Tuesday, 23 August 2016
Bank notes in Ponderland and Thailand and UK
Khun Sutapa Amornvivat of SCB Bank writing at InPonderland last week, as always, makes an eloquent point on the crisis facing the global banking industry.
As she pointed out the previous month, automation will increase its impact in that industry whether branch closures and ATM consolidation or the flash-crash AI hyper-dealings of the stock exchanges and is worth wider consideration.
While her latest article highlights the Bank of England now offering its record low rate of interest in 622 years. Japan is mired in sluggish growth as the Abenomic arrows miss their target, although popping up at Rio as a Super Mario computer game character to launch Tokyo2020 seems to have hit the mark.
But almost daily banking scandals whether the LIBOR fiddles in the City, billion dollar fines for HSBC money-laundering through Mexican and Japanese banks or accounting fraud in corporations such as Olympus losing 80% of its shareholder value reduce public faith in many banks and the wider industry.
And if as she says the USA has weathered the 2008 banking crash better than most then it must surely be fractional, with both Freddie Mac and Fannie Mae being nationalised (and also RBS in UK) amid the wreckage of trillion dollar bank bailouts.
More money has been printed for the banks in a few short years than has ever been provided in Third World aid.
So much so that progressive bankers such as Woodward Investments in UK this week have now called a halt to City bonuses as distorting both the market and corporate growth. And the debate around Maximum Salaries, Working week adjustments and Intra-company Inequality can only grow.
And therein lies the substance of Khun Sutapa's point in ensuring a banking system that works for the good of all rather than just the banks.
The social movement of The 99% is gathering pace though riots and revolts and eventually political power with say Podemos in Spain, Five Star in Italy and even UKIP protests in UK throwing petrol on the fire of the far right on the rise across much of the EU especially Hungary's Jobbik and Austria's Freedom Party and France's FN.
The bank reforms subsequent to 2008 have hardly begun, with CET1 Khun Sutapa mentions, and Basel3 being mere minor percentage adjustments of the deckchairs on the banking system’s Titanic.
Though, UK is progressing apace on various reforms – hopefully not delayed by the Summer of Silliness of Brexit which looks likely to be cancelled on Parliament’s return in September. As if losing the AAA credit rating and causing jitters through every stock market wasn’t bad enough for UK plc.
The latest banking reforms are already unveiled with for example, by 2018, every UK bank required to issue a comparison app for the cheapest current account rates and overdrafts including capped overdraft rates. No more extortionate $20 charges for a $1 overdraft error.
Here in Kent - hardly the epicentre of the world financial industry I would be the first to admit – the stellar bonuses in the nearby City distort the Kent property market for mansions and farms each year.
Yet even here in East Kent we have had reforms under Mark Carney Governor of the Bank of England launching the new £20 note with the artist JMW Turner to be introduced in 2020 (and a £10 note with Jane Austen for 2017) just 3 months ago at the Turner mega-Arts gallery in Margate.
And Victoria Cleland the Cashier for the Bank of England (her signature appears on each note, which must take her hours) spent time at the National Trust’s Chartwell, the home of Winston Churchill, and just a few miles from Kent’s Chevening mansion, now the base for not one but 3 Foreign Secretaries and named for the British Council’s UK scholarships.
Victoria was launching the new Winston Churchill £5 note for next month, the UK being the first major economy to switch to plastic polymer notes and ending the Treasury’s 322-year tradition of paper money. The long-lasting notes, hopefully avoiding any Weimar bonfire of hyper-inflation, will last 5 years rather than 2 years, saving £100M over 10 years and allowing for new counterfeiting features.
But for Thailand that’s all well and good, and no doubt SCB are already updating their systems for the new UK notes (the banknotes have a tendency to stick together when new which may be even more problematic in tropical heat).
And the UK has already seen its first full year of electronic money replacing paper currency. On my trips to Thailand the electronic passport cards that now replace travellers' cheques attracted some curiosity in some banks, so expanding banking training could be useful.
~~Future Finace Reforms~~
As with DTAC - active in progressing mobile banking - such literacy and training programmes are as vital as cybersecurity, the latter key given 10,000 ATM's across Thailand hacked just this week via the redoubtable Bank of Thailand and GSB.
Surely too the Thai banking industry bouncing back from the 1997 Crash – I stopped counting as the baht rose from 45 to 84 to the pound then – must be considering expanding its UK and European operations to boost the Thai economy given a 92% fall in Thailand’s FDI?
London for all its LIBOR faults is still the centre of world markets and surely just one branch of Bangkok Bank in The City is not enough for the Thai bank industry and economy?
