UK banks’ lack of appetite for risk is damaging lending and the economy

The willingness of broking and investor platform Hargreaves Lansdown to throw itself on the mercy of a random group of financial barons speaks volumes to the lack of ambition of British executives.

Considering London is a leading global banking centre, the lack of vision among our home grown banks is pathetic.

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

Across the world, banks are starting to look beyond the great financial crisis. In Spain, BBVA has gone hostile in its pursuit of Sabadell the owner of Britain’s TSB.

Having made a splash in Italy with its digital consumer banking offer, BBVA is to offer its online service in Germany.

In the UK, Debbie Crosbie at Nationwide, not long in the job, is seeking to offer consumers a broader choice of banking with mutual ownership through its £2.9billion offer to buy Virgin Money. 

The deal has been badly handled in that Nationwide members deserved a vote. But the goals are laudable.

Contrast this with the stultifying dullness of NatWest and Lloyds post the financial crisis and government shareholdings. 

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

Both appear to have become risk averse, which largely explains why the shares sell at large discounts to their American counterparts.

Lloyds, under the late Brian Pitman, was always on the lookout for extending its offering, buying insurers such as Scottish Widows and seeking to extend its mortgage offer with the purchase of TSB.

The forced marriage with bankrupt HBOS, where Shadow Chancellor Rachel Reeves once worked on mortgages, took place more than 16 years ago. 

By now, it should have become much more of a risk taker. It is possible that Lloyds problems with fraud at the Reading branch of HBOS and NatWest’s lingering shameful behaviour with its GRG restructuring operation have made both banks so risk averse that they are damaging lending and the economy.

If one of the clearing banks were, for instance, to show an interest in Hargreaves Lansdown, which does offer investment opportunities in growth funds, it could make a difference to Britain’s wealth creating capacity. 

It is high time that UK banks freed themselves from the shackles of post great financial crisis caution.

Cooked Goose

Did private equity outfit Permira make a mistake in trying to list luxury Italian sneaker maker Golden Goose in Milan?

The EU’s volatile politics, in the aftermath of the European parliamentary elections, which saw the Right make gains, has cast an investment shadow over the Continent. 

Luxury goods tend to be an exception with France’s LVMH still Europe’s most valuable entities.

Shoe brands can be hopelessly erratic. Dr Martens received a glowing reception when it listed in 2021 but is having a nightmare, losing 86 per cent of its value following a overstocking foul-up in the US. 

Posh sandal seller Birkenstock is going great guns in New York with the shares up nearly 25 per cent since an listing putting a value of £9.4billion on the group.

Amid the turmoil in the EU maybe Golden Goose, sneaker supplier to Taylor Swift, should opt for the relative calm of the London stock exchange. 

After all, it has just recaptured its European leadership from France in spite of the upcoming UK General Election.

Wilson’s return

Canary Wharf could do with an injection of new thinking as leading banks such as HSBC move away. Working patterns since Covid-19 and a fightback by the City of London has 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 pioneer the Thatcherite dream of Wall Street on the Thames.

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

His ambition is to further develop Canary Wharf as ‘a city within a city’ showcasing UK life sciences and providing more housing, retail and leisure. Good plan.