Online glitches, record fines and resignations have once again thrown British banking into the headlines. Malt manufacturer Muntons and flooring manufacturer Amtico talk to TM about the effects this has had and their concerns for the future stability of UK financial markets.
On June 19 a systems upgrade glitch left customers of NatWest, RBS and Ulster Bank facing a barrage of problems. Online balances seemed to freeze, payments were rebuffed and workers nationwide struggled to receive their pay.
Branches opened extra hours to deal with customers face-to-face but what kind of effect did this have on business customers?
Julie Lawrenson, financial controller at Stownmarket-based Muntons, said that thankfully the glitch did not cause much disruption at all.
“We could not access our statements online but this was sorted after three days. If it had not been fixed by Monday June 25 we would have visited the bank to get our statements printed off but it certainly did not disrupt any business,” Ms Lawrenson said.
“We do rely heavily on our banking and not being able to see customer payments coming in can affect our dispatch. However, on this occasion it was sorted before it could cause any problems,” she added.
Jonathan Duck, CEO of Amtico, also experienced problems as some employees failed to receive their pay and foreign exchange transactions were misprocessed.
However, he said in terms of business, this is not the biggest concern: “It had no large effect and was just one more thing to keep an eye on. What is much bigger is whether the Libor has been manipulated or not.”
The London Interbank Offered Rate (Libor) is the interest rate banks charge when lending to each other and this influences the cost of loans and mortgages.
Barclays chairman Marcus Agius resigned this morning after the bank was fined £290m last week for attempting to manipulate the Libor following an investigation by the financial services authority (FSA).
The FSA are now to investigate a number of banks, including RBS who have been reported to have sacked four traders last year over Libor manipulation.
Mr Duck said: “If the Libor has been misstated then there are lots of people who have borrowed lots of money at the wrong interest rate. These are public facts and figures that may have been misstated.
“We will have to wait and see what the FSA and Bank of England does about it but it could completely destroy the credibility of London as a financial centre,” the Amtico CEO said.
He added: “Next time you take a loan out that is linked to the Libor you will think, is this defined properly or has someone messed around with it?”
At a time when banks are trying to communicate the availablity of finance to manufacturers, often complaining of low demand for their products, this additional knock to confidence in the banks will be unhelpful.