19 January 2018

Devil's Advocate

Roger Elwell - Yes Please

83Posts 304,960Views 39Comments
Finextra community

Transaction Banking

A community for discussing technology trends, views and perspective in global transaction banking

Never Mind Tax Cuts, Save Up for the Coming Bail-Outs

17 November 2008  |  2220 views  |  0

Before we get too carried away with the prospect of (unfunded) tax cuts, perhaps the government should be keeping back some of their non-existent funds to bail out other industries.  After setting a precedent by promising (but not yet delivering) shed loads of cash to bail out the banks, how will it react to the inevitable clamour for similar support from other parts of industry that will hit the skids over the coming months?

We've already seen reports that the automotive industry in the UK is looking for support of up to £25 billion.  This might well be just the start.  One area I wouldn't be surprised to see coming cap in hand is the private equity business.  You might remember the feeding frenzy that took hold in the early noughties, up until recently, where quite a bit of big corporate UK was swallowed up by highly-leveraged private equity firms.  Somewhere down the line, I imagine that some or all of their loan facilities will be up for renewal.  If and when this happens, it will be interesting to see how well they fare.  What, with banks being strapped for cash to lend to home buyers, and the likelihood that, with falling stock values and reduced profits, those deals are now in 'negative equity' (excuse the pun), we could well see banks demanding repayment, rather than providing loan extensions.

What would happen then?  Would some of these companies be closed down, broken up, or what?  If they are, and the owners come to the government for funding, how could HMG say no after lending and investing so much in the banking industry?  Would they be prepared to stomach the huge number of job losses that would ensue?

Did the powers that be think about this when they dived into banking?  Probably not, but I bet the begging bowls will come out, and it will be interesting to see what HMG's excuse is for not helping these companies out.

Maybe they're better off saving the remainder of the country's overdraft limit for those events, rather than providing tax cuts.

TagsCardsRetail banking

Comments: (0)

Comment on this story (membership required)

Latest posts from Roger

Sowing The Seeds Of The Next Housing Bubble

13 September 2011  |  4824 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationRetail bankingGroupInnovation in Financial Services

Charging for Use of ATMs

24 August 2011  |  5588 views  |  3 comments | recomends Recommends 0 TagsCardsRetail bankingGroupTransaction Banking

Card Glitch Shows Why Cash and Cheques Should Stay

24 August 2010  |  5451 views  |  1 comments | recomends Recommends 0 TagsCardsRetail bankingGroupOnline Banking

Car Insurance Technology Not Joined Up

15 July 2010  |  5382 views  |  1 comments | recomends Recommends 0 TagsCardsRetail bankingGroupOnline Banking

The Death of the Meeting: I Blame Technology

24 June 2010  |  5570 views  |  3 comments | recomends Recommends 0 TagsCardsPaymentsGroupTransaction Banking

Roger's profile

job title Consultant
location Colchester
member since 2008
Summary profile See full profile »
Consulting to the financial services industry with a specific expertise in the cards business - issuing and acquiring.

Roger's expertise

Member since 2008
83 posts39 comments
What Roger reads

Who's commenting on Roger's posts