Posts Tagged ‘term life insurance quotes’
Written on November 16th, 2009 by no shouts
Proposals are to be laid out by the Welsh Assembly Government on how care for elderly people could be financed.
It comes amid warnings that the current system is unsustainable.
UK ministers have said they want to see a debate on a compulsory state-run savings scheme or a private insurance in case people need care in later life.
A "green paper" launched by Deputy Social Services Minister Gwenda Thomas will feed into a similar paper from the UK government.
No changes are expected to be made before 2011 at the earliest.
In November last year the assembly government launched a consultation on how care services in Wales should be funded.
Ageing population
Wales has a larger elderly population in proportion to the rest of the UK.
The consultation, run in parallel with one in England, was prompted by predictions that services will face a £6bn funding gap across the UK in 20 years.
Figures show that bout a third of men and half of women will, upon reaching the age of 65, need long-term care and support.
It is expected that nearly 96,000 people over 65 in Wales will need the support of social care services by 2031.
Wales also has an ageing population, and statistics indicate that in the next 20 years, the number of people aged over 85 in Wales will double to 137,000, and those aged over 100 will increase fourfold to more than 2,000.
Thhe proportion of people aged over 65 to those aged 20-64 in Wales is projected to increase from 40% to 64% by 2031.
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Written on November 13th, 2009 by one shout
ABC’s of Term Life Insurance:
Your Free Term Life Insurance Guide
The first step in applying for term life insurance is to find out the term life insurance information. What is a good term life insurance definition? Do I need to be covered? How do I go about applying for term life insurance? Whatever term life insurance information or term life insurance definition you need, you’ll find it here. Term101.com gives you the ABCs of term life insurance.
Do I need Life Insurance?
Life insurance is a key component of a sound personal financial plan. No matter your stage in life – young or old, single or married, with kids or without – you can usually benefit from having some form of life insurance. Working with knowledgeable professionals can help you select a term and type of coverage that meets your current needs, as well as those to come.
How long should my term of coverage be?
There are a variety of policies that feature terms of 5, 10, 15, 20, 25 and even 30 years. Helping you select a term that is consistent with your financial objectives is something an insurance professional can guide you through.
Despite what you may have heard or read, there is no magic formula for determining the amount of coverage you need. Instead, the answer depends on a number of factors that vary from person to person: things like age, marital status, income level, debts, mortgages and whether or not you have children. Our experienced sales staff will help you evaluate your individual situation and select the coverage that’s right for you.
Life insurance comes in several variations. Selecting the right policy, whether it be term life, whole life, or something else, doesn’t need to be as confusing as it sounds. An insurance professional can explain the many different options that are available and help you choose the type of insurance that suits your lifestyle now and into the future. Here are brief explanations of the types of life insurance we offer:
Term Life Insurance
Term life insurance provides coverage for a specific period of time, and is therefore temporary. Typical policy terms are 5, 10, 15, 20, 25 and even 30 years. The premium is designed to stay level during that term period. This is the most popular form of insurance used today. Term life policies are usually renewable at the option of the policy holder until the insured reaches age 95 or 100. However, premium charges will usually increase each year after the end of the initial guaranteed term period.
Whole Life Insurance
Whole life insurance is permanent insurance, which is designed to stay in effect until death. Generally, the annual premiums are constructed to remain constant throughout the life of the policy, but are typically more expensive in the first few years as compared to term life insurance premiums. Whole life policies accrue cash value the longer you own them. Depending on the terms of the policy, accrual cash value may be borrowed from the policy or applied to premium charges. Policy proceeds may be reduced by outstanding policy loan amounts.
Universal Life Insurance
Universal life policies are a form of whole life, but offer greater flexibility. You can select the amount of premium you would like to pay (within limits established by the insurance company) and your policy benefits are adjusted accordingly. This allows you to change the amount of your premium or coverage in response to changes in your life situation.
Return of Premium (ROP) Insurance
ROP combines certain benefits of term life insurance and whole life insurance. ROP offers lower premiums and a guaranteed refund of the life insurance premiums paid during the term of the policy, provided the insured doesn’t die prior to the end of the term period. The refund may not include premiums paid for disability riders, rated policies, or other instances. Ask your Term101 licensed representative for more details. ROP policies are available in several variations, including 15, 20, and 30-year terms.
