Morning Brief – UK Branch Banking

UK Branch Banking

This week has revealed the difference in bricks and mortar strategies between the traditional clearing banks and first an ex building society now a bank and then a challenger bank. The clearing banks have been efficient and some would say ruthless in shutting branches. There are now 4,000 branches in the UK after the closure of 5,300 in the past 8 years. That means that Nationwide has the largest network of any banking group with 605 branches. Metro is also committed to the branch strategy with 76 branches but differs from 16 million customer Nationwide with 2.8 million. No doubt the GBP 650 million funding largely from their new 53% Colombian shareholder together with the write down by 40% of the GBP248 million bonds has helped, but the sense is that Metro at best has bought itself some time. To do what is somewhat unclear.

GBP/USD 1.2240.

US Interest Rates

Early this year the banking darling of the US tech classes, Silicon Valley Bank was caught by rising interest rates-and that was well before they reached today’s 5% levels. Well that is an example of a smaller bank getting it wrong and having insufficient liquidity the banking sages huffed. At that time the Bank of America CEO at the other end of the scale promised huge returns for BoA shareholders when rates went up as they were sitting on a mountain of low cost deposits. As it turns out BoA did precisely what SVB did and bought yields of 2.4% which does not look that clever for CEO Brian Moynihan. the difference is the scale of BoA that allows them to weather that particularly bad Treasury decision. However the unspoken fear is that if the very biggest banks could get it so wrong, is there not a story about to break about the smaller members of the US banking fraternity?
3 months Us Interest rates 5.51%. (Ouch)

Unpredictable Events

On 7^th October 1916, Corporal Adolf Hitler was wounded in the thigh during the Battle of the Somme during the Great War. A few centimetres higher and who knows what might not have happened or happened differently with the Nazi Party and its subsequent immolation in WW2.
In the same way one of our readers commented on the piece that we did on oil last Friday which seemed OK until…the tragic events over the weekend in Israel and Gaza that sent oil to where it is now with ICE Brent up at USD87.65.

International Monetary Fund

Having if not lavished praise but certainly praised the UK a few short months ago for its economic performance in an admittedly lacklustre field, yesterday the IMF marked down the UK’s prospects to the bottom of the G7 class behind Italy and at less than half USA and Canada with 0.6% growth for 2024. And just for good measure they predicted high interest for the UK for 5 years.

GBP/EUR 1.1560.

I say a Little Prayer

It was of course Dionne Warwick who made this Hal David and Burt Bacharach song great this day in 1968 when it went Gold:

The moment I wake up
Before I put on my makeup
I say a little prayer for you
While combing my hair, now
And wondering what dress to wear, now
I say a little prayer for you
 
Forever, forever, you’ll stay in my heart
And I will love you
Forever, and ever we never will part
Oh, how I’ll love you
Together, together, that’s how it must be
To live without you
Would only be heartbreak for me
 
I run for the bus, dear
While riding I think of us, dear
I say a little prayer for you
At work I just take time
And all through my coffee break-time
I say a little prayer for you
 
Forever, forever, you’ll stay in my heart
And I will love you
Forever, and ever we never will part
Oh, how I’ll love you
Together, together, that’s how it must be
To live without you
Would only mean heartbreak for me

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter