Isle of Man Bank

[ThreeRaccoonsInATrenchCoat]

9 minutes ago, Declan said:

No I'm not. The structure doesn't matter. The point you made was that "the group" was subsidising a loss making IOM Bank, it doesn't matter whether that's through RBSI or the Nat West Group or another subsidiary.

 

  That's right.

9 minutes ago, Declan said:

IOM Bank could still be a profitable business overall even if some branches were being run as a loss leader or needed to close. Do you know whether the IOM operation as a whole is profitable - because if not that's a bigger concern than a couple of small branches.

Yes, it could be profitable but not without closing any loss-making branches and making a lot of adjustments. They also have long-term liabilities, similar to the government, which need to be restructured to make them self-sufficient and not require cash injections from the UK group.

[ThreeRaccoonsInATrenchCoat]

Could IOM Bank sustain itself right now on its own without RBSI? No. 

[Non-Believer]

I don't remember how IoM Bank came to be part of RBSI (via Nat West?); but once upon a time it must have been a sustainable, standalone operation for many years? Otherwise it wouldn't have been attractive to be gobbled up? It had numerous small branches all serving their communities.

Obviously time and financial pressures and obligations all change but one might wonder how much of these closures is down to the bigger RBSI picture involving its questionable more recent history?

[Declan]

2 minutes ago, Non-Believer said:

I don't remember how IoM Bank came to be part of RBSI (via Nat West?); but once upon a time it must have been a sustainable, standalone operation for many years? Otherwise it wouldn't have been attractive to be gobbled up? It had numerous small branches all serving their communities.

Obviously time and financial pressures and obligations all change but one might wonder how much of these closures is down to the bigger RBSI picture involving its questionable more recent history?

It was taken over long ago by National Provincial Bank which became the Nat in Natwest. But like Ulster Bank in Northern Ireland operated as a subsidiary bank, with it's own management, board, HR etc based locally for many years. Although the MD would have been accountable to NatWest for profits and NatWest provided logistical support, it was largely run on the Island.

Obviously Natwest was taken over by RBS, who seem to have changed the structure with every management reshuffle. Now it's run from Jersey by people whose bosses will be in London.

[Capt_Mainwaring]

https://www.iombank.com/content/dam/iom/documents/personal/iomb-annual-report-and-accounts-2018.pdf

And historic ones on here:

https://www.iombank.com/global/financial-performance.html

 

[Max Power]

I've had no time for IoM Bank since they sold a very expensive annuity to a dying man, in the full knowledge of his illness. He didn't live to collect the first payment and it didn't pass to his heirs. They actually got away with it in the Manx courts, surprise surprise! RBS are a criminal organisation, I don't understand why some of their senior UK staff were never assassinated over the GRG scandal, which rumbles on twelve years after they murdered customers and stole their livelihoods, protected by the government schoolchums. Like all banks, they are shits through and through so the last thing I'd be bothered about is the survival of any branches of a gangster organisation such as RBS!

[Mistercee]

There really is a load of rubbish being talked about this!! 

To understand the reasoning behind these decisions one must first understand how the Banks used to operate and how they have to operate now.

At one time I think there were about 40 banks licensed  to operate on the Island - nearly all subsidiaries of UK banks. All of the local banks took in deposits from their customers and basically upstreamed most of the funds to the UK parents to finance their lending operations. Isle of Man Bank for example used the deposits from customers to fund its local loan book but the vast majority of funds went to the UK parent company. In effect IOMB took a turn on all the money upstreamed which was sufficient to sustain the branch network.

Quite simply local banks cannot now simply upstream funds to the parent group and have to lay off a significant proportion with other institutions on commercial terms. These other institutions basically do not want these funds (due to Regulatory restrictions) so pay a very low interest rate. With a very low rate of return on funds upstreamed due to the current low interest rate environment, IOMB's turn has been reduced to the point where it is not generating sufficient profit to sustain the branch network and provide the Group with an adequate return on the capital employed in the business.

Regulation has basically strangled the way banks here used to do business. The Isle of Man and its "Offshore" status attracted deposits to the banks here from around the world. At the end of December 2008 total deposits with banks on the island were just shy of £60 billion - at the end of December  2019 they were £35 billion. If deposits are down the opportunities for the banks to make money on their deposit book have gone down as well. The paranoia within the banks about tax planning, money laundering and the e-gaming industry haven't helped  but this is also fueled by the Regulators attitude towards such matters.  

 

The world has changed. we are in a sustained period of low interest rates that has impacted the ability of banks to make money. Couple this with the move to online banking and the move away from cash then people just don't use the branch network. We have a population of c85k - a town in the UK with a similar population would be lucky to have one bank.                         

[Banker]

At one time all the Banks were able to make a profit on surplus balances by depositing with other institutions including their parents. However with the global fall in interest rates those balances are now worthless as far as getting a return with some like Euros, yen etc attracting negative rates.

[Neil Down]

16 minutes ago, Banker said:

At one time all the Banks were able to make a profit on surplus balances by depositing with other institutions including their parents. However with the global fall in interest rates those balances are now worthless as far as getting a return with some like Euros, yen etc attracting negative rates.

Euros have been attracting negative interest for the last few years