Survivorship or Second-to-Die
A type of Universal or Whole Life coverage, these policies pay a death benefit upon the death of the second of two insured people. It is particularly useful to individuals whose heirs will face substantial estate tax liabilities. The insurance company does not pay the death benefit until the second person dies. This then provides money to pay estate taxes when they are needed, or otherwise use the proceeds by the beneficiary.
Age 100 Level Guaranteed
Usually a type of Universal Life, these plans feature set premiums and death benefits to age 100. Many plans allow you to maintain the insurance without paying additional premiums if you live past 100.
Choosing between the many types of life insurance available is a function of where you are in life and what financial assets you are trying to protect. Â A Term101.com insurance professional can help you decide which insurance is appropriate to your individual needs. Please call (800) 781-6377 to learn more.
I’m not in perfect health. Can I still get insured?
You will ask you a number of specific questions about your health history that will be used to help determine whether you qualify for coverage. Helping customers who feel their health histories would preclude them from obtaining coverage find a policy that meets their needs and is affordable is what a insurance professional does.
I am a smoker. Am I still insurable?
In most cases, brokers are able to obtain insurance coverage for customers who smoke. Your premiums may be higher than a non-smoker, but you might be surprised at the rates we can make available. A short conversation with a member of our sales team will yield a detailed answer specific to your individual situation.
Get One of the Best Term Life Insurance Quotes Online!
Buying from a term life insurance company can be confusing, complicated, time consuming and dare we say, frustrating. It shouldn’t be, and that’s why Term101.com is here.
Term101.com works with thousands of people every year to find them the right term life insurance quote online at the right price. We do it with the latest technology to research thousands of policies, and we do it with attention to detail and conscientious customer service that make the purchase process efficient, flexible and user-friendly.
Written on November 12th, 2009 by no shouts
By Kevin Peachey
Personal finance reporter, BBC News
When a syndicate of seven office workers from Merseyside won the £45m jackpot in the Euromillions lottery draw, they immediately announced their plans to quit their jobs.
Their win – a cool £6.5m each – was enough for the "Magnificent Seven" Hewlett Packard IT workers to contemplate a life of leisure.
News of their luck prompted the same conversation from supermarkets to staffrooms, from butchers to building sites – how big a win means you never need to work again
So, the BBC News website, with the help of some financial experts, has calculated the lucky numbers for a job-free life.
The amount varies depending on how old the winner is and what type of investments that person is willing to make.
A £554,676 win for a 40-year-old woman willing to take a risk on investments would be enough to earn an average wage every year until she died.
But for a 21-year-old man wanting a risk-free return, it could cost just over £2m.
The maths bit
So, how did we work it out
EARLY RETIREMENT COST
- Man aged 21: £2,019,117
- Man aged 40: £1,268,780
- Woman aged 21: £1,658,201
- Woman aged 40: £1,069,225
Source: Canada Life
Basically, we wanted to know how much a winner would need to invest to earn a regular return equivalent to the median average wage in the UK.
Remember, if you line up all the workers in the UK, from the highest earners and one end to the lowest at the other, and pick the person exactly in the middle – that is the median.
This middle man earned £28,000 in 2009. The figure for women was £22,000.
After income tax and National Insurance contributions are deducted, the take-home pay is £21,244 for a man and £17,104 for a woman.
That will not buy you a dream home or a fleet of sports cars, but it is the average that people in the UK live on.
So how big a lump sum would a lottery winner need to get this level of take-home pay for the rest of their life, and how could they get it
Early retirement
Insurance companies sell annuities – a guaranteed retirement income for the rest of your life. Crudely, this is calculated on your chances of living, with most people buying an annuity in their 60s with their pot of retirement savings.
The life expectancy of a man aged 21 now is nearly 87. To guarantee an annual income of £21,244 for the rest of his life, insurance company Canada Life charges a price of just over £2m.
A man aged 40 now clearly will not live as long, so he will be charged £1.27m.
Because the median average wage of a woman is lower, the annuity is cheaper, according to Laith Khalaf, a pensions analyst at Hargreaves Lansdown.
