Faisal Islam on Economics

Faisal Islam guides you through the world of finance and money in language which makes sense.

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April 24, 2014 2 Comments

Why Labour isn’t really severing its ties with the Co-op Bank

Interesting story from the BBC that Labour is going to cut its link with the embattled Co-operative Bank.

Forget for a moment that the bank was already reviewing its relations with the party. The apparent move to Unity Trust Bank - the trade union bank - is hardly severing links with the Co-op.

24 miliband coop r Why Labour isnt really severing its ties with the Co op Bank

Unity Trust was founded as a joint venture between the Co-op and the trade unions in 1984. It might be intriguing enough if Ed Miliband’s party now had a bank whose president is Unison leader Dave Prentis. (Billy Hayes of the CWU, Paul Noon of Prospect and the RMT’s finance director are also on the board).

Miliband could be seen to have reformed the union funding link only to have turned it into bank loans rather than donations. But that’s not the point.

Unity Trust bank right now is functionally part of the Co-op Bank. The Co-op’s 27 per cent shareholding is one thing. But more important is that the bank’s articles of association demand that Co-op controls Unity Trust.

Regulators  (the Bank of England now) naturally demand that bankers, not union leaders, run banks. Therefore, despite its minority shareholding, the Co-op Bank appoints the majority of the board, the chairman and the MD.

That means the Co-op Bank’s own risk director and financial control director sit on the board of Unity Trust Bank.

Now Co-op did appear to be trying to sell its stake. But this has not happened yet, and as another bank would have to buy the share in order for unity trust to retain its banking licence, I imagine this will be a rather lengthy process.

So right now this is far from a case of Labour severing a link with a bank facing more embarrassing reports, and more akin to changing the part of Co-op to which the party is linked.

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March 19, 2014 9 Comments

Budget 2014: Carney butts in on a day of surprises

This is George Osborne’s big chance. It is the first time he will hold up the budget box at a time of a robustly growing economy. It has been a four-year wait for this pleasure.

March 12, 2014 1 Comment

Key Cameron EU ally: ‘no idea’ about UK renegotiation

David Cameron was at pains to get the Swedes onside when he announced his referendum plan last year. So, why do they still have ‘no idea’ what it is?

March 3, 2014 4 Comments

A warmer war – Putin winning on the economic front

It is a version of mutually assured destruction preventing a full-scale trade embargo, and President Putin has planned in this way for years – Europe imports nearly a third of its gas from

February 20, 2014 4 Comments

British Gas turns up the heat

Centrica Chief Executive Sam Laidlaw told Channel 4 News such pressure is undermining investor confidence and means vitally needed new power stations may not be built.

February 13, 2014 4 Comments

Forward guidance did not fail, but welcome to forward vagueness

On any measure, having to abandon your much-hyped new policy innovation after just six months, is embarrassing – the rock star central banker seems out of tune.

January 29, 2014 33 Comments

Dependent independence? Carney’s warning for Scotland

Mark Carney diplomatically warns Scotland that independence could come at a heavy price – like the ones paid by Ireland, Iceland, Cyprus and Spain.

January 28, 2014 4 Comments

Playing ‘long-term plan’ bingo with George Osborne

If you believe that the government’s policies contributed to further imbalances, it might appear a little cheeky to argue: “Vote for me and I will rebalance the economy I further

January 23, 2014 3 Comments

Why ‘Davos Man’ pontificates about inequality over canapes and fine wine

There are many on my Twitter stream who find it grotesque that the supposed “masters of the universe” who failed to create a safe financial world order are still on top.

January 22, 2014 5 Comments

At Davos, the crisis is now off the menu

Davos Man is trying to put behind him some six years of financial fear. Doom Davos and Deleveraging Davos have been replaced by Dealmaking Davos. The dust is settling.

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