acre of arid desert where there were once fertile mountains and valleys, green vegetation and food.

A path where our existence is defined by pandemics and migration crises, as the earth’s population tries to squeeze into the ever-reducing areas of habitable land.

In this reality, all the arguments about progress and advancement are consigned to the pages of our history, the only agenda item at international meetings is survival.

But the other fork is an alternative path. From the window of an airplane, with wings that exactly resemble a bird’s feathers, views of healthy mangrove as far as the eye can see, miles of luxurious, green canopy, interrupted by shimmering blue oceans.

Nature in all its glory and striking colours, thriving. And when it meets a city it doesn’t mind pausing for a while, because this metropolis is powered by geothermal energy, and the office buildings are made of carbon-eating concrete that behave like trees, and the mall is modelled after a termite mound. Every roof is lined with solar panels.

Two sides of the same coin. The first possibility a dystopian apocalyptic vision; the other a reality, already happening, which may just prevent and reverse the existential threat on this precious planet we call home. 

Last month, representatives of Commonwealth governments met with climate change experts, academics and businesses to launch an alternative pathway to addressing climate change, one that moves beyond adaptation, beyond mitigation, to actually reversing the human effects of climate change. 

It proposes to regenerate the environment by taking excess carbon and carbon dioxide (CO2) out of the atmosphere, where it is poisoning our planet, and putting it back in the soil where belongs.

This initiative, Regenerative Development to Reverse Climate Change, in collaboration with the Cloudburst Foundation, creates the potential for climate change to become an opportunity for innovation and sustainable, eco-friendly economic growth.

Strong support from some of the greatest environmental advocates, including Prince Charles, Mary Robinson and Anote Tong, and powerful presentations from some of the finest minds in the climate change arena, gave us the gift of possibility.

World-renowned experts like Paul Hawken, Thomas Goreau, Janine Benyus and Ben Haggard pointed out that these innovations are already happening. And it is quite simple really. For years man has watched nature and copied nature and nature has always led the way. How else did we make human flight happen if we did not copy God's own 'animal aircraft'?

We see it in other ways too, and the truth is that we already have amazing examples of biomimicry – technology that mimics nature. The eco-friendly Eastgate Centre in Zimbabwe is modelled after termite mounds. In China, the dry, barren plains of the Loess Plateau have been regenerated and restored to healthy green land; and we have similar examples of land regeneration in Rwanda.

What I am saying is that the genius of man, which created technologies that have huge benefits for human beings but detrimental effects on our environment, is the same genius we will employ to help us through mitigation and adaption, and ultimately to reverse climate change and stop global warming. But there is a fundamental problem. We have ecologists, scientists, environmentalists and academics coming up with these solutions working in silos.

So what the Commonwealth began to do last October, when we had our first climate change reversal workshop, is to bring them together. We invited 60 experts who are pioneering these approaches to climate change to Marlborough House. They explored how we can create an integrated plan on climate change reversal.

My goal is to be able to offer every Commonwealth country a package of multidisciplinary, multisectoral solutions to this multidimensional problem. Collaboration and political will are key, because we will need to weave the ideas into our curriculum, insert them in our building codes and business regulations and integrate them into our gender, agricultural and environmental policies.

But how will cash-strapped countries fund this? This is where initiatives like our Climate Finance Access Hub comes in. This programme gives countries the capacity to make successful applications for funding from the Green Fund and other climate change financing mechanisms.

We also have to listen to what the captains of industry are saying. At our meeting last month, Paul Polman, CEO of the mega-consumer goods company Unilever, stressed that when businesses consider investment they take into account sustainable development goals.

If there is no justice and peace, if there is hunger and destitution and if they are operating in cities which are not sustainable, on land that might be reclaimed by the sea or deteriorate into desert conditions, they are investing in a venture that will fail. So the regenerative approach does not have to come at the cost of economic growth. Actually, it will boost investment and development.

The Commonwealth has been at the forefront of the climate change discussion since the 1980s when it first became topical. Our milestones include the Langkawi Declaration in 1989 which commits us to protect the environment, and our leaders' summit in 2015, days before COP21, was instrumental in the landmark Paris Agreement on climate change. But the empirical evidence shows us that even at 1.5 degrees, islands will disappear into the ocean.

This November when governments convene at COP23, we will be posing the question: which pathway will you take? But this is not just a question for governments and organisations, it is a question for every single individual on this earth.

So what are we going to teach our children? More than 60 per cent of the 2.4 billion people in the Commonwealth are under the age of 30. How are we going to harness this exuberance and abundant talent and transform them into innovative solutions? How are we going to run our businesses and manage waste and energy in our homes? What path are you going to take? One that risks our future? Or one that is built on the principle that we can work with nature instead of against it to progress and develop?

Patricia Scotland is Secretary-General of the Commonwealth

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