He found that Canada Life would charge a 21-year-old woman £1.66m. This will guarantee an annual income of £17,104 for the rest of her life. She is expected to live until she is aged just over 90.
For a 40-year-old woman, the price charged for the annuity is £1.07m.
All of these calculations protect this income against an estimated inflation rate of 3% a year. They also take into account tax that would have to be paid.
Playing the markets
Taking early retirement, by purchasing an annuity, might be the safest way of guaranteeing an income for our lucky Lotto winner. Yet it is not the only way.
INVESTMENT COST
- Man aged 21: £807,245
- Man aged 40: £659,248
- Woman aged 21: £666,076
- Woman aged 40: £554,676
Source: Fidelity International
Another option is having an investment portfolio. Because of the greater risks involved in this method, the lump sum needed is lower.
We asked investment specialists Fidelity International to come up with a lump sum which would bring us the typical annual incomes outlined earlier.
This money would be invested in shares of leading companies, government bonds, and in ordinary savings accounts to bring us the return.
They found a 21-year-old man would need a lump sum of £807,245. A woman of the same age would need to put in £666,076.
For our 40-year-olds, the man would need to win £659,248 and the woman would need £554,676.
This assumed an average annual growth rate of 5% in these investments and inflation of 3%.
But before we get carried away, some of this income could be taxed. Although the 21-year-old might be able to put the majority in tax-free Individual Savings Accounts, the older investors would would face capital gains and income tax on at least some of their investment income.
Unlike the annuity, these investments can be handed down to children in a will. An annuity is just for an individual until he or she dies.
The odds
So there we have it. if you are a 40-year-old woman willing to take a risk, you need to win just over half a million pounds, but if you are a safety-first 21-year-old man, you need a jackpot of just over £2m.
"We need to save more to live the life of a lottery winner in our retirement"
Julian Webb, Fidelity International
Unfortunately, and unsurprisingly, the odds of that happening are rather long.
In the main UK Lotto game, which is drawn twice a week, the average top prize is just over £2m for those who get all the numbers correct. The chance of winning that jackpot is one in 13,983,816 – in other words, nearly a 14 million-to-one chance.
The estimated next highest prize, by matching five numbers and the bonus ball, is £100,000.
So while a win is highly unlikely for most of us, these kinds of calculations are worthwhile, according to Julian Webb of Fidelity International.
"While we would all like to win this amount of money on the lottery, unfortunately most of us will not. However, it is worth applying this thinking to what we need to save, in order to enjoy an income equal to the average wage in our retirement," he says.
"Today, people are retiring with an average pot of money of just £35,000, which would leave them on less than the minimum wage, so the message is clear – we need to save more to live the life of a lottery winner in our retirement."
In a completely unscientific poll, the BBC asked 10 shopkeepers in London with an average age of 36 how much they thought they would need to win on the lottery to give up work forever. They overestimated.
Answers ranged from £1m to £5m, with an average of £2.2m, but a fair sprinkling said they they would continue in their jobs even if they won the jackpot.
"The more you work, the more you keep young," says the man behind the till in one hardware store. "And money never gives you happiness."
It is not a sentiment the winning Magnificent Seven from Liverpool seem to agree with.
In the words of one of them, 28-year-old James Bennett: "The best thing is knowing I can now support my children for the rest of their lives – there is simply no better feeling than that."
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Written on November 11th, 2009 by no shouts
What to know before chucking the life insurance along with your business suits. (source: Forbes)
– RSS news feeds and Stock Market News on Rocketnews.com
Written on November 11th, 2009 by no shouts
The wife of back-from-the-dead canoeist John Darwin has offered to return more than half a million pounds of fraudulently obtained cash.
Lawyers for Anne Darwin said she would pay back £591,838 she made from the scam she staged with her husband John, a Proceeds of Crime hearing heard.
The pair of Seaton Carew, Teesside, were jailed after he faked his death to claim life insurance and pension cash.
John Dawin agreed to pay a nominal sum of £1, as he has no financial assets.
A proceeds of crime hearing to confiscate some of the money started at Leeds Crown Court earlier.
