#AceFinanceNews – Featured Report:BRITAIN:June.10: Despite a spate of record fines of bankers rigging international rates, miss-selling people insurance policies and bagging huge bonuses, UK Chancellor George Osborne is set to use his annual Mansion House event in the City of London to keep his friends happy.
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Against the growing lack of trust in the City, Osborne is set to keep his banking friends sweet. The theme of the chancellor’s speech is the need for a new settlement with the EU, with the City, and in the way the public finances are managed.
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Having won electoral success in May, the Conservative government is keen to use its majority to press on with traditional Tory financial policies, which often means fawning to its City backers and friends.
The annual Mansion House speech is given by the chancellor to black-tied bankers, the City elite and other grandees – many of whom are Conservative Party donors. Osborne himself has an estimated personal fortune of around $6 million, as the beneficiary of a trust fund that owns a 15 percent stake in Osborne & Little, the wallpaper-and-fabrics company co-founded by his father, Sir Peter Osborne.
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However, the City has been rocked in recent years by rows over huge bankers’ bonuses, despite the global economic crash caused by toxic debt flying around and the credit crunch. In the UK the taxpayer had to bail out both Lloyds and RBS in 2008 in order to keep them afloat.
The government also had to support Northern Rock and Northern Rock (Asset Management), as well as Bradford & Bingley. The total support package for the ban bailout during 2008-9, according to the National Audit Office, came to an eye-watering $1.85 trillion.
Bonuses and Record Fines
Not content with having had to bail out the bankers, taxpayers have been angered at their bonuses. This year it was reported that bankers were set to be awarded $7.7 billion in bonuses. Bailed bank RBS handed over $770 million, and Lloyds paid $580.
In the latest scandal, London-based HSBC is being investigated in several countries for operating a secret bank in Switzerland used by rich people and companies to avoid tax in other states in an ‘aggravated money laundering’ operation.
Meanwhile record fines have been handed over by banks who admitted rigging international rate systems. In 2012, Barclays Bank was fined $200 million by the Commodity Futures Trading Commission, $160 million by the United States Department of Justice and £59.5 million by the UK Financial Services Authority for attempted manipulation of the Libor and Euribor rates.
All eyes will be on whether George Osborne cuts the bank levy, which has been used to swell the government coffers by taking a charge on the financial sector. Stuart Gulliver, chief executive of HSBC, will be listening very carefully, having threatened to move his headquarters out of London and move back to Hong Kong.
Osborne, however, is unlikely to do anything that will upset his City mates too much. He has too much to lose.