rant: Citigroup Mandy Rice-Davies national savings special interest group pleading
by ermine
8 comments
Citi give me a Mandy Rice-Davis moment on NS&I
Way back when, I think it might have been my Dad, may have been some other wise old geezer, giving a young ermine some advice.
Never ever miss the opportunity, in some situations, to keep schtum and STFU.
The advice sprang to mind as I read that Citigroup are dischuffed that savers have the temerity to get into NS&I savings rather than watch their money slowly die as the rapacious banks refuse to give them a decent return on savings. Apparently the certificates are a bad idea according to Citi-
“While the new national savings index-linked certificates appear highly popular with many investors, we believe they are a bad idea for the government: they are likely to prove a highly expensive form of funding and will hinder the important task of reducing the UK banking sector’s reliance on wholesale funding,”
Obviously they are speaking from the point of view of what is best for the country, then, rather than as a form of egregious special-interest group pleading?
Well, that’s all right then. It also brought to mind another classic quote from the past, the elegant accuracy of Mandy Rice-Davies during the trial of Stephen Ward in the Profumo scandal.
Well he would say that, wouldn’t he?
Exactly, Mr Citigroup. You would say that, wouldn’t you? It’s so much easier than going back to your desk and working out how to offer a decent rate of savings interest. Alternatively, just take my Dad’s advice and observe this is a situation to STFU.
After all, a fair amount of UK Government money has gone into bonuses for some of your buddies. It’s about time some of the lowly grunts that actually have to work for this money got a slice of the pie, don’tcha think? I haven’t loaded up my full 15k because I still have to earn the last couple of grand, probably not something that’s really an issue for Mr Citi, “Thought leader” extraordinaire.
No, I’m not taking the mickey. Seriously, “Thought Leadership” is one of citi’s Vikram Pandit’s core competencies, according to citi’s website. I think they’ve overstretched the mark here 
As an American, Citigroup are scum in my experience. They’re not even run for the benefit of the investors — if it were, then they wouldn’t be on the verge of bankruptcy every 5-8 years.
Undoubtedly ILSCs will cost HMG a bit more than Gilt issuance, but it’s small beer, I would think, when compared with the electoral benefit arising from having the banks whinge in public.
Hi SG
If I’ve understood correctly these http://www.dmo.gov.uk/documentview.aspx?docName=/gilts/press/pr310511.pdf were the last lot of index linked gilts up for auction. They are paying RPI+5/8% so ILSC’s are probably about cost neutral by the time you add some cost in for managing <=£15k per punter through NS&I.
Of course these mature in 29 years rather than 5 years which is a different matter all together.
Cheers
RIT
ermine, I am disappointed. You should see ILSCs as the state handout to the well off that they are, and agree with Citi.
As a saver, sure, they are the most awesome deal going.
AV have the note, and say the government pay a +90bp premium over IL gilts.
http://ftalphaville.ft.com/blog/2011/06/07/587166/nsi-certificates-must-be-capped/
I am a taxpayer, and I protest. Why do I need to give a subsidy to retail depositors when the government borrows money? I didn’t ask the government to borrow that money. So why should it pay more a penny to borrow than the bond markets require it to?
Why do those rich enough to be able to defer consumption need yet another subsidy? We poor taxpayers already have to backstop all retail bank deposits. You can buy IL gilts in your SIPP or your ISA – the taxpayer generously also allows you a tax-free return on your investments!
Sure, maybe this is special pleading from Citi, though I doubt they raise much from UK retail depositors. But the special pleading from the savers should be given due attention too.
-> Lemondy
@Lemondy, I think SG nailed some of why… Besides, what’s the problem with a state handout to the well off? The banks had some earlier on, HMG is just spreading the love wider to the lower echelons!
No argument with the conclusion Citi came to re the expensive debt, it just happens to so conveniently be a course of action that would benefit banks, so I was reminded of the lovely Mandy’s pithy wit
“what’s the problem with a state handout to the well off”
Slippery slope, dude. Next you will be penning articles for the Guardian about how the government needs to keep subsidising your Ocado habit/iPhone rental.
by Bankers say don’t mess with us – classic special interest pleading « Simple Living in Suffolk
[...] day, another Mandy Rice-Davies moment. Our bankers seem to be getting their mates on the case of helping them avoid the consequences of [...]
Hi ermine
This news nicely correlates with my hypothesis in last weeks post. Thanks for the update.
So we now have the vested interests starting the lobbying to try and get them withdrawn. It will be interesting to see if the interest paid to savers by the banks starts to rise next. In a ‘free’ world of supply and demand that is the response they should be giving to a new competitor in the market. Particulary one looking for £14 billion of inflows.
I’ll be watching the monthly Bank of England savings rate data even more carefully now as clearly the banks have started to notice the outflows.
Cheers
RIT