Convinced sons
Mrs Darwin, who appeared in court, agreed to pay £363,700.01 compensation to the victims of the crime and £228,138.24 under the terms of the Proceeds of Crime Act.
Her husband was not at court.
The couple had convinced the police, a coroner, financial institutions and even their two sons that John Darwin had drowned while canoeing in the North Sea in 2002.
However, he had been hidden away in a flat next door to his wife’s home, and they later embarked on a new life in Panama.
In November 2007 he returned to the UK, telling police he was a missing person with amnesia.
Darwin, 58, was jailed in July 2008 for six years for deception, while 57-year-old Anne Darwin was jailed for six-and-a-half-years for fraud and money-laundering.
In March, they both lost appeals against their sentences.
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Written on November 10th, 2009 by no shouts
Oprah Winfrey’s production company and a US insurance firm have reached an amicable settlement over rights to the phrase "aha moment".
Earlier this year, Harpo asked the Mutual of Omaha to stop using the phrase to promote its products and creating an association with Winfrey.
The talk show host has often uses the slogan on her programme to describe "flashes of understanding".
Representatives for Harpo and Mutual declined to give any further details.
Campaign
The Omaha-based company responded to Harpo’s request with legal action stating it had obtained preliminary approval of a trademark on "aha moment".
Mutual also said it had conceived the slogan in early 2008 and encountered no opposition when it made its application to the US patents office.
Harpo made no response to Mutual’s move asking a court to declare it had not infringed Winfrey’s rights.
The insurance company asked for their claim to be dismissed last month.
They used the slogan in a website campaign in which users chose the best "aha moments" to be at the heart of a series of TV adverts.
The 10 stories are still appearing on their internet site, while the company calls itself "proud sponsor of life’s aha moments".
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Written on November 8th, 2009 by no shouts
US President Barack Obama has hailed as "historic" the approval of a health bill by the House of Representatives.
He said he was "absolutely confident" the Senate would pass its own version, and that healthcare reforms would become law by the end of the year.
Passed in a narrow 220-215 vote by the House, the bill aims to extend coverage to 36 million more Americans and provide affordable healthcare to 96%.
Mr Obama has made healthcare reform a central plank of his domestic agenda.
Correspondents say the legislation could lead to the biggest changes in American healthcare in decades.
Tight numbers
Democratic Senators must now consider their own bill. They need 60 out of 100 votes to bring it to a final vote.
"I look forward to signing comprehensive health insurance reform into law by the end of the year"
Barack Obama
There are only 57 Democrats and two independents in the Senate. Two Republicans have signalled they could approve a compromise health bill.
If it is passed, lawmakers from both houses will try to reconcile the two versions before the programme can be signed into law by the president.
In Saturday’s vote, the bill was supported by 219 Democrats and one Republican – Joseph Cao from New Orleans. Opposed were 176 Republicans and 39 Democrats.
Mr Obama said: "Tonight, in an historic vote, the House of Representatives passed a bill that would finally make real the promise of quality, affordable healthcare for the American people.
"The United States Senate must follow suit and pass its version of the legislation. I am absolutely confident it will, and I look forward to signing comprehensive health insurance reform into law by the end of the year."
Abortion amendment
The debate had sparked strong emotions on both sides.
Democratic Party representative John Dingell said: "[The bill] offers everyone, regardless of health or income, the peace of mind that comes from knowing they will have access to affordable healthcare when they need it."
KEY BILL PROVISIONS
- Aims to provide affordable healthcare to 96% to redress 2008 figure of 47 million uninsured
- Individuals must obtain coverage and most firms must provide it to workers
- Creates an insurance market for purchase of coverage
- One product will be a government health insurance plan
- People with pre-existing health problems cannot be denied insurance
- Funded by raft of measures, including 5.4% surtax on those earning $500,000 a year or more
- Those who earn up to 150% of poverty level to qualify for Medicaid government programme for the poor
- Insurers must justify increases in premiums
Q&A: US healthcare reform
Send us your views on reforms
But Republican representative Candice Miller said: "We are going to have a complete government takeover of our healthcare system faster than you can say ‘this is making me sick’."
