A “Polo mint deal” is how one swap victim described the Financial Services Authority’s agreement with high street banks over the mis-selling of interest rate hedging products.
Devoid of much detail and with major questions yet to be answered, this “settlement” needs to be treated with caution.
Banks aren’t charities and it is not the business of their executives to give away shareholders’ money freely. The question is: should they be expected to pay for the sins of the past? The manner in which they have dealt with swap mis-selling suggests they think not.
The complexity of the scheme governing who is eligible to claim suggests a considerable amount of horse-trading has taken place to arrive at this deal. Moreover, the certainty with which senior officials and ministers have downplayed the potential size of swap compensation costs suggests either that they have not grasped the scale of the scandal or that they realise this scheme will not get close to delivering the redress to which thousands of businesses believe they are entitled.
The provisions likely to be announced by the banks when they publish full-year financial results next month will be the most telling sign of how seriously they take this scheme.
At present, the amounts set aside are minimal compared with what many derivatives experts believe to be the true cost of the scandal. Lloyds Banking Group, for instance, said last year its bill would not be “material”, while Royal Bank of Scotland (LSE: RBS.L - news) , which is thought to have been the largest seller of these products, has set aside just £50m.
There are encouraging signs that both these taxpayer-backed lenders are beginning to get on top of the issue, with Lloyds expected to announce a large provision, while RBS said on Thursday that it would “meaningfully increase” the size of its compensation pot.
For Antony Jenkins, Barclays’ new chief executive, swap mis-selling could be a chance to show that under his leadership the bank really is the good corporate citizen he has pledged it will become.
The banks must realise that they are under pressure to do the right thing for their customers. With a parliamentary commission on industry standards sitting, it is firmly in their interests to demonstrate that when they err they are prepared to reform. Done voluntarily, it would send out an even more powerful message.
After spending $5bn and seven years in pursuit of black gold in the Arctic, Shell’s drill bits still haven’t touched rocks that might contain oil.
A series of setbacks afflicted the 2012 campaign and, Shell’s chief Peter Voser made clear on Thursday, pose a very real threat to its ambitions to drill in 2013. But as Mr Voser said, another year’s delay is unlikely to deter Shell given the scale of the prize on offer.
More than 20pc of the world’s undiscovered oil and gas reserves are believed to lie in the Arctic. With established basins like the North Sea dwindling and demand growing from power-hungry Asian economies, oil giants rightly want to be explore new frontiers. Anyway, the Arctic was always going to be a long haul, with large-scale production decades away.
Despite that backdrop, shareholders won’t be sleeping easy there’s plenty to worry about. Future (LSE: FUTR.L - news) operations will be affected by the outcome of a high-level review by US authorities, who have branded Shell’s 2012 mishaps “troubling”. The Kulluk rig is damaged from running aground and problems have arisen with a second rig. Authorities will also look at problems with Shell’s oil spill response vessel.
Shell says it can never rule out “incidents”, but for a company that has staked its reputation on safe operation in the Arctic, the volume of problems it suffered in 2012 is at best unfortunate.
As and when Shell is able to resume, the eyes of the world will be on the oil major. With its 10-year exploration licences coming up for renewal from 2015, it cannot afford more incidents that risk reputational damage.
With America’s energy landscape transformed by cheap shale gas and tight oil, too many “incidents” could see politicians put the freeze on drilling in the fragile Arctic for the long-term .
Shell says it is proceeding with caution. It is right to do so it’s treading on thin ice.
= Will eight out of 10 broadcasters prefer it? =
For all the talk of how the internet is eating television, advertisers still haven’t yet found a substitute for the gogglebox. Britain’s commercial broadcasters deliver larger simultaneous audiences than any website has managed to crack so far. For high impact, blanket ad campaigns, TV remains unbeatable.
But one thing that online media has had over its broadcast rivals has been the ability to target ads. Most commercial television companies allow brands to bombard millions of viewers all at once with adverts for, say, cat food, in the hope that there will be enough pet lovers out there watching to make it worth their while.
Internet advertising on the other hand uses “cookies” to track which website users have visited, and serve up commercials that tap into their interests.
But now BSkyB (LSE: BSY.L - news) thinks it might have cracked a hybrid of the two forms of advertising. While the likes of ITV (LSE: ITV.L - news) and Channel 4 beam into people’s homes without granular data about who is watching, BSkyB knows exactly where its 10.7m subscribers live and has a hi-tech piece of kit in their living rooms tracking their viewing. The company plans to use that information to serve people tailored TV adverts.
Executives are still cautious about exactly how much information they will harness in this way, meaning that households without pets will still have to watch cat food ads for some time yet, but there is no doubt that the system will help broadcasters maximise their revenues and advertisers spend their money more effectively. Nascent technology it may be, but those looking for the future of television advertising need look no further.