The Anonymous Widower

David’s Golden Rules And Cyprus

I’ve mentioned my late friend and bank manager, David’s rules before, so how would they apply to the Cyprus bail-out and the problems it has created.

Things have changed since he died six years ago, but the two principles he gave me still apply.

If you a UK citizen or resident, he would never have advised anybody to use a bank that was head-quartered outside of the UK, as you don’t know what external factors will apply in that country.

The second principle, was never to bank with a small bank, that has the possibility of being taken over by a man with a large ego for his own purposes.  He said this, when I got an offer from Bank of Scotland, in probably the 1990s. I know that they didn’t have the Fred the Shred problem, but he felt that given the changes that would happen in banking, it might be something I would regret.

Incidentally, he was not against smaller building societies and credit unions, and once told me that he believed the latter would be strong in the future. He was wrong on that, but I think he underestimated the conservatism of the average bank account customer, who are reluctant to change banks.

So if we look at the last few years, his rules would have ruled out banking with the Icelandics, RBS and probably Bank of Scotland too!

I didn’t bank with any of them!

So what would he have thought about Cyprus.  He would probably have had a very juicy tale about one of the Cypriot Banks ans of course they do break both golden rules, in that they aren’t in the UK and are two small.  They may be OK, if you need a local bank account, but these days, with electronic transfers, you could probably manage it all through the Internet. I don’t know for sure, as I’ve only ever been to Cyprus as a tourist for enjoyment.  Nothing in the world, would encourage me to live outside of the UK anyway!

But making account holders in Cyprus take a haircut is something, that will happen elsewhere in the eurozone, as the precedent has now been set.

In fact, if I was George Osborne, I might be having a quiet chuckle, as the Cyprus haircut, might be one of the better things that happen to the UK financially this year. Will those, EU citizens with a dodgy banking system in their country, look even more seriously at the UK as a more benign place to live?

I think too, we’ll see more innovative financial products coming out of the City of London, designed to appeal to those with money in other parts of the European Union. If you’re very rich, these products already exist, but will we see products for say the German engineer or doctor of comfortable means, who wants his money safe, to work for him and give him a comfortable retirement.



March 17, 2013 - Posted by | Business, Finance, News | , ,


  1. The Cyprus situation by the way is the complete opposite of what happened with the UK depositors of Icelandic banks. The depositors in Cyprus, including UK citizens, are paying, but UK account holders in branches in the UK are not. Check my blog for more information.

    Comment by anonemiss | March 17, 2013 | Reply

    • I know the rules. It’s just that David’s common sense of a lifetime in banking is even more relevant today.

      Comment by AnonW | March 17, 2013 | Reply

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