Before the vote, Mr Obama had made a rare visit to Congress to try to persuade wavering members of his own Democratic Party to back the bill.
He said such opportunities came around "maybe once in a generation".
After the vote House Speaker Nancy Pelosi said: "I thank the president for his tremendous leadership, because without President Obama in the White House, this victory would not have been possible."
The bill will allow the government to sell insurance in competition with private companies and make insurers offer cover to those with pre-existing conditions.
However, the government-run healthcare programme – the so-called "public option" – was scaled back in the run-up to the vote.
One key concession to get the bill through was to anti-abortion legislators.
An amendment was passed that prohibits coverage for abortion in the government-run programme except for rape, incest or if the mother’s life is threatened. Private plans can still offer the cover.
Democrat Bart Stupak, who sponsored the amendment, said: "Let us stand together on principle – no public funding for abortions."
Abortion rights supporters said the amendment was the biggest setback to their cause in decades.
The Senate debate on healthcare reform is expected in the coming days.
Senate majority leader Harry Reid said after the House vote: "We realise the strong will for reform that exists, and we are energised that we stand closer than ever to reforming our broken health insurance system."
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Written on November 6th, 2009 by no shouts
By Dan Bell
BBC News
Chelsea and Newcastle United are thinking about selling the naming rights to their stadiums. But why do fans get so upset about their hallowed ground having a corporate moniker
How would you feel if your boss tried to re-name one of your children after the company website
Well that’s pretty much the reaction Newcastle United fans had when the man who owns their club re-named its stadium: sportsdirect.com @ St James’ Park Stadium.
Even if you’re not a Newcastle supporter, this is not an easy name to love – it’s like a stone-cladding porch tacked onto the front of a stately home. For life-long fans, it is a travesty.
"At first when I heard it I couldn’t believe it. To me he’s just kicking the supporters in the teeth," says Joe Grey, who’s a third-generation Newcastle fan. He is not alone.
But why does a simple name change – albeit an ugly one – provoke such an angry reaction And why did corporate sponsors of other clubs, such Arsenal’s Emirates and the Reebok stadium in Bolton, get away with it
History/tradition
"The football club is about their history as the Geordie Nation," says Jim White, a sports writer with the Guardian.
"You don’t support the board, you don’t support the owner – some of the players get up your nose – you support something wider which is your community.
NAMING RIGHTSThey stuck:
- Emirates (Arsenal)
- Reebok (Bolton)
- Britannia (Stoke)
- Ricoh Arena (Coventry)
They didn’t stick:
- The Friends Provident St Mary’s Stadium (Southampton – name changed)
- McCain Stadium (Scarborough – club folded)
- JJB Stadium (Wigan – now the DW Stadium)
"The stadium is there permanently and people are very offended when you interfere with that.
"For him [the owner] to compromise that history and tradition by insulting the name of St. James’ Park is ridiculous."
It seems that just as you should never dismiss a true football fan’s grief at losing with the phrase "it’s just a game", neither is the title of their stadium "just a name".
But Newcastle United is not alone in being lumbered with clumsy corporate branding, and at least its branding is for sports equipment.
What of York City fans and their less-than sporty sounding Kit Kat Crescent, or Hull City’s elegantly titled Kingston Communications Stadium, usually shortened to "The KC", neither of which caused outrage
Nor is corporate colonisation limited to football. The Oval, bastion of English cricket, is now "The Brit Oval", following a sponsorship deal with an insurance firm.
And compared with American sports, British sponsorship is the epitome of subtlety. American football has the Pizza Hut Park and who can suppress a smirk at the sound of Dick’s Sporting Goods ark in Colorado.
So why do some companies get away with it and others don’t According to Jonathan Gabay a branding expert with Brandforensics.co.uk, the problem is not so much how ugly or inappropriate the name is, but how long it has been there.
"It all depends whether the brand is going to have meaning to the community," says Gabay. "The problem in Newcastle is that it didn’t have any meaning. Why It already had a strong meaning that meant to a lot of the fans.
"Parents were supporters, and their parents were supporters. It is in the blood. It is something I am inheriting from my parents who also supported this team, it is my kinship to the local community and also to the wider community."
