蜜芽传媒

The Office of Fair Trading is calling the bluff of the big banks.

They've threatened to end "free banking" if they are banned from levying stiff penalty charges on those who breach overdraft limits - which could result from an investigation by the OFT currently in progress.

That sounds like the kind of threat which could damage the standing and popularity of the competition watchdog. So it has today bitten back which will examine just how free "free banking" really is.

You can tell that the OFT doesn't think it is very free: refers to "so-called free banking".

I wrote recently about the substantial charges levied by banks when we use plastic abroad. The point I made then was how difficult it is to work out what the banks charge us for that service: the way they charge is complex and the information they often provide is baffling.

And as John Fingleton, the director general at the OFT, pointed out this morning, there are hidden charges for millions of people who keep their current accounts in credit but receive next-to-no interest payment.

Now there have been plenty of studies allegedly proving that we receive the best value banking services in the world. That may be true. But we are also blessed with some of the most profitable banks in the world.

The question therefore is whether there is sufficient competition between our banks in the provision of current account services.

If you think there is, ask yourself the following question: what in aggregate in a typical year do you pay your bank for your current account? In order to know that you would have to calculate the interest you forgo on credit balances that pay zero or low interest, you would have to calculate the loss to you from money due to you but held in the banks' transmission system, and you would then have to add in overdraft charges, penalty charges, charges for using plastic abroad, charges for buying currency in the UK and so on.

Unless you can answer that question, and I will bet that most of you can't, how on earth can you shop around for a better service? Without greater clarity about what we pay our banks, genuine competition that would benefit us all will never flourish.

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In the globalised world, there are three big sources of cash for corporate takeovers: Russian oligarchs鈥� money, Middle Eastern oil revenues, and private-equity funds.

has been encountering two out of three.

Earlier this month a consortium of three of the world鈥檚 biggest private equity groups retreated from an attempt to buy the supermarket group for around 拢9.3bn.

And this morning an investment company called Three Delta, which looks after funds for the gulf state of Qatar, spent a touch over 拢1.4bn buying 15 per cent of Sainsbury.

What Three Delta apparently likes about Sainsbury is all its lovely property, worth somewhere between 拢8bn and 拢9bn.

But the conspiracy theorists also believe that Three Delta will join forces with Robert Tchenguiz, the property tycoon, who owns 5 per cent of Sainsbury.

The support for that theory is that Three Delta鈥檚 founder and head, Paul Taylor, used to be the lieutenant to Robert Tchenguiz and his brother Vincent, as chief executive of their private businesses, .

However Taylor has told Sainsbury that he is doing his own thing and is not in cahoots with Tchenguiz 鈥� which is certainly plausible, in that former lieutenants frequently like to manifest their independence from their former employers.

That said, the modus operandi of Three Delta is to focus on 鈥渁sset-backed business acquisitions and direct real estate opportunities鈥� 鈥� or at least, that鈥檚 its official blurb. So it鈥檚 bound to want Sainsbury to shine the brightest possible light on the value of its freehold estate.

Robert Tchenguiz wants more than a bright light. He and his advisors from the giant US bank recently gave a presentation to Sainsbury鈥檚 board in which they made the case for Sainsbury being split into two distinct companies. One company would be the operator of the supermarkets. The other would be a tax-efficient property business (a real estate investment trust, or REIT), which would own Sainsbury's properties.

Sainsbury's board believes such a break up would be too risky. It fears that the demerged operator of the supermarkets 鈥� know as an opco in the jargon 鈥� could be too strapped for cash if forced to pay rent to the new separated property company.

Opposition to a radical demerger also comes from the two Sainsbury peers (John and David Sainsbury), their spouses and children, who control 14 陆 per cent of the shares.

So the poor Sainsbury board is stuck in the middle. It doesn鈥檛 believe that Three Delta will support Robert Tchenguiz鈥檚 break up, but can鈥檛 be certain.

Sainsbury鈥檚 directors will strive to come up with a compromise, which would probably involve borrowing against the security of the property and returning cash to shareholders.

Either way, Sainsbury does not look like a stable company at the moment, in the sense that the interests and ambitions of assorted owners and managers seem miles apart.

That鈥檚 not healthy for a big business in a highly competitive market which is only mid-way through a recovery programme.

Since Three Delta has indicated to Sainsbury that it is a supportive long-term holder, perhaps it could buy Robert Tchenguiz鈥檚 stake and bring a little more cohesion to the ownership of the company.

