building societies = transparency + profit

This is what happens when you choose to cooperate with a building society, not a main-street bank: you have rights to elect the Board of your building society,  agree or disagree with their propose changes to the Rules and Memorandum as set by the AGM (Annual general meeting). Building society’s customers are also asked to approve its Annual report and accounts, director’s renumeration report and appoint its auditors. Photo0177

Nationwide, is the biggest building society in the UK, its profits last year increased by 54% to 1 billion GBP and it is not the sec on largest mortgage lender in the country.

The main difference between ‘normal’ banks and building societies is that building societies do not have shareholders therefore they are not pressurised to make massive profits. This means that essentially they are able to run on lower costs and therefore offer cheaper products to their clients. Moreover, they are mutual institutions meaning – their clients make decisions on how the building society operates. They exist in UK since the 18th century. Building societies are not companies and are not listed on the stock market.

When thinking about the financial market, banking sector and the recent crisis which is still overshadowing lives of many people, it’s worth remembering that there ARE alternative ways of doing things. And, sustainable, people-friendly, fair and transparent banking can be profitable too.



“People generally are reluctant to accept the fact that paying performance bonuses make things worse not better – the executives themselves are certainly in denial – but there is wealth of research to show this is the case. A recent paper by Michael Cooper, Huseyin Gulen and Raghavendra Rau says bluntly: “we find evidence that chief executive pay is negatively related to future stock trends.””

A. Hilton, Evening Standard, 3 July.


the Secret City: the City of London

if you would randomly ask someone a question in London “where exactly is the city of London?”, i could guarantee that you would get a great variety of guesses at best, but most likely you would just confuse people and get another question in return “i am sorry, but i am not sure what you mean..”

But, it is understandable. The city of London is very extraordinary case with special history, laws and even more special status today both in London and globally. To me the city of London was just an administrative unit of London until I started to research tax competition issues. That’s when i found out that actually it is one of the tax havens which also explains city of londonwhy so many multinational companies and global banks are located exactly in that one square mile. Though it is still part of London and England, of course, it is very independent and autonomous with its own government, mayor, police, taxes, regulations and legislation.

Just very recently i had a chance to watch this new documentary The Secret City, which was a complete eye opener; the city of London is like an old relic which in a way seems like being stuck in time but equally is enough flexible and smart to adapt to modern times and benefit like no one else.

In public discourse London/ the City of London is always used as an argument when talking about various global policies and initiatives in the area of finances, business, tax or competitiveness. Tories (particularly, Boris Johnson) like to call it as the Great Britain’s golden goose which has to be protected and whose interests have to be taken into account.

However, this documentary sets a different scene. The city of London “is not a golden goose, but a tree under which nothing else can grow.” The city of London is very secretive and with very anti-democratic governance model. Its governing body is elected not by its citizens or residents but by companies. Currently, apparently about 108 companies participate in elections. Border between the City of London and the East London is like the USA and Mexico border which highlights this huge contrast between the two. Labour party has tried to initiate reforms but so far there is no big progress.

City of London is so detached from the British economy and is servicing global financial sector more than London or Britain. It’s full official title is actually the City of London Corporation and as a corporation therefore it has no obligation to declare its assets or be accountable to anyone. It has a massive lobbying power and influence in British government and no legislation is adopted without the City of London’s knowledge or approval.

City of London with its unique and ‘special’ governance model certainly distorts the democracy and markets by playing according to different rules. Will ever anyone will be that courageous to put this relic in museum to let it rest and replace with modern democratic administration?

Another great film about history and government of the City of London, is this one.

planes vs banks

“The airline industry benefits from every mistake ever made anywhere on the planet. Any pilot who makes a mistake anywhere on the planet today will make your next flight safer. The banking industry is the opposite. Every mistake takes the banking system closer to total collapse. One system is antifragile, the other is fragile. The banking system failed because it was built for order and not built for the unpredictable.”

Professor Nassim Nicholas Taleb, author of “Black Swan”

financial crisis

from 1945 to 1971, when strict financial regulation dominated the world, there were 38 financial crisis. From 1973 to 1997 during the upsurge of neoliberalism, there were 139 financial crisis around the world.

no 1945. – 1971.gadam, kad pasaulē dominēja stingra finanšu regulācija, pasaulē bija 38 finanšu krīzes. No 1973. – 1997.gadam, neoliberalisma uzplaukuma laikā, pasaule piedzīvoja jau 139 finanšu krīzes.

(Martin Wolf, “Fixing Global Finance: How to Curb Financial Crises in the 21st Century”)