But he says it’s a different story if the brand is there from the beginning, having provided a brand new facility, rather than an interloper coming in and re-naming a much-loved institution.
White agrees. "If Arsenal had tried to change Highbury to the Emirates then people would have got very cheesed off. When you’ve got a new stadium you’ve got a blank canvas in a different way."
In fact, Gabay says there may even be bond formed between the sponsor and the fans because there is a sense of the brand and the community having built something together.
"If Emirates were ever to leave from there, I doubt they would ever do it, I bet you people would still refer to it as the old Emirates stadium," he says. One wonders if there are any fans now who refer to it as Ashburton Grove.
But unlike the Emirates and the Reebok, some namings of new stadiums do fail to catch. And the more cumbersome, the more likely they are to fail. When Southampton opened their new ground in 2001 it was lumbered with the moniker of The Friends Provident St Mary’s Stadium. Many just called it St Mary’s.
In the end, though, no brand can take away a club’s history.
Joe Grey, 45, remembers the first time his dad took him to a match at St James’ Park. It was an FA Cup tie, against Luton Town. Newcastle lost 2-1. He thinks it was either 1970 or 1971.
"I always remember going with my dad and getting off at Gateshead station and looking over the Tyne and seeing the stadium and it was just fantastic.
"It’s history. It’s been the home of the ground since 1892, well over 100 years. Whenever you think of Newcastle United you think of St James’ Park."
And whatever the sign on the wall, it is the fans that chose what they call their own stadium, says the Sun’s Ian McGarry.
"There’s no way anyone in Newcastle or anywhere else in England, or in Europe for that matter, is going to call it the Sportsdirect.com."
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Written on November 4th, 2009 by no shouts
This week our City Diarists discuss the sell-off of Royal Bank of Scotland subsidiaries, the UK and US policies on banking bail-outs and the real meaning of economic growth.
These diaries are written by people who work in finance and have had a front row seat as their industry goes through the biggest changes in decades.
They give us regular insiders’ updates on the mood in the City of London and the dramatic changes in the world of finance.
LAURA
Laura (not her real name) works for a commercial bank in London.
If a week is a long time in politics the same can definitely be said for banking. The expected scale of the Royal Bank of Scotland emasculation is staggering. There are seven relatively recognisable brands under RBS ownership – RBS, Natwest, Direct Line, Churchill Insurance, Lombard, Coutts and Green Flag. Of these, RBS will disappear in England, and Churchill, Greenflag and Direct Line will be sold.
Asset finance has been cut back across the financial sector as the return on lending is often low and the rate of default over the last 18 months is high. So that leaves just Natwest, Coutts and a reduced Lombard standing – not counting the other RBS brands, which few consumers have ever heard of.
Commercial business lending is quite active in part as customers of RBS and Lloyds have been running for the hills (ie other banks) due to uncertainty over their long-term funding. The announcements from the EU on their break up will inevitably spook business owners even more and this doesn’t bode well for their eventual sale price.
A few weeks ago an RBS bank manager commented to me that all of a sudden no business lending deals were being approved for more than a five year term – whether it be a secured loan or interest rate hedge. The reason given to staff was that it was something to do with their balance sheet. As usual, the staff had been told complete rubbish and had to give patsy answers to deflect any questions from customers. But now all becomes clear: the bank knew that it would be given five years by the EU to ‘dispose’ of RBS business banking in England following the announcement this week, and it was trying to tie up potential loose ends early.
Sickening
"Yet again the drivers of the bank’s misfortune get away virtually scot-free"
I love my job most of the time. I get to meet interesting businesses and help them fund growth and create new ideas and employment. However, what makes me sick is the complete lack of honesty by the powers that be in RBS and two other banks in particular who shall remain nameless. The 3,700 staff losing their jobs in the latest cull by RBS had nothing to do with their paymasters’ mistakes and yet again we see the drivers of the bank’s misfortune getting away virtually scot-free.
It doesn’t make you feel good when the black sheep of the family have taken over the asylum.