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The battle over broke out in earnest this morning. has just announced that it and its partners 鈥� of Spain and of Belgium 鈥� believe they could pay around 13 per cent more for ABN than what is offering.

What will also attract some ABN shareholders is that this banking troika would offer 70 per cent in cash and 30 per cent in RBS shares.

However they have made any formal offer conditional on ABN reversing its decision to sell its US bank, , to . ABN 鈥� which is pleased as punch at having made that sale 鈥� will not want to do that.

Now if ABN were a normal British company, RBS would now have a distinct advantage over Barclays, because in most bid contests money talks, especially cash money.

But ABN isn鈥檛 a normal British company. First, it鈥檚 a bank: banking regulators have the power to make or break takeover offers, and the Dutch regulator has already signalled he鈥檚 uncomfortable about dismantling ABN. Second, it鈥檚 not British (yes, I noticed): Dutch politicians may also intervene to hinder a break-up of ABN.

So this contest is a test of shareholder power within the European Union. If the owners of ABN are the dominant force, RBS would be given the opportunity by ABN to make its offer work. If they鈥檙e not, ABN will enter any cursory talks with RBS in a hostile frame of mind and then proceed to squish its proposal.

What鈥檚 my prediction? ABN鈥檚 board will view RBS as a hostile invading force rather than an institution trying to offer more money to its owners than Barclays 鈥� and it will do its darnedest to repel it. Not exactly cricket.

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This is stock market capitalism at its most raw.

Overnight, , the giant US private equity firm, in partnership with Boots's deputy chairman, Stefano Pessina, spent more than a billion pounds buying almost 10 per cent of shares.

It means they now own 25 per cent of the famous healthcare retailer and wholesaler.

What they've done has two implications.

They will now have to raise their offer to all Alliance Boots shareholders to what they paid last night, which was 拢11.39.

That means their takeover offer will value Alliance Boots at 拢11.1bn, or almost 14 per cent more than they were originally prepared to pay for the company.

And their share raid has probably defeated the rival group of and the charity , which also wants to buy Alliance Boots.

It's history: Boots, one of the UK's oldest retailers, is set to be owned by the American founder of the modern private-equity industry, KKR.

UPDATE 14:30

We thought it was all over. It is now.

Terra Firma has abandoned its attempt to buy Alliance Boots, which means that beyond any doubt KKR is the new owner.

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It鈥檚 all very well to agree to marry someone, but the real work 鈥� and all the stress 鈥� is in the preparations for the marriage ceremony. is about to find that out, having finalised the terms for acquiring of the Netherlands in a so-called 鈥渕erger protocol.鈥�

If all goes to plan, the organisations will formally combine towards the end of the year to create one of the five biggest banks in the world, worth well over 拢90bn (拢97bn on basis of current share prices).

It鈥檒l be called Barclays Group, its chief executive will be Barclays鈥� John Varley, but HQ will be in the Netherlands.

All may not go to plan. There are significant regulatory hurdles that have to be overcome: over the coming three months or so, Barclays and ABN will have to receive approval from banking regulators in 70 different countries, from Asia to South America.

A bigger obstacle is probably Barclays鈥� irrepressible British rival, the , which also has designs on ABN.

In partnership with of Spain and of Belgium, RBS wants to make a takeover offer for ABN.
RBS had believed it could pay more than Barclays, having effectively pre-sold to Santander and Fortis the big bits of ABN it doesn鈥檛 want.

To date, ABN鈥檚 senior directors have not manifested any great enthusiasm for RBS鈥檚 plan, perhaps because they would have to look for other employment if their bank were broken up.

However, they鈥檝e agreed to meet with the chairmen and chief executives of RBS, Santander and Fortis this afternoon to give them a chance to put their case.

But even before hearing what RBS has to say, ABN is trying to repel it by selling its US bank, , which is particularly prized by RBS. And the price it鈥檚 receiving for LaSalle looks very substantial indeed 鈥� which will make it very hard for RBS to justify a price for the whole of ABN that put a bigger value on LaSalle.

So RBS will have to work hard today to keep its ambitions of snatching ABN alive.

ABN鈥檚 choice of buyer for LaSalle is also piquant. It is selling to , which in the past indicated its interest in buying Barclays but may now feel less disposed towards spoiling Barclays鈥� impending nuptials with ABN.

