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Thursday, February 21, 2019 ARCHIVES  |  SEARCH  |  POST ADS  |  ADVERTISE  |  SUBSCRIBE   |  LOGIN   |  CONTACT US

In banks, we trust...

By Winfred Peppinck

When I grew up, a long time ago, the bank manager was a man of esteem in the community, a paragon of virtue, trust, the sort of man who was often honorary president of the local cricket or golf club, always a member of Rotary or a local charity.

A man of stature, before whom you felt uneasy, when seeking a bank loan, especially later in life when you and your wife, went to his office, (and they were always men) requesting a first home loan.

Lots of scrutiny, questioning ability to repay, lots of salary details to reveal, lots of squirming!

Now in Australia, a Royal Commission, the highest level legal consideration about administration, operations throughout in the country, and it has focused its “blowtorch on the belly,” of the banking and insurance industry.

And this time it is the banking sector that is screaming and squirming.

Board members have resigned, (scrupulous ones have repaid some of those bonuses!) shareholders inflamed by the ridiculous bonuses they awarded to themselves, particularly as most of the banks are forced to pay hefty fines to customers.

Other heads have rolled, CEOs have resigned and the Royal Commission may well advocate criminal charges for corruption and malpractice.

Also uncovered, a level of corruption, venality and greed, especially among mortgage brokers, bank staff, working under supervision.

Many staff “talked up” more “generous loans” for properties they could not afford, hence their guarantors were often aged parents, wishing to help their children get their first home loan, and using their homes as collateral.

When the bank insisted on payment, if the houses bought during economic “boom time” collapsed, and banks foreclosed, guarantors lost their houses and property, when they could not meet mortgage or insurance repayments.

Huge interest payments, often for policies they did not need, and which continued to be pursued even after the insurer had died!

Bankers now regarded “lowly” as used car salesmen!

Pleasing to see Central Bank of Bahrain governor Rasheed Al Maraj sacked a whole board of a Bahrain-based bank, and warned an Islamic Bank lacking appropriate controls, poor risk management and lax administration.

“During the last decade, the top 10 global banks, had paid more than $250 billion in fines and penalties, and had to fire hundreds of thousands of their employees, to reduce costs and sustain themselves.”

“He counselled that a far-sighted leader should never opt for a quick buck while ignoring long-term consequences.”

No doubt many in Bahrain, recall the TIBC (International Banking Corporation), scandal, the bank CEO, Glenn Stewart and others, in his dealing with the Al Gosaibi family, were prevented, from leaving Bahrain, while the CBB, investigated irregularities.

According to the New York Times, Stewart, (allegedly with special collusion,) fled Bahrain on a mystery launch, returning eventually, to his home in Los Angeles, via Iraq, while resulting court cases have followed him and others to the Cayman Islands, Switzerland, Bahrain and the UAE.

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