Arrogance
Whilst I’m in a feisty mood – HBOS in 2007-08 tried to grow their market share by launching the now laughably named ‘Hero’ product. This effectively offered over the odds business funding for one year fee-free at a level that other banks refused to compete with, all with the aim of buying business. The fact that someone in management didn’t work out that lending more money than you could probably get back for no fees and minimal interest rates was a rubbish idea is testament to the monolithic arrogance which unfortunately still pervades so many of our high street names.
There is also a poignant circle of life lesson to the break up of RBS. In marketing they used to refer to the RBS v Virgin method of branding; RBS being a company which had many distinct brands while Virgin had all of their companies strongly marked with the same brand. Virgin may soon own large chunks of RBS and potentially win the marketing strategy debate with it.
Read Laura’s previous diary entries
ANTHONY
"Anthony" (not his real name) works for an investment bank in the City.
The A30 is a picturesque drive from Cornwall that takes you across Dartmoor before connecting with the M5 at Exeter. Sleepy villages are dotted amongst the wild, rolling moors. It is an unlikely location for a series of frantic telephone calls which were made to avert the financial disaster which followed the collapse of Lehman Brothers.
The calls were made by Hector Sants, head of the Financial Services Authority, while he tried to find a solution to the request by the US Treasury to wave regulatory concerns and allow Barclays to buy Lehmans. The scene is described in Andrew Ross Sorkin’s book Too Big To Fail: Inside the Battle to Save Wall Street.
The FSA wanted assurances that the US government would provide guarantees against potential losses in Lehmans. These guarantees were not given and so the FSA on orders from Gordon Brown would not sanction the Barclays proposal.
Banking failure
"In the UK, all banks are too big to fail. In the US, it is quite the opposite."
Nobody would blame the PM for turning down the deal. If the US government would not stand by their man then why should we However, one of the UK grievances was that insufficient due diligence had been carried out and therefore it was impossible to quantify the extent of Lehmans’ losses. If that was so then why did the prime minister nod through the disastrous acquisition of HBOS by Lloyds Bank with a similar lack of due diligence
There is a clear distinction in US and UK policy in this area. In the UK, all banks are too big to fail. In the US, it is quite the opposite. This week, US lender CIT filed for bankruptcy. It is the fifth largest bankruptcy in US history. There have been 115 bank closures in the US this year alone. But in the UK we rescued the Dunfermline Building Society.
Despite allowing banks to fail, the US economy is recovering while the UK economy is still floundering with the prospect that the UK government needs an additional £40 billion to fund the restructuring of Lloyds, RBS and Northern Rock. The question to ask is that if the government had allowed Northern Rock to fail and had paid out protection on all depositors up to £50,000 under the Government Asset Protection Scheme, would that have been cheaper than rescuing Northern Rock
"My investment bank is recruiting which illustrates the level of optimism returning"
I think the US was wrong not to rescue Lehmans because it was too big to fail. The other small banks that have been allowed to fail have not had quite such an impact and so in the long run it is better that they were allowed to fail. The too big to fail rule applies to RBS and Lloyds but not Northern Rock.
Optimism
The case for Lehmans survival is reinforced by the record performance of the investment banks in 2009. In my investment bank we have been recruiting which illustrates the level of optimism that is returning. If Lehmans had continued, profits would have risen. By allowing it to fail, losses became self-fulfilling.
The governor of the Bank of England, Mervyn King supported the principle in a recent speech saying that banks which were too big to fail should be broken up. Indeed, this is starting to happen to UK banks. RBS will sell Churchill Insurance and Direct Line while Lloyds will sell Cheltenham and Gloucester. In complete contrast there seems to be no pressure to break up J P Morgan Chase or Citibank in the US.
Only time will tell which country got its policies right.
Read Antony’s previous diary entries
STEPHEN
Stephen (not his real name) has worked in the City of London for over a decade.
This week I’d like to reflect on what exactly is meant by "growth".
Growth of two to three per cent remains the perennial policy objective of western governments in the modern era. Our modern digital world makes quantity even easier to determine than quality. "Life is poetry," as a wise soul said to me recently, "but we have tried to make it mathematics".
Focus on positive "growth" in headline figures means that growth of any kind and any quality will do. No need to understand exactly what that growth involves. Just keep the numbers climbing and throw money at it if we have to.
When growth is not positive, we believe we are being deprived. So if the numbers stop climbing, then we just print money to make the fandango continue.