Also, there was a strong signal last week from the Dutch banking regulator that it wasn鈥檛 relaxed about seeing ABN dismantled by RBS. And it would be na茂ve to believe that Dutch domestic politics won鈥檛 have an impact on what happens to ABN, since traditionally it has been the pride of banking in the Netherlands.

RBS isn鈥檛 wholly without friends. The European Commission has made clear that it will try to prevent any deal being blocked for protectionist motives.

Probably of more significance is that RBS has the backing of important ABN shareholders, especially the hedge fund TCI, which has been pressing ABN to break itself up or sell itself.

So Barclays versus RBS is shaping up to be a thrilling contest.

For Barclays, the risks are considerable. If it fails to acquire ABN, it may become vulnerable to being taken over, having signalled that it regards supersizing itself as important for success in today global banking market.

Equally, RBS too would look somewhat strategically challenged if it dares and fails in combat against Barclays.

That said, it is striking that for once two confident, substantial British companies are taking the initiative in the global takeover market and endeavouring to purchase an overseas rival 鈥� rather than conforming to the normal British pattern of being bought by foreign interests.

Hooray for that, so long as the victor doesn鈥檛 repeat the mistake of so many previous British companies when venturing overseas by overpaying.

What Barclays and RBS are testing is whether there is a genuine pan-European takeover market in banks.

Will international investors like TCI determine the future shape of the European banking market, such that ABN is simply sold to the highest bidder? Or will the structure of the banking industry continue to be determined by national politicians whose instincts are protectionist?

If ultimately the fate of ABN is decided by its shareholders, the consequences could be profound. There could be a spate of cross-border takeovers within Europe.

The concept of the British, French or German bank would wither and the concept of the European bank would be born.

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Following a Freedom of Information request to the , the 蜜芽传媒 has received relating to the dispute between the Commission and Lord Laidlaw over his failure to become tax resident in the UK.

The documents include the minutes of the original meeting on April 2 2004 between Lord Stevenson, the Chairman of the Commission, and Lord Laidlaw, who was then plain Irvine Laidlaw.

They record Lord Laidlaw as saying that he had 鈥渃onsulted with his tax advisers and would inform the Revenue of his intention to become resident in the UK for tax purposes鈥� as of April 6 2004.

We鈥檝e also been sent Lord Laidlaw鈥檚 letter to Lord Stevenson of March 21 2007, which says:

鈥淕iven the vote in the House of Commons on replacing the Lords with a fully elected chamber, there is considerable uncertainty on whether both you and I will have a job in the future. I think more clarity is need on the Government鈥檚 plans before making changes in my tax position.鈥�

That rather implies that Lord Laidlaw isn鈥檛 planning to stop being a tax exile any time soon.

Finally we have a copy of Lord Stevenson鈥檚 reply to Lord Laidlaw of April 18. It says:

鈥淚 should make it plain that the various reasons in your letter, some personal, some political, for not moving your tax residency are, in our view, irrelevant to the matter in hand which is simply that we expect you to honour the commitment you made鈥�.

Lord Stevenson goes on to say that he expects Lord Laidlaw to backdate his tax residency to April 6 2004, the date he originally agreed to become a tax resident.

If Lord Laidlaw complies, this could be very expensive for him. He is worth an estimated 拢700m and might have to pay tens of millions of pounds of tax to Her Majesty鈥檚 Revenue and Customs, if paying all the tax that would be due from the past three years.

So the documents show why Lord Laidlaw is not showing any great enthusiasm for following the instructions of his party leader, David Cameron, to honour the undertakings he gave to the Lords Appointments Commission.

For the full set of papers,

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There are worrying signs of a serious marble deficiency at the world鈥檚 leading private equity firm, . Here鈥檚 why.

1) The two most substantial and resonant criticisms of private equity鈥檚 ownership of companies is that private-equity firms in general are too secretive and that they burden the businesses they buy with excessive debts.

2) So you would assume that Kohlberg Kravis Roberts, the irrepressible granddaddy of the modern private equity industry, would not wish to lay itself open to either of those charges when buying for around 拢10.6bn. After all, it鈥檚 a much loved British business, and deals with the NHS and almost all of us when we have a cough, a sniffle or something more serious. Oh, and it also employs 100,000 people who are all wondering if their jobs will be less secure as and when the takeover is completed.

3) I therefore expected that it would be easy to learn quite how much debt KKR is loading on to the business. Silly me. Apparently this is commercially sensitive information, which if released could be exploited by KKR鈥檚 rival in the contest to buy Alliance Boots. As someone who has been hanging around the City for more than 20 years, I regard that excuse as what my 10-year-old would call lamer than lame.

