In October 2008, almost a decade ago, the British banking system stood on the brink of collapse. Royal Bank of Scotland and Lloyds Banking Group were rescued by a government bailout, while a third bank – Barclays – avoided the need to take taxpayers’ money through its own fundraising efforts in the UAE and Singapore.
Part of that arrangement – a $3bn loan the UK bank made to Qatar – has now come back to haunt Barclays. Last summer, the Serious Fraud Office brought criminal charges against the bank’s holding company and four former executives. Now the SFO has gone one step further and taken action against the bank’s operating arm – Barclays Bank PLC.
This new development matters because if the operating company were to be found guilty in a court case, the Financial Conduct Authority could strip Barclays of its banking licence. In theory, that could result in the bank’s high street branches being closed.
The chances of this happening, though, look infinitesimally small. For a start, the charges will be strongly contested both by the bank and the four individuals. The SFO has to prove there was something illegal about the Qatar loan.
In the event of the charges being proved, a judge could fine the bank and jail the individuals for up to 10 years. It would then be up to the FCA to decide whether any further punishment was merited.
In mitigation, Barclays would argue that the events of 2008 were all a long time time ago, and that it now has a completely new group of executives in control. The bank has also been trying – if not always succeeding – to patch up what were once quite fraught relations with the City’s regulators.
Even if the FCA is unimpressed by the passage of time argument, new ring-fencing arrangements for the banks mean that the regulator could decide to remove the banking licence for the Barclay’s investment banking arm and leave the retail division untouched. This would show the FCA’s determination to stamp out bad behaviour but still represents the nuclear option, especially at a time when the financial sector is grappling with issues relating to Brexit.
Would the watchdog really be prepared to push the button when it has alternatives – lifetime bans for individuals and huge corporate fines? Probably not.
Host of factors led to Warren Evans beds folding up
Warren Evans stores were for first-time buyers who loved Habitat and Heals but couldn’t really afford their prices. For a whole generation of young professionals in the capital in the 1980s and 1990s, its Camden bed store was a key destination for relatively cheap wooden double bed frame and futons. But now the firm, which expanded to 14 showrooms across the capital and the south, faces closure after failing to find a buyer. And its woes should give sleepless nights to anyone employed in the furniture sector.
What did it for Warren Evans? Like any other retailer, sometimes it’s just being out of step with fast-moving consumer tastes. There’s nothing mid-century modern about a 1980s bedframe.
Furniture retailing was also, for a while, resilient to online competition. But slick newcomers such as Made.com and Swoon Editions have switched us all on to web buying, even for bulky items. The mattress market has also rapidly moved online, judged by shares in Eve Sleep. It floated at 100p last May and although it sagged at first, falling to 80p last September, it has sprung to 125p this week.
But this is not just a tale of online trouncing the high street. Furniture is a classic big-ticket consumer price item. When incomes are tight, as they are now, consumers can easily defer the purchase of a new sofa or bed for a year or two.
Then there is the housing market. The biggest trigger for buying furniture is setting up home or moving house. But transaction activity has fallen flat, particularly in the London market, starving furniture retailers of customers.
Warren Evans is the latest in a line of furniture retailers to struggle. Last year, DFS bought rivals Sofology and Dwell, as well as eight stores from Multiyork, which filed for administration in November. It is estimated that as many as 10,000 jobs are currently at risk.
Another factor damaging the furniture retailers is rather less recognised. Those graduates of the 1980s and 1990s bought their own homes, usually within a decade of leaving college. Now that private renting is the most common form of tenure for 25 to 34 year-olds – and becoming the norm for older age groups too – there’s a good reason they’re not spending Saturdays mooching round furniture stores. They’re not going to be buying their own furniture for a long time yet.