The banks have found themselves under the media microscope once more, following their reluctance to pass on the 1.5 per cent interest rate cut to the public. The Daily Telegraph reported that only three of the 88 major lenders had said they would pass it on to their borrowers but most had already reduced rates for savers. The majority of banks eventually relented but were reported at the weekend to have told Chancellor Alistair Darling 'we are not charities' and that further cuts will not be passed on.
- The reaction?
In the wake of the recent bailout, the press were angry with the banks' stance. The Sun railed against 'greedy bank bosses', while The Daily Telegraph said: 'They're lucky to be alive.' Darling was said to have thrust unflattering newspaper headlines under bank executives' noses at a meeting on Friday to make his point.
- Who are the key PR players?
The Council of Mortgage Lenders, the British Banking Association and a number of individual banks stressed publicly that banks rely on the Libor rate for margins, not the base rate. Until the Libor rate drops, they argued, their lending rates cannot. Notably Barclays and HSBC, which did not take public money, are still resisting calls to lower rates while Lloyds TSB took quick action.
- What happens next?
The majority of banks relented in the end, but this is just the beginning. Interest rates are expected to drop further and reports suggest the banks will refuse to comply next time, creating a further divide between the part or fully-owned government institutions - under great pressure to pass on cuts - and those without public stakes that may fight harder. The banks' public image has probably never been lower and their PR task will be an uphill struggle.
1.49% - Base-rate and Libor gap, widest since the 1940s.