4) But, perhaps more relevantly, I took it for granted that KKR and its business partner, Stefano Pessina 鈥� the Monaco-based billionaire deputy chairman of Alliance Boots 鈥� would leap at the chance to be interviewed about their plans. They would obviously want to allay the legitimate fears of Alliance Boots鈥檚 many employees and customers and explain that their ambitions are actually to grow the company, rather than slash and burn it for a quick buck. But again I made a miscalculation. Neither Mr Pessina nor any KKR partner wishes to be interviewed for television or radio. So what was that about private equity鈥檚 new commitment to communicate better and become more transparent in their activities?

5) To be clear, I have nothing but respect for KKR鈥檚 and Pessina鈥檚 respective track records as uber capitalists. But their inability to recognise that now, more than ever, they need to build the trust of the wider public, in order to pursue their ambitions over the longer term, makes me wonder whether they鈥檝e been out in this unseasonal sunshine too long.

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Any day now Alliance Boots will succumb to a takeover bid from a private-equity fund, probably KKR in partnership with Stefano Pessina, rather than Guy Hands鈥檚 Terra Firma with the Wellcome Trust.

When that happens we鈥檒l be able to run a useful experiment about whether private equity is a good or bad thing, because we鈥檒l be able to compare the performance of Boots against the one that recently got away from private equity, J Sainsbury.

The two companies have a great deal in common:

1) They鈥檙e both worth about 拢10bn.
2) They both face intense competition from Tesco and Asda (though obviously in different parts of their respective businesses).
3) They are both about mid-way through a recovery programme having endured years of decline.
4) They are both run by executives from the Mars stable, Justin King at Sainsbury and Richard Baker at Boots.
5) They both have strong brand names and powerful market positions.

However quite soon there will be a couple of big differences between them. Boots will become much less visible than Sainsbury. It will be able to reconfigure and develop its business without the requirement to keep thousands of investors and the media informed of its every move, its every success and its every ailment.

Broadly, the owners and managers will feel liberated to do more or less what they like.

And those managers will be feeling pretty chipper. They will have cashed in for many millions in aggregate their current incentive packages and will be loaded up with even more generous incentive packages.

The contrast with Sainsbury could not be more stark. There the top tier of management have just suffered a double whammy. Unlike their peers at Boots, they鈥檝e had a magnificent windfall on their current performance packages dangled in front of them and then snatched away; and they鈥檝e dreamed of becoming immensely wealthy in partnership with new private-equity owners only to see those new owners gallop off.

In a way, the different plights of the two companies can be put down to two billionaires, each of whom has a strong emotional attachment to one of the businesses: Stefano Pessina, who created the Alliance bit of Alliance Boots, a pan-European network of healthcare retailers and wholesalers; and Lord Sainsbury, who was chairman of Sainsbury till becoming a minister in Blair鈥檚 government and who scared off the putative private-equity bidders for Sainsbury by saying he wouldn鈥檛 take less than 拢6 a share for his substantial stake.

Pessina wants to take Boots private because he believes it鈥檒l flourish away from the hurly burly of the public markets; Sainsbury, whose record as a manager of Sainsbury was not superlative and whose trustee sold a load of his stock at prices well below 拢6, is pledging his faith and a substantial part of his fortune to the status quo.

Which of these two would you back to win? The outcome will have quite an impact on whether the shift from public to private ownership turns out to be a cyclical or a secular phenomenon.

UPDATE 07.00

The board of Boots has recommended a takeover offer from one of the world's largest private equity firms, Kohlberg Kravis Roberts.

The offer is 拢10.90 per Boots share, which is a bit more than investors had been expecting.

It values the leading healthcare retailer at 拢10.6bn.

The deal would be by far the largest acquisition ever made in the UK by a private equity firm.

It will be highly controversial, following the recent campaign by trade unions and MPs on the left of the Labour Party claiming that private equity takeovers lead to savage job cuts and excessive rewards for the executives in private equity firms.

Boots's board has said yes, because KKR has improved its offer a fraction from what it originally offered.

The deal would be enormous in terms of its impact on people. Boots employs more than 100,000. Millions of us trust its pharmacies. And its wholesaling operation is a huge supplier to the NHS.

So takeover will reignite the debate about whether ownership by private equity is good or bad for British companies.

Unions are bound to complain that there'll be job insecurity for Boots's staff and fat profits for KKR.

