Saturday, February 08, 2014

Barefaced Banking

I was saddened to learn of the death of the British satirist John Fortune on New Year’s Eve. In a distinguished career, he will perhaps be best remembered for his hilarious collaborations with fellow writers and comedians John Bird and Rory Bremner (Figure 71.1).

Figure 71.1: Pioneering satirist John Fortune, right, with the equally sharp John Bird (left) and Rory Bremner.

Copyright © 2013 BBC

A couple of days later, I received a ‘Happy New Year’ email from a friend, Emilio, who lives in the (central) Spanish region of Aragón. He described to me an absurd conversation he had recently had with a member of staff at his local bank. (I had better not identify the bank itself. Suffice it to say that it also has branches in the UK.) Indeed, his encounter sounded positively Fortunesque.

First, I had better sketch the background. Since the Eurozone economic crisis took hold, Spanish banks have been on the ropes, distrusted and reviled by those who have no choice but to use them. That said, the nation’s banking sector has become profitable since this time last year. A significant factor, according to the Financial Times, was a sharp reduction in write-offs and provisions. Allow me to report another possible factor.

A fortnight before Christmas, Emilio had gone to his bank to withdraw some cash, which he had been obliged to order at the beginning of December. He needed to pay for materials – he is a self-employed air-conditioning engineer – and suppliers tend to insist on cash payment. This is illegal, by the way, but as they are loath to accept cards or bank transfers, Em has no say in the matter. (A recently-leaked government report claimed that a staggering 25% of Spanish commerce operates under the taxman’s radar, all helped by a neighbourly omerta among the small-business community.)

While counting the readies, the besuited señorito behind the counter mentioned that the bank was once again issuing credit cards. Ever agreeable, and wanting to establish some degree of financial legitimacy, Em paid attention to the predictable spiel. The clerk suggested an initial limit of two thousand euros, after which he outlined the ‘Terms and Conditions’.

In order to qualify for the credit facility, it was mandatory to open a savings account at the same time. Em was puzzled, knowing that when servicing any sort of debt, only a fool would opt to keep savings. Then the truth dawned – all over him. The required deposit in the so-called ‘savings’ account would be – you’ve guessed – two thousand euros. Furthermore, it paid no interest. Well, potentially it did; the current rate just happened to be zero per cent. On the other hand, the credit card would rake in a cool 22.8 per cent (APR). Some differential. On top of that was a ten per cent surcharge should the full balance not be settled by the end of each month (Figure 71.2). (No wonder these banks are making a profit, the sole requirement being customer idiocy.)

Figure 71.2: You give your money to a bank, and the bank sells it back to you.

Copyright © 2014 Mercury NIE

Despite Em’s speechless incredulity, the clerk did not break his stride. If such a highly-valued business client wanted a loan for, say, a new van, he could simply deposit 20,000 notes in an interest-free savings account, then pay for the vehicle upfront with his shiny new piece of plastic. Olé!

My reply was short: no lo hiciste, ¿te (you didn’t, did you?) and no, mercifully, he didn’t. The bank’s generous offer was declined with quiet courtesy.

Is it me, or does this transcend satire? Meanwhile, Spain’s politicians, squirming under the EU’s fat thumb, privately wonder why the black market is thriving like never before. It is the elephant which would be in the room, were it not too big to fit through the doorway.

John Fortune (Figure 71.3) lives on – and works as a straight-faced bank clerk somewhere on the outskirts of Zaragoza.

Figure 71.3: John Fortune (1939-2013)

Copyright © 2014 Telegraph Media Group Ltd

Copyright © 2014 Paul Spradbery