And both banks make money – pots of it

And both banks make money – pots of it.Banks don’t win votes – unless you bash them. Fred Goodwin found this when he was beaten up by the Treasury Select Committee last week. Armed with Don Cruickshank’s seminal work on banking competition, published last year, the MPs attacked the Royal Bank boss for making “fat cat” profits. Would these same MPs feel that the cause of bringing down costs for customers was better served by creating a fifth force on the high street – or by snuffing it out? The answer is in an early- day motion, calling on the Lloyds TSB bid to be blocked.Stage one of the blocking will come this week, when the Office of Fair Trading gives the green light to the Abbey-Bank of Scotland merger. Stage two will come later this month when the OFT refers the Lloyds TSB bid to the Competition Commission (an eventuality presaged in the Lloyds TSB offer letter this week) and stage three will come, if things go on that long, when the Commission blocks the bid altogether later this year.The real danger, though, is that the Commission lets the bid go through. Even people in Lloyds TSB fear that Abbey is not worth the pounds 19bn Lloyds TSB is willing to pay.For a start, Mr Ellwood will have to sell to buy.

He will need to sell part of his mortgage business to avoid having too much market share – and could even be forced to get rid of some of the other retail operations.Then he would need to integrate the target company Consider this, if you will Abbey is not a normal retail bank. It makes nearly half its profits from its treasury operations, which are as good as anybody’s (and a damn sight better than Lloyds TSB’s). Mr Ellwood will have to put the Abbey treasury folk in charge of an enlarged business, or else face losing the geese that lay the golden eggs. Even if he gives the Abbey folk the train set, he risks suffering some damaging defections.Which comes to our Cardigan/Raglan question. Mr Ellwood cannot fail to be wounded by the pursuit of Abbey.

But will the injury be fatal?Gruesome at GranadaCharles Allen could not have chosen a worse time to make his debut as Granada chairman. The share price is at a Robinson-era low, and everyone is worried that he’ll deliver more bad tidings at Wednesday’s annual general meeting The news on advertising revenue will be poor, but not new. There is no reason why Granada shares should fall any further – well, not that they are admitting – but they just might.This is a bad time to start stalking the ultimate quarry – Carlton. Charles needs to find a way of persuading Michael Green to cede the rest of ITV and ONdigital to Granada and still present it as a victory for Carlton. Mr Green, smarting at his defeat at the hands of Granada over United News & Media, may not be in a mood to deal. He might consider an alternative deal – like getting into bed with BSkyB or Pearson – preferable to giving into Charles Allen yet again.Such a move might only put off the inevitable But Granada is no longer the market’s darling.

The Compass demerger was not well- executed and, instead of negotiating from strength, Charles Allen is showing uncustomary signs of weakness.n j.nisse independent.co.uk. Good news for mutuality last week as both the Chelsea and Port- man building societies successfully rejected members’ resolutions to change the rules. Chelsea rejected a demutualisation resolution, while Portman turned down calls for directors to be more open and for salaries to be decided by members. Good news for mutuality last week as both the Chelsea and Port- man building societies successfully rejected members’ resolutions to change the rules.

Chelsea rejected a demutualisation resolution, while Portman turned down calls for directors to be more open and for salaries to be decided by members.
Once again, mutuality is in the spotlight. Nor is it likely to dim as the Government publishes its study into the future of co-operatives this week. And in a fortnight, a Treasury select committee inquiry will start looking into Equitable Life’s problems.Hopefully, a new report from the Centre for Business Research (CBR) at Cambridge University will be given due consideration by the Government. It argues that mutuality is worth saving, not least because without it, many ordinary investors who need a choice of long-term, low-risk savings plans for their pensions or life assurance are likely to lose out.The windfalls that members get when a mutual becomes a plc are attractive, of course.