Whereas the company's deputy chairman, Stefano Pessina - who's in partnership with KKR - will probably argue that Alliance Boots's prospect for growth would be better as a private company - sheltered from the interference of shareholders and the media.

UPDATE 11.30

Terra Firma's higher offer is conditional on inspecting Boots's books - and is therefore not a firm offer. For that reason, Boots's board is under no pressure to recommend it.

Terra Firma's motive for making the announcement is to drive up Boots's price in the market. It is prepared to pay an effective 拢11.15 - viz 拢11.26 minus the break fee (seminar on this to follow).

This prevents KKR from going into the market to buy stock as under takeover code rules a bidder cannot pay more for stock in the market than the value of its offer.

Read the rest of this entry

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Lord Laidlaw remains a tax exile, three years after having agreed to become resident in the UK for tax purposes as a condition of becoming a Tory peer.

When nominated for a peerage in the spring of 2004, the insisted that the wealthy businessman should not become a lord unless he agreed to start paying most of his taxes in Britain.

In April of 2004, Lord Laidlaw - who has been a substantial donor to the Tory Party - agreed to do just that. But I've learned that Lord Laidlaw is still not resident in the UK.

Lord Laidlaw wrote to the Lords Appointments Commission three weeks ago explaining why he had not yet given up his tax-exile status. The letter, which has been read to me, cites a variety of personal reasons.

The letter also says that Lord Laidlaw still intends to become a UK resident for tax purposes.

However the Lords Appointments Commission - which was created by Tony Blair to vet all nominees of the House of Lords - is furious at Lord Laidlaw's failure to come back onshore. One of the conditions it sets for all new peers is that they should pay most of their tax in the UK.

The Commission has no formal punitive powers. But it plans to name and shame him in a review of its activities, to be published in a few weeks.

When contacted by me, Lord Laidlaw said "I have made it a rule never to speak to journalists".

A friend of Lord Laidlaw said: "No date was ever set for Lord Laidlaw to become resident in the UK".

The disclosure will add to the unease about the process of creating peers, which has been highlighted by the police investigation into peerages offered by Tony Blair to four business people who lent millions collectively to the Labour Party.

In 2005, Lord Laidlaw - who has homes in Monaco, London and Florida - sold his conferences business, the , for 拢768m. He picked up 拢714m for his stake in the Bermuda-based business.

There was plenty of controversy when Irvine Laidlaw became a lord because he has been a generous Tory donor. He is believed to have given the Tories more than 拢1m in the past. The Conservative Party currently owes Lord Laidlaw 拢2.5m.

Lord Laidlaw is a substantial donor to charity, notably the which helps disadvantaged young people in Scotland. He has also provided an estimated 拢2m to finance productions at the London Coliseum.

UPDATE 0950 GMT
The Lords Appointments Commission tells me it has now shut the stable door. As of last year, it will no longer even consider anyone for a peerage if the nominee is not already resident in the UK for tax purposes. Which shows quite how seriously it regards Lord Laidlaw's failure to honour his agreement to become a tax resident.

UPDATE 1700 GMT
The Lords Appointments Commission has today written to Lord Laidlaw saying that it would not have approved his appointment to the Lords if it had known that he would remain a tax exile.

The Commission's members feel very let down by Lord Laidlaw's behaviour.

They have in their possession a civil servant's notes of a meeting between Lord Laidlaw and the chairman of the Commission, Lord Stevenson, which took place on April 2 2004.

The minutes record Lord Laidlaw as saying he would become a tax resident as of April 6 that same year.

The commission is insisting therefore that Lord Laidlaw now backdate his residency and make all payments due to Her Majesty鈥檚 Revenue and Customs over the past three years.

That could be very expensive for the wealthy businessman - who pocketed more than 拢700m in 2005 when he sold his conferences business.

But the pressure is piling on him, after the Tory leader, David Cameron, insisted he honour his undertakings.

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Has Gordon Brown turned against private equity? That's the conclusion drawn by a number of newspapers in explaining why Government attempts to sell have stalled close to the finishing line.

and have both reported that Brown is running scared of a 拢400m disposal of this famous state-run bookmaker to a racing-industry consortium that includes a private equity firm,

The suggestion is that the Chancellor does not want to be seen to be favouring the moneybags of private equity when his election as Labour's next leader is almost a racing certainty, for fear of inflaming anti-private-equity trade unions and leftish Labour MPs.