Indeed with calls from government for UK challenger banks to have most-favoured legislation such as the USA’s Metro bank and Richard Branson’s Virgin Money to increase activity to break the stagnation of the too-big-to-fail Big 5 of Lloyds etc, shouldn’t the more dynamic Thai banking centre expand to UK?
SCB itself has played somewhat safe with expansion to Cambodia although the rather peculiar Cambodian Commercial banking detracts from the normally excellent SCB advertising, and Central dept stores has retrenched from Italian expansion (perhaps wisely given the Mafia-isation of the Italian banks as Khun Sutapa cites) to Central Vietnam.
Although to be fair Mario Renzi is active with the European Central Bank this week on reforms of the Bank of Italy's towering $3BN public debt and massive unemployment.
And with the Thai G77 Chairmanship ebbing away this year at the UN, shouldn’t SCB be active with the dynamic Khun Pisit of Exim Bank who has called for a Team of Thailand to boost and restructure the Thai economy faster?
Plans for the new UK sugar tax can only impact positively on UK and Thai waistlines - but negatively on the Thai sugar cane industry – as will the rollout of UK Graphene to the car industry be negative for the Thai rubber industry, and Chinese steel industry, but potential for support for Thai farmers and SME’s for forward-thinking banks and financiers.
And if as Khun Sutapa calls for a reformed banking industry as a key pillar of the economy, shouldn’t there be moves to further capitalise on what Barclays has begun with an end to trading in a basket of food commodities such as rice or cooking oil? That alone would be a boost for Thailand's farmers and SME's and consumers.
The UK has fallen behind German dynamism for the moment in not capping interest rates at 10% - hence the scandal of UK payday loans with 1,000% interest rates. Quite how such Zimbabwean interest rates pass the UK regulators is astonishing. And even payday loans firms like Wonga were censured by parliament for advertising to poorer communities as with say Newcastle United football shirts sponsorship and stadium advertising hoardings.
Newcastle's Magpies being something of a football club in woe as it is also owned by Sports Direct sportswear retailer and (with Wetherspoons pubs on zerohours)Mike Ashley, recently dragged into parliament and fined £1M for being one of the worst offenders on failing to pay the minimum wage and zero hours casual contracts.
With a banking industry serving all, the future of what I call the Free Economy is already beginning in Europe with British Gas introducing its FreeTime service for one day of free electricity at the weekend, 20M new Smartmeter electricity meters (with peculiar advertising essentially confirming that the previous meters simply made up a cost) capped for the cheapest rates, and both Switzerland and Finland active around the issue of a Basic Citizen Income not dissimilar to the UK’s Universal Credit welfare reforms.
Capped train fares and other utility prices can only follow and profit levies for monopoly services.
At the very least such Citizen Incomes, as the innovative Yingluck Rice Pledge Scheme tried to do, should reduce welfare admin costs and at best flush money through the economy by retaining it in citizen’s wallets, whether those wallets are digital or not.
I’ve advocated a One Gov system too, of a free bank account and email and mobile phone number at birth to reduce such public costs and provide fully electronic banking and public services etc.
~~Future Thailand and UK~~
With millions unbanked in Thailand and ASEAN, and calls by Rockefeller Foundation in Thailand and Prudential and City UK in London under the new and dynamic of Miles Celic, that seems an opportunity for progressive bankers such as Khun Pisit and Khun Sutapa in both EU and ASEAN.
Thailand’s advance to universal free healthcare is only likely to increase from the TRT 20THB system provided funding is geared to such expansion – and I’ve often wondered why the likes of Panasonic or Philips here at the fringe of Benelux haven’t grasped the nettle of a Digital DNA Bathroom Mirror in advance of the UK NHS DNA rollout by 2019.
Perhaps a JV with a dynamic bank would be ideal in terms of fast-forwarding retina scan and digital fingerprint technology for dual purpose cyber-security and medical analysis?
And again progressive banks such as SCB or Exim would be active with the good folks of True as well as DTAC in mobile banking and transactions ideal for the new True 20BN THB Digital Park mega-investments and value-added jobs in customer service as an adjunct to Thailand’s skills in tourism and hospitality.
And no research exists as yet on the Thai 50,000 expats in UK sending money home, but the Philippines BSP places high value on the Pinoy dollar brought home: over $18Bn of remittances, some 12% of GDP. Surely an open goal for dynamic think tanks in Thailand such as Rockefeller and TDRI?
Against that backdrop, surely Thailand and SCB should be tuning up their financial instruments for a Greater future with Britain and bank reforms.
Tim Garbutt is a Director of Sincerity advertising agency, opening offices in BKK and ASEAN, and director of Surin School charity, the first school built in Isaan and standing for parliament in UK on better relations between UK and Thailand and ASEAN.