London Briefing: "Free banking will be axed" screamed the headline on the front page of Monday's London Evening Standard. "Customers hit as profits keep rising," the story continued.

It doesn't take much to whip up a frenzy against the big banks in Britain and an unguarded comment from HSBC, the biggest of them all, did the trick this time. Even though virtually every other country in Europe and the United States charges customers for running current accounts, free banking has become something of a sacred cow in Britain.

But with the Office of Fair Trading pursuing the banks over late-payment penalties on credit cards - often as much as £25 (€36.60) a go - many in the industry believe charges on current accounts are inevitable.

HSBC moved swiftly to reassure its customers, some of whom already pay charges on premium accounts, that it was committed to maintaining free banking, although anyone who slips into the red at the end of the month shouldn't hold out too much hope of qualifying.

Like the oil companies and the supermarkets, when banks report record profits they are invariably accused of ripping-off their customers. The accusation is particularly pointed as hundreds of thousands of Britons struggle to repay credit card bills they piled up during the consumer spending frenzy of a few years ago.

The "rip-off Britain" brigade will certainly be busy this week, with all five of the country's biggest banks reporting their interim results.

HSBC kicked off on Monday with figures that comfortably outstripped the City's expectations. First-half profits increased 18 per cent to a record £6.7 billion, although worldwide bad debts increased by almost 19 per cent.

The experience in the UK was even worse, with bad debts surging by 36 per cent to £361 million, reflecting the country's record rate of personal bankruptcies.

At HBOS, Britain's fourth-biggest bank, profits also topped expectations but bad debt provisions rose by more than 17 per cent to £864 million. It will be a similar story at LloydsTSB, Barclays and Bank of Scotland later in the week.

So how they must be looking on with envy at Allied Irish Banks' paltry bad debt total of just €12 million over the first half. Far from spiralling, the figure has actually declined from €42 million after some good recoveries over the period.

In Britain, where AIB pushed its profits ahead by 18 per cent, bad debts were just £7.5 million. As a business bank over here, it has been cushioned from the growing number of personal bankruptcies that have piled up the bad debts for its UK rivals.

AIB cautioned yesterday that its exceptional performance on bad debts cannot be sustained indefinitely but it is certainly not expecting to suffer in the same way as its larger UK rivals.

Bad debts will be the story of the interim reporting season for the banking industry, with some suffering more than others.

HSBC saw the inevitable bursting of the consumer spending bubble rather earlier than some, and started tightening up a couple of years ago.

It is reaping the benefit now with a reduced proportion of loans going bad although, like the rest of the industry, it is concerned about the relentless rise in personal bankruptcies.

These, it believes, are being fuelled not just by the Enterprise Act, which is widely seen as having made personal bankruptcy appear a more attractive option to those in financial difficulty, but also by unscrupulous debt management companies pushing consumers down the bankruptcy route - and charging them a fee for the privilege.

At the moment, the relentless rise in personal bankruptcies shows no sign of abating. If anything, it will accelerate over the coming months, which means bad debts and "rip-off" accusations will continue to haunt the banking sector for a while yet.

'Old' friends to relax in Andalucia

Oh, to be a fly on the wall at Peter Sutherland's splendid home in the Andalucian mountains of southern Spain next week. For among the former Irish attorney-general's house guests in August is none other than his BP colleague Lord (John) Browne, whom the whole world now knows will be leaving his job as chief executive of Britain's biggest company at the end of 2008.

The long-planned holiday will be a test of the friendship of the two highly-regarded City grandees. Browne is widely known as Britain's "most-admired" businessman while the well-connected Sutherland, chairman of BP and investment bank Goldman Sachs International, has a formidable track record.

When the two clashed last week over Browne's departure date, the encounter echoed throughout the City, sparking a debate over retirement rules for top executives.

Mandatory retirement for executive directors at BP comes at 60, a milestone Browne reaches in February 2008. It was an open secret in the Square Mile that he was keen to stay on beyond that date; indeed, he had made his views on the "intolerable prejudice" of age discrimination widely known.

But the battle over his departure date threatened to tear apart the BP board and the rift was making front page news in the financial press. So Sutherland laid down the law in what was said to have been a "tense" meeting ahead of the BP shareholder gathering.

Browne was allowed one concession - he could stay until the end of 2008, rather than depart in February. Sutherland will leave in 2009, once the new chief executive is in place. It will not have escaped Browne' s attention that by then the chairman will be 63, but as a non-executive he is not bound by the same rules and had his own retirement deadline waived by the board last year. There will be much for the two to discuss, not least their colleagues jockeying for position as Browne's successor.