Horta-Osório Steals Show at British Banker’s Association Conference

Last Thursday saw the British Banker’s Association 2015 Annual Conference. All the big guns were there, including the FCA. But word on the grapevine is that next year’s conference, they’re calling:

The António Horta-Osório Show.

Judging by the headlines, it was the Lloyds Banking Group’s chief exec whose contribution turned the evening on its head.

So insightful were his comments and keen understanding of the market, one renowned trading firm yesterday marked Lloyds shares as “outperforming”, predicting a 16% rise from their current £0.87 to a round £1.00 in the near future.

And it was the future that marked the theme of Horta-Osorio’s speech. There were so many points of note that each of yesterday’s financial rags led with a different story.

That each editor was able to make a lead story from one of the many bullet-points that punctuated the LLoyds’ boss’ vision of UK banking tells a story in itself. That said, here are they, and they’re all about the face, the face, the face, of banking:

Ring-fencing: should banks separate retail from wholesale banking?

The big headline was Horta-Osório’s contradiction to Sir David Walker, the ex-chair of Barclays, comments earlier this month. The latter is on record stating that separating investment banking from retail banking would “irrevocably damage” our system.

On the night, Horta-Osório said the complete opposite. A strict barrier imposed between savings and investment banking would lessen fallout from any collapse in the future.

From a practical viewpoint, with support from regulatory bodies, managed ring-fencing would reduce the amount of capital banks need to operate. All of the sentiment in this part of the speech surrounded the burden banks imposed on the taxpayer from 2007/8 to today.

Stop your whining: don’t fight regulations, work with them

Like ring-fencing, regulation is a real part of everyday bank life. Gone are the days when banks could pull the wool over customers’ eyes.

But as Horta-Osório alluded, the massive regulation is the banks’ own fault. They, the financial institutions of Great Britain, not only need to win back customers’ trust. They also have to convince the watchdogs that they’re capable of running a tight, trustworthy ship.

The customer comes first: stop treating them with disdain

The amount of red tape banks now have to wade through was, or maybe still is, endemic of their attitude to customers.

There will come a time when the government and its authorities leave banks to get on with their business. But that road will be fraught, at times.

Focusing on services banks can provide customers (that they actually need) will help smooth the path. Moreover, bring that time closer.

Lloyds Banking Group: state stake dribbling out its last

A massive theme behind everything in the Lloyds CEO’s speech was burdening the taxpayer. Or rather, even if economic meltdown happens again, the government shouldn’t have to bail banks out.

Horta-Osório commended the government on the way its sold its stake in Lloyds Banking Group piece by piece. Had they done so in one big chunk (and 43% was a huge chunk), all kinds of wrong messages could have been read into to sale.

Instead, selling the stock ‘blind’ has ensured Lloyds have escaped the insider dealing scandals other banks have had to mop up.

Today, the government has disposed of almost two thirds of its stake in Lloyds in this manner. On that note, Horta-Osório believes it won’t be long before the Group is 100% back in the hands of private ownership. Now that’s a Tory trait, if ever there was one.

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