February 27, 2009
Posted: 1346 GMT
Should Sir Fred, the former CEO of RBS, voluntarily return part of his million dollar pension?
Sir Fred was granted a £16 million pension pot as part of an agreement to leave the bank last year. This generates a pension worth in excess of $1 million a year. But RBS is now majority owned by the British Government, and on Thursday declared the largest corporate loss in UK history.
The Prime Minister, Gordon Brown wants to claw some of that money back. There are icy letters between Sir Fred and the government minister Lord Myners setting out their "You agreed to it" and "Oh no I didnt" argument.
Legally? The money is probably Sir Fred's to keep. He can't be blamed if government and bank foolishly didn't read the small print, allowing him to fill his boots with cash. Morally? Ahhhh, now we enter a different world.
Sir Fred agreed to take a smaller payoff when he left RBS because it was the right thing to do – he called it a gesture. And now he says he has made enough "gestures." He is keeping his pension "entitlement."
Lord Myners puts his view bluntly: "I hope that on reflection you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award."
So there you have it. "We want the money back" shrieks one side. "You aint getting it" shouts the other.
Let me go out on a limb here – if I were Sir Fred, would I give the money back? If I honestly believed the government knew about the pension, and had agreed to it? I will forever be known as one of the worst bankers in the world. My place in financial history is unfortunately secured. So why not just take the money ... I can live in luxury whatever people maybe saying.
What would you do?
February 26, 2009
Posted: 939 GMT
February 24, 2009
Posted: 1426 GMT
The last few days have been turbulent on the market. Not surprisingly, ordinary investors are wondering what on earth is going on.
How can it be, after so much time and money has been spent on the economies of the world, that the market still won't show any signs of recovery?
The answer is because the crisis has moved into another phase. We have gone from a sub-prime collapse in the U.S. housing market, through to a general banking crises based on highly exotic financial instruments - and now into a deep industrial recession in the world's major economies. And it is this part that is now causing markets to fall.
On average, there was a 33 percent fall in Q4 earnings for the 394 companies in the S&P that reported since mid-January according to Bloomberg.com.
So it is clear that the market believes many stocks to be overpriced, based on the companies' existing and future earnings. With downgrades in economic growth for economies like the U.S., Germany and the UK, it's a wonder investors haven't sold even harder. Perhaps they now are catching up
For investors, these are simply horrible days. What to do? Sell into a falling market? Take a risk and buy cheap (I assure you this isn't a case of "Buy on the dips... you may be buying at the top of the next down section of the rollercoaster).
In short - no-one knows. And that's the problem.
Sorry. If you had hoped I would tell you whether to buy or sell, then you are fuming right now. "Not much good Quest," I hear you say.
So tell me then, what should we do?
February 23, 2009
Posted: 1642 GMT
While insightul reporting on economic upheaval are what makes Quest Means Business a must-see for most people, for some discerning viewers it simply comes down to presenter Richard Quest's unexpectedly melodic appeal.
The anchor's distinctive tones, and his enthusiasm for social network medium Twitter, have prompted fans to set samples of his show to music and post the results on YouTube.
"Deep Hypnotic State," which takes its title from something Quest has apparently uttered live on air, starts with applause and a thundering bassline, before throwing in classic soundbites from the man himself.
While it might not take the charts by storm, Quest has told its creators that he is "seriously impressed" with the remix.
February 21, 2009
Posted: 1416 GMT
February 20, 2009
Posted: 1433 GMT
I had a late night phone call from a friend in the Caribbean. He had money on deposit at Stanford Bank in Antigua - not a fortune, just his savings in a certificate of deposit. Money he can no longer access.
Customers queue outside the Stanford Group-owned Bank of Antigua in St. John's.
Worse - his Stanford credit card no longer works since Visa has suspended all Stanford plastic. That has ramifications for things like telephone bills which are paid directly using the cards.
