Premier League profits
It’s a lot of money, £7 billion, but that’s what Barclays made in profits in the year 2006. And Barclays is only our third biggest bank. Altogether the profits of the UK’s High Street banks will top £40 billion when all ten have reported in a few weeks time. A lot of this money is not made from you and me directly. Half of Barclays’ profit comes from abroad. Retail banking in the UK – our bank accounts – made £1.2 billion. But that was up17% on the £1 billion they made last year. And that is not turnover. It is profit. The difference between what they charge us to run our bank accounts and what it actually costs them.
But hang on a minute you say. Barclays does not charge me anything to run my current account. Really? What about the 0.1% interest it pays on your money which it is busy investing elsewhere and making a lot more than that. What about the 15.6% it charges for agreed overdrafts or the 27.5% if it is not agreed? Or the £30 a day (maximum of £90 a month) it charges per payment if you go over your agreed limit? Or the £35 for bouncing a cheque or a direct debit? What about the fee of up to £174 a year for one of its ‘Additions’ accounts? And what about the interest rates on its Barclayloans – sorry I do not know what they are because you cannot find out without giving them free your personal details which they can then use to sell you more stuff. It is what the bank calls ‘personal pricing’ and is a convenient way to keep their loan rates out of the comparison charts. Which hardly fits in with Barclays boss John Varley’s view this week that customers want ‘choice…transparency…and value for money’.
He also said that having a successful bank in the UK is a good thing. After all Barclays paid around £2 billion in tax last year. And its strong profits mainly go to benefit the pensions funds which own most of its shares. OK. But it also means that banks could afford to stop levying charges which are probably illegal when we go overdrawn by mistake. I wrote about this in Saga Magazine [link here] in December and already readers are recovering large sums. So if you have been charged £35 to bounce a cheque or £30 to make a payment that left you further in debt – and all the banks charge similar amounts – do not feel guilty about asking for your money back. And if necessary going to court. The banks normally give in eventually. And over the next few days and weeks we’ll see just how easily they can afford to give us back our money.
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