YET another crucial week looms for the banking sector and this time we'll get some flesh on the bones of a strategy that Royal Bank of Scotland boss Stephen Hester has already promised.
Whatever else he'll achieve, this will be the week that the huntsman of Oxfordshire sets the dogs on his predecessor's animal. But at least something will survive – hopefully a leaner body that can limp on to full health.
Hester will be brutal and
there will be casualties. Scotland may get off more lightly than hitherto expected, largely because it has not been involved in the complex financial engineering that brought about the bank's downfall. For once, simple banking and call-centre operations may be to its advantage. Gogarburn is also poised to take on more staff.
As for the bigger picture, Hester looks likely to retain much of the Citizens bank operations in the US which has a strong customer franchise, although it made one big mistake when it moved into selling mortgages through brokers instead of branches. Otherwise, it has a good risk profile. If the board was offered a decent price, it would probably sell, but that looks unlikely and so RBS may be stuck with it anyway. But Hester is understood to prefer retaining it, as he does not want to dispense altogether with the bank's international footholds. He's more likely to withdraw bad products than exit any particular territory altogether.
Before he announces the outline of his strategy on Thursday, we may get wind of the Government's asset protection scheme, which remains a vital piece of the jigsaw. It aims to get the bank's lending and it simply must work. As one analyst told me last week: "It is a defining moment. If it isn't effective you are a short step from nationalisation."
Carmaker bail-outs a road to nowhereCAR production in the UK in January was down by 58.7% on a year ago, and the manufacturers are now demanding Government help in order to stay in business. They are pleading for survival when, truth be told, the industry is in a state of denial.
The car industry is as much a part of the problem as one of its highest-profile victims. The credit bubble gave rise to an insatiable demand for consumer goods, including cars, that have been produced at an ever-increasing rate by technology that now stands idle.
The sheer magnitude of that investment is enough to prompt the big car companies to panic. But to make matters worse, the technology has been invested in the old models that are increasingly unwanted. Manufacturers may plead for bank-style bail-outs, and claim a special case for the protection of skills, but this assumes those skills and products are what the post-recessionary world will require.
It is a crisis afflicting all governments with substantial car industries, and one which highlights the catch-all impact of the multinational in crisis. General Motors' problems cannot be confined to the US when its empire embraces the British, Swedish and German car industries.
The result will be – and probably should be – a cull of these over-producing manufacturers and a dose of reality that a return to "normal" output cannot be presumed. It will be nasty, but it may be the only answer. Propping up ailing companies has failed us in the past and will fail again. For Woolworths read Saab, probably Opel and possibly Vauxhall. There could be a few more yet.
Don't dismiss the bulldog BrummieLord Digby Jones, the former CBI boss and trade minister, is not everybody's cup of tea, and is regarded by some as a bit of a buffoon who likes the sound of his own voice. He shares with Boris Johnson, the London mayor, a 'love him or loathe him' reputation for talking either plain sense or nonsense, depending on your point of view.
But there is no faulting Lord Jones's dedication to duty and his ambassadorial credentials, to which he has added TV celebrity status and respectability as a battler with the British bulldog spirit.
Now he's turned up as an adviser to HSBC, chairing a new international business advisory board. In these sensitive times for bankers, the question about bonuses had to be asked and the man with the Union Jack cufflinks responded indignantly that he had never needed a bonus to incentivise him and he didn't intend to start now.
Maybe there is a wider role awaiting the Brummie recruit to banking.