If Brown were spurning private equity, that would be a big deal. He has for years been a cheerleader for these purchasers of British businesses. He has a powerful conviction that when private-equity funds buy companies they frequently make them more efficient and enhance their long term prospects. And the way he slashed the rate of capital gains tax has been a particularly remunerative boon for the multi-millionaire partners in private-equity businesses.

But, for now, I don't think private-equity firms need to start looking for new premises in friendlier parts of Europe - because Brown has had no personal involvement in the Tote deal, or so I am told.

Treasury officials are frustrating the Tote disposal for the time-honoured reasons that they're not sure the proceeds are quite enough, and they're alarmed at the magnitude of potential rewards for managers.

Is this, however, a pernicious example of the politics of envy in Whitehall? On this occasion, I think not.

The consortium has benefited from a Government decision to sell the Tote without a proper competitive tendering process. For reasons best known to the Labour Party, the Government is committed to sell this famous betting business to the racing industry, rather than obtain the fattest possible price by allowing all-and-sundry to bid for the gem.

But since the racing-industry consortium is benefiting from a sweetheart deal, the Treasury is understandably concerned that management rewards and incentives should not be perceived to be excessive.

Had the Government allowed the Tote to be sold to the highest bidder, then it wouldn鈥檛 have mattered a bean what the executives at the winning team stood to earn, because there would have been a huge return to taxpayers. But in a one-horse race, it's probably reasonable to cap the prize money.

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Those who run our biggest banks frequently ask me why nobody loves them and their institutions. One reason is the kind of note that is being sent by NatWest to its customers about changes being made to charges for use of their debit cards outside the UK.

This note says that as of 5 June, the transaction charges for withdrawals of cash from ATMs and for shop purchases when abroad are changing. But it doesn't say what the charges were before or whether the impending changes represent an increase or a cut. Nor is there any explanation for why the charges are changing.

Can you think of any other service business that would alter their charges without trying to tell their customers why they were doing so? These days, even the power companies endeavour to make a case for their tariff changes.

To be clear, charges levied by banks when we use our plastic abroad are far from trivial. It's one of the hidden ways that the banks make proper money out of so-called free banking. For the big banks collectively, well over a billion pounds in revenue is levied from retail customers from charges on these non-sterling transactions with debit cards.

Depending on which bank you use and how much you spend when abroad, you can easily provide your bank with revenue from charges of 拢60 or so on a single trip. On my calculations, during a typical family holiday abroad, if you use your debit card for cash withdrawals and shop purchases totalling between 拢750 and 拢1500 on aggregate, you are likely to pay your bank anything from about 拢20 in charges to 拢120 in charges.

Anyway there seems to be great similarity in what the banks charge for using ATMs outside the UK but quite a lot of difference in what they levy for buying stuff in overseas shops with a debit card. For what it's worth, Nationwide seems to be the cheapest (since it doesn't levy any charges) and Halifax seems to be the priciest - though depending on how you use your debit card, other banks can cost you more than the Halifax.

I should also point out that I've not investigated whether all the banks charge an identically competitive exchange rate on these transactions. All the benefits of lower charges could be wiped out if your bank sold you dollars, euros or yuan at a worse rate than another bank would. But of course, when using your debit card at an ATM or in a shop, you just have to take the rate you're given, you can't shop around.

To return to NatWest, when a colleague of mine, Claire Mace, first approached its press office, she was told that there were no plans to change the debit card charges - even though the leaflets announcing the changes had already been sent out. Which again doesn't imply that this bank attaches great importance to explaining its tariffs.

Anyway, what the leaflet sent to NatWest customers says is that a transaction fee of 2.75% will be added to all cash withdrawals and shop purchases. And then there'll be a further 2% charge on cash withdrawals, subject to a minimum of 拢2 and a maximum of 拢5. On transactions in shops, there will be a separate flat fee of 拢1.25.

All quite complicated and confusing. Does that represent an increase or decrease in charges? Guess what, it depends how you use your card. The basic transaction fee is going up from 2.65%, but the other ATM fee is being reduced from 2.25%. However the flat rate fee for buying in shops is rising significantly from 75p per transaction.

The effect of all this is that from June if you withdraw 拢100 from a cash machine that will cost you 拢4.75 compared with 拢4.90 right now. But if you buy something for 拢100, that'll cost you 拢4, up from 拢3.40.

What it means is that if NatWest customers tend to use their debit cards for shopping when abroad rather than taking out cash, it will be quids in. Which sounds to me a bit like a price rise. What does it sound like to you?

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• - What's this?