Home Money ALEX BRUMMER: UK banks’ lack of risk appetite is damaging lending and the economy

ALEX BRUMMER: UK banks’ lack of risk appetite is damaging lending and the economy

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Takeover: Hargreaves Lansdown's willingness to throw himself at the mercy of a random group of financial barons speaks volumes about the lack of ambition of British executives.

The willingness of brokerage and investment platform Hargreaves Lansdown to put itself at the mercy of a random group of financial tycoons speaks volumes about the lack of ambition of British executives.

Considering London is a major global banking centre, the lack of vision among our local banks is pathetic.

Hargreaves co-founder Stephen Lansdown has reminded the firm’s shareholders and clients that private equity and sovereign wealth fund ownership may not be ideal.

Around the world, banks 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 himself at the mercy of a random group of financial barons speaks volumes about the lack of ambition of British executives.

After having caused a sensation in Italy with its digital consumer banking offering, BBVA will offer its online service in Germany.

In the UK, Nationwide’s short-term Debbie Crosbie is seeking to offer consumers a broader choice of mutually owned banking through her £2.9bn bid to buy Virgin Money.

The deal has been mismanaged in the sense that Nationwide members deserved a vote. But the goals are commendable.

Compare this to the brutalizing stupidity of NatWest and Lloyds after the financial crisis and the government’s shareholdings.

Lloyds long ago divested itself of state involvement and NatWest is now well advanced in the same direction.

Both appear to have become risk averse, which goes a long way to explaining why the stocks are selling at deep discounts to their U.S. counterparts.

Lloyds, under the leadership of the late Brian Pitman, was always attentive to expanding its offering, buying insurers such as Scottish Widows and seeking to expand its mortgage offering with the purchase of TSB.

The forced marriage to bankrupt HBOS, where shadow chancellor Rachel Reeves once worked in mortgages, took place more than 16 years ago.

By now, it should have become much riskier. Lloyds’ problems with fraud at the HBOS Reading branch and NatWest’s persistently embarrassing behavior with its GRG restructuring operation may have made both banks so risk-averse that they are damaging lending and the economy.

If one of the clearing banks, for example, were to show 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 time for UK banks to free themselves from the shackles of post-Great Financial Crisis caution.

cooked goose

Did private equity group Permira make a mistake in trying to take Italian luxury sneaker maker Golden Goose public in Milan?

Volatile EU politics, following the European parliamentary elections, in which the right made gains, has cast a shadow over investments on the continent.

Luxury goods tend to be an exception, and France’s LVMH remains Europe’s most valuable entity.

Shoe brands can be hopelessly erratic. Dr Martens received an enthusiastic reception when it went public in 2021, but it is having a nightmare: it lost 86 per cent of its value after an overstocking problem in the US.

Stylish sandal seller Birkenstock is making waves in New York and its shares have risen almost 25 per cent since its flotation, which put a £9.4bn value on the group.

Amid turmoil in the EU, perhaps Golden Goose, Taylor Swift’s sneaker supplier, should opt for the relative calm of the London Stock Exchange.

After all, it has just regained European leadership from France despite the UK’s upcoming general election.

Wilson’s return

Canary Wharf could do with an injection of new ideas as leading banks such as HSBC step away. Working patterns since Covid-19 and the City of London’s reaction have left London’s second financial district with a problem.

Nigel Wilson, the imaginative former chief executive of insurer Legal & General, has agreed to take over, succeeding George Iacobescu, who helped drive Wall Street’s Thatcherite dream of the Thames.

Under Wilson’s leadership, L&G forged a £4bn partnership with Oxford University, which diversified into student accommodation and housebuilding.

Its ambition is to further develop Canary Wharf as “a city within a city” showcasing the UK’s life sciences and offering more housing, retail and leisure. Good plan.

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