Great guest blog today.  The return of John Laity who makes some sound observations about Bank profits.  (Thanks John).  Again, if any of you want to write a guest blog, please let me know, as you see, all is fully attributable to you.

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The billion dollar question – Who’s assets are being protected?

To address the “Global Downturn” the Government rushed through packages of support for UK Banking Institutions. Under the support plans, about £200bn was made available to banks under what is known as the Special Liquidity Scheme. This was set up by the Bank of England earlier this year. The Bank of England will, according to the Treasury, will “extend and widen” its facilities for banks to stablise the financial system. There is then an Additional £50bn security for banks:

The Treasury made available security to a number of banks should they need it to repair their balance sheet. The banks involved in the plan were listed as: Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland, Standard Chartered. The Government took stakes in the banks through so-called Preference shares.

The Government also committed to help banks refinance short and medium term debt. The Government guarantee this to the tune of £250bn.

Today Barclays published it’s Pre-tax profits (for the first six months) at £2.98bn ($5bn).

Immediately there was much press talk about a return to the “Bankers Bonus Culture” and the press quickly pointed out that such profits are only possible due to the £ bn’s spent by the tax payer. One of the most interesting comments came from the BBC, who pointed out that it is unfair that Barclay’s Investment operations should benefit from tax payer security as in effect it means the tax payer is underwriting the investment risk to the benefit of investors…So who might they be?

According to the 2007 Accounts for the Parliamentary Contributory Pension Fund (2006-2007) – Barclays Global Investments manages 50% of the pension funds assets. (15%  being held in Multi Asset Equity and 35% in Overseas Equity) …

According to the Governments Actuary’s Department On 01 April 2008, 634 MPs were active members of the Parliamentary Contributory Pension Scheme (PCPS). The equity (share) holding for the scheme being 67%.

Across the period April 2007 – March 2008 the investment return was – 4.0 %…So MP’s did suffer from an fund investment downturn. However, the PCPS is exempt from the Statutory Funding Objective (2004 Pensions Act) and benefits levels are guaranteed by legislation…

In all the rush to publish MP interests and expenses, certain things seem to remain unlisted by the Register of Members interests. Is there a listing buried away behind “employed relations” for personal investments, savings or share ownership?

I appreciate that such information could be deemed confidential…But the £ BILLION questions are these:

Have individual MPs benefited from investment returns handled by bailed out banks?

Will members of the Government receive shareholder dividends or returns of investments from Barclays?
We will probably never know, but 634 MPs have a safe bet for at least 50% of their pension provision in Barclays.
It is YOUR tax money being spent to provide bank stability, what are you going to see out of it?

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