Banking

William Francis Sutton Jr (1901-1980), who spent half his adult life in prison, denied ever having said that he robbed banks ‘because that’s where the money is’. But he still gave his name to Sutton’s law of diagnostics, briefly summarised as ‘first consider the obvious’ – a maxim applied by finance ministries the world over in search of additional tax revenues. Name a category of corporate taxpayer that sits on vast reserves, is run by overpaid executives but loathed by its own customers and expects state support in times of crisis. Ah yes, the banks. So let’s tax them again and again.

The passing, aged 100, of the former US Federal Reserve chairman Alan Greenspan, prompts thoughts about shifting tensions between politicians and central bankers. Greenspan’s 18-year Fed tenure spanned those of presidents Reagan, Bush senior, Clinton and Bush junior. All had reason to thank him for his mastery of markets, even though history now regards him as a key architect of the 2008 crisis, which came shortly after his retirement and was certainly fuelled by his era of easy money and light regulation. And though Democrats occasionally took potshots at him for being a free-market right-winger at heart, few seriously accused him of Republican partisanship and no one challenged the abiding value of his institution’s independence.

‘Banks don’t vote and citizens don’t love them, so they’ll always be the Chancellor’s target of choice,’ I wrote in September when one of this autumn’s many false Budget trails pointed towards a left-pleasing extra surcharge on bank profits. But it didn’t happen: partly because Rachel Reeves was love-bombed by Goldman Sachs chief David Solomon and JPMorgan chairman Jamie Dimon, promising new investment in the UK if she held off; partly because she had evidently figured out that a raid on banks that already pay higher tax rates than in any other major financial centre – many of whose bosses are already packing to move to Dubai – would make them even less eager to help boost growth by lending more to British businesses.

Between news bulletins of the Manchester synagogue attack last week, I popped into my local Co-op for some groceries. When the public address system said something indistinct about ‘solidarity’, I paused to listen: it was an advert for Sun & Stone lager, produced in Scotland in collaboration with Taybeh, a Palestinian microbrewery, and with a slice of any profits going to the Disaster Emergency Committee’s Gaza appeal. The Co-op is a benign beacon of alternative capitalism, owned by its members and valued by millions of customers. At their annual meeting in June, those members voted to ‘cease all trading with Israel’, as the Co-op has also done with the likes of Belarus, Iran and Syria.

When I wrote in July that Dame Alison Rose’s forced exit as chief executive of NatWest in the wake of the Nigel Farage scandal was ‘unnecessary’, many readers vehemently disagreed with me. Out she went, Treasury ministers having steamrollered the NatWest board’s brief attempt to hold her in post – and a subsequent Information Commissioner’s Office (ICO) report concluded she had breached data protection laws by revealing to the BBC that Farage had been a customer of the Coutts arm of NatWest and adding the misleading suggestion that his accounts had been closed for purely commercial reasons. Bang to rights, then. Rose should forfeit the £10 million to which she’s contractually entitled and I should execute a swift reverse-ferret. Or should we?

Since we launched our Economic Innovator (originally ‘Disruptor’) awards in 2018, I’ve had enjoyable contacts with well over 100 entrepreneur-led high-growth companies picked as finalists from across the UK. Most I met at convivial pitching lunches; the rest told me their stories by Zoom or phone. Only one chosen finalist has ever shunned both the lunch and the opportunity for a call: it was Revolut, the London fintech venture that’s currently hustling for a UK banking licence. Revolut’s 38-year-old Russian-born founder Nikolay Storonsky has built a serious disruptor, valued in 2021 at $33 billion. Though Schroders – as a Revolut shareholder – has marked that figure down to $18 billion, it still bears comparison with Barclays and NatWest at £25 billion each.