More than four years after their humiliating bailout, life does not get any easier for our biggest banks. And four factors are set to collide this week that will make it unusually testing. It is not just the season where bartering over bonuses makes headlines, with its usual complications. Here are some thoughts about just how fraught that has become, especially for the banks in which we all have a share.
But the week is expected to start with a very significant announcement from the Chancellor. Just a couple of months ago he was pleading with Parliament's Banking Commission, set up in the wake of the Libor scandal, not to recommend any more big changes to banks' structure. It took the Coalition many months to come to a common position where the High Street side of banks should be 'ringfenced', not split from, but separated from the investment side where deals are done on trading floors. And before Christmas, George Osborne made clear to the Commission that he believed it was enough, asking them publicly not to 'unpick' the planned reform.
But Osborne is expected to say that the Bank of England should be given an extra power to impose use of an 'electrified ringfence' on top of what has already been agreed. Forgive the terrible jargon, but in essence Osborne is advocating taking on part of the Banking Commission's plan where the authorities would have the power to force a bank to split up if they misbehave. This would give the Bank of England even more clout than the new powers they are already taking over in the spring to monitor the banks. The big banks themselves will be furious not just because they don't like the idea, but because having settled at pains to deal with the plans to run bits of their businesses separately, the idea of the proposed rules changing again is deeply unappealing. So why does Osborne now think it is worth 'unpicking' the plan? After another few weeks of dreadful headlines for the industry, perhaps the political attraction of going one step further to be tough on the banks was too hard to resist.
Also this week, bank chief executives and chairmen will be making their own appearances in front of the Banking Commission, starting with the bosses of Lloyds tomorrow. Then Barclays' new boss will take his turn on Tuesday, having over the weekend continued his clearout of the board who were there when things went wrong. HSBC completes the hat-trick on Wednesday. On the agenda? PPI, bonuses, swap mis-selling, lending to small businesses, taking money from Qatar, job losses ... it's hard to know where the MPs will start. Just in case you thought that RBS would miss out on all this public attention, their looming fine for rate rigging in the financial markets is likely to hit this week after months of speculation. The fine is likely to be around £500 million and the bank's been told by the Chancellor they have to take the money out of this year's bonus pool. Last year their investment bankers were allocated £390 million in bonuses. The total bonus pool for the whole bank was £758 million. In an industry where, like it or not, money matters, if RBS tries to take all the money from the fine from highly paid staff who expect to be handsomely rewarded, they may quickly run into trouble internally. If they do not take it out of the cash allocated for bonuses, they run into huge trouble outside. And don't forget, the same cringeing type of emails between traders that shamed Barclays are also likely to be contained in the report into what went wrong.
Finally, for good measure, the next Governor of the Bank of England, the Canadian Mark Carney, is making his first appearance in front of MPs on Wednesday. There are enormous questions to ask the man who will be the most powerful unelected person in the country; How does he think he could get the lacklustre economy going? What does he think of our banks? Why does he need a whacking great salary bigger than Sir Mervyn King's and given his known political links in Canada can he be truly independent? Will he open up the closed world of the Bank? What does he think about our constant chatter about bankers' pay? Will he actually answer the questions when, so far, he has been reluctant to say very much at all? If you don't care about the banks, you might find all the noise about the industry this week tedious or frustrating. If you hate the banks, you might rather enjoy seeing them squirm. But what happens in the next few days is an important stage in the banks' painful and sometimes dramatic journey to a healthier place. It's worth remembering that if the banks don't work properly, it's awfully hard for the rest of the economy to work too.