In short, he is facing the complete collapse of his financial affairs. My friend is one of many tens of thousands who have been affected by this case. Some savers in the U.S. will be covered by government deposit insurance. Those in the Caribbean and Central America will be less fortunate.
These are not the wealthy victims of Bernie Madoff. Mostly these are working people who used Stanford as their local bank, for everyday transactions like checking, certificates of deposits and small loans.
The employees in the Caribbean were bank tellers and administrators, not the hedge fund masters found elsewhere. Sure, Stanford was an "offshore" bank - but it was responsible for some very onshore duties.
Some years ago, when living outside Britain, I actually thought about opening an account with Stanford. The only reason I didn't was because of the time and trouble of changing direct payments from my existing bank.
I slept well last night. My friend did not.
Have you ever been affected by a bank failure ? How did you cope ? Did your family have to lend you money ? Join this discussion so we can understand what it's really like.
February 19, 2009
Posted: 1356 GMT
Filed under: Quest Means Business
February 18, 2009
Posted: 1222 GMT
The news that GM and Chrysler need more government cash is not a surprise. Everyone said they would. The changes that are being made to their businesses are deep and structural. Plants closed, jobs lost, models discontinued.
And there is no guarantee of success. All of this wouldn't be of much interest outside the United States, if other governments hadn't jumped on the bailout bandwagon and doled out dosh to their car companies too.
The Brits (or at least the foreign owners of British cars plants, the Italians, the French... all have in some shape or form attempted to level an uneven field.
No doubt the Japanese and Germans will have to follow suit otherwise their car companies will cry "foul."
But enough is enough. The chairman of luxury car brand Daimler told me on this week that he hoped there would be an end to this bailing out of car companies because it distorts competition. He also refused to say "no" to whether he ruled out asking for German government cash.
It seems once the bailout cash starts flowing, it is never ending.
Car companies have economic tentacles that few other industries experience. From raw materials, to manufactuer to distribution to credit facilities and the retail end. They stretch the length and breadth of the global economy. That is why we bail them out
Last night on our show many of your Twittered me on the subject. There was a clear majority in favor of NO more bailouts... it was throwing good money after bad.
So do you agree ? Is it time to let the car companies go to the wall (with all the possible consequences ? )
Bailout or bust - Your thoughts?
February 11, 2009
Posted: 1137 GMT
Watching politicians dissect the bankers responsible for some of the worst of the financial crises has been very satisfying - but it has brought out the very worst in me: the drive for revenge.
The former chairmen and CEOs of HBOS and Royal Bank of Scotland had an uncomfortable time being questioned by the UK Treasury Select Committee, a government panel investigating how these financial giants ended up needing multi-billion dollar bailouts.
They all duly said sorry, and then tried to tell us why it really wasn't their fault the banks collapsed, and that they'd personally lost more money than most.
But I wanted more. I wanted mea culpas of the gravest kind. "It happened on my watch. I am responsible. It is my fault." And of these there was naught.
Some came across with great sincerety. Former HBOS chairman Lord Stevenson, seemed truly troubled by what had taken place.
Others gave the impression this had been a nasty setback to an otherwise nakedly ambitious career - For instance Andy Hornby of HBOS's failure to acknowledge any personal culpability. It is easy to see why, for some, he has become a poster child for banking excess.
I am not proud of myself for wanting this revenge. But since we will be paying for these men's (and others) mistakes for years to come I feel justified.
February 9, 2009
Posted: 1323 GMT
I have never understood the wish to count dollars before bodies. The Australian fires is a good example of this.
With a horrific death toll from hellish fires, the story is awful. I for one will not be worrying about the insurance costs of the fires for the time being. There will be plenty of time to talk about who will foot the bill. Today is not that day.
On the business front , the news is all about Barclays results and the profits announced. Honestly? I don't undertstand them.
I heard on the radio this morning that the devil was in the detail, but never quite realized the devil had such big horns... the top man at Barclays keeps saying 'no' to doing an interview with me. I wonder what he thinks I might ask ?