Ever wondered what this sense of entitlement leads to I’ve often wondered that if there was neither growth nor decline and we just trod water for a bit, how life would be. It would probably be quite enjoyable. My grandparents spoke of the Great Depression as a time they just made do and enjoyed each other’s company.
Endless growth
There may be ever more mathematics in life, but if the maths stops working then we just fudge it. From growth rates, to employment statistics, house prices and even exam pass rates, the modern era has witnessed both gravity-defying growth and quite shameless goalpost moving.
Excessive focus on headline growth statistics, however, causes dangerous distension as the cycle matures. As the cycle nears the end, increasingly untenable growth occurs. Our quest for endless growth, paradoxically, amplifies boom and bust even as we earnestly seek the opposite.
On a recent trip around Asia, I was startled at the difference not in the amount of growth, but its quality. In Asia, there are millions of poor and often starving people desperate for subsistence and security, not growth. Foreign holidays and buy-to-let portfolios are not part of this economic wave – not in the same way as in the West. And the demographic patterns across the generations mean that there is endless, natural demand for the basics: infrastructure, housing, simple staples.
Burst bubble
In the West, growth in the mid-part of this decade was increasingly removed from the basic underpinnings of life. It was more about house prices than house quantities and more about the "service economy" and consumption than making hard goods. Now we are faced with the fallout from that burst bubble, despite countless warnings which our leaders chose to reject.
If you are poor, homeless and starving in a developing country, the solution to your problems involves gaining ownership or tenancy of a house. If you are over-borrowed and own two or more properties in the West, the solution to your problems probably involves losing at least one of those houses and starting again once the dust has cleared. But that message will always remain politically unacceptable and will not be discussed by the vested interests that inhabit our public life.
So the rise of the developing world poses a rather grounding lesson to the West. If life is mathematics, then decline is death and stagnation is near-death. But if life is poetry, lean times and the rise of developing countries make us reassess and learn to enjoy what we have while we wait for better days.
Read Stephen’s previous diary entries
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This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Written on November 3rd, 2009 by no shouts
Dozens of bank branches in Scotland are to be sold off as part of a major shake-up of the UK government-owned banking sector.
Assets being sold in Scotland include 185 Lloyds TSB branches, four branches of Cheltenham and Gloucester and the Intelligence Finance internet business.
The Royal Bank of Scotland will sell off its NatWest branches in Scotland.
It will also put on the market RBS Insurance, which operates the fourth biggest global card payment service.
Lloyds banking group said after the bank break up plan is completed it would be Scotland’s biggest financial sector business employing 20,000 people.
Bank of Scotland, which has more than 300 branches, would remain part of the Lloyds banking group, which is 43.5%-owned by the government.
BANK BRANCH SELL-OFF
- Lloyds TSB brand disappears and 185 Lloyds TSB branches in Scotland to be sold
- Four Scottish branches of Cheltenham and Gloucester for sale
- Intelligence Finance internet operation for sale
- Royal Bank of Scotland to sell off its branch network in England and Wales
- RBS’s NatWest branches in Scotland for sale
- RBS Insurance for sale
Douglas Fraser on the bank sale
Brian Taylor on political reaction
Views from Direct Line
Life and pension brand Scottish Widows would also remain part of Lloyds, as would Scottish Widows Investment Partnership and some specialist commercial financing operations.
The banking side of the slimmed-down Lloyds operation would be known as Bank of Scotland in Scotland, and Lloyds in England and Wales.
Lloyds said its registered office would remain at The Mound in Edinburgh
Chancellor Alistair Darling said that under the proposals, more private money was being put into Lloyds, reducing the government’s potential liability to Lloyds by £260bn.
Both RBS and Lloyds have agreed to increase lending to businesses and property owners by a total of £39bn.
They have also agreed not to pay any bonuses to staff earning more than £39,000 for their performance in 2009, while board members will defer all their bonus payments for this year until 2012.
Shares in RBS fell 1.4% to 38 pence, well below the average price of 50.5p paid by the government for its stake in the bank.
Lloyds was up 5.9% at 90p, also below the 122.6p price the government took to bail out the bank.
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
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