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At the end of the Second World War, Martins Bank is of course just one of hundreds of large British Business Concerns that must adapt, change and rebuild to meet the challenges of a fast changing economy. After just twenty years, a new generation is spawned – “the getaway people” as one 1960s ad campaign would have it – and with it, any number of slogans spewing forth from large corporations who want you to buy their “must have” products. Whoever you are, a marked increase in your personal wealth has given you aspirations unheard of even in the “you’ve never had it so good” 1950s.   Martins is blessed with the vision to tap into this new affluent society, helped in no small part by having three of the biggest named British Corporations of today on its books. The direct links that these companies have with the “getaway” generation, is however, as much a hindrance to the Bank as it is a help.  In this feature, which has been re-written, we look first of all at each of Martins biggest three customers, and then at the proposed merger between Barclays Lloyds and Martins, a corporate move which in July 1968 exposes clearly to Parliament for the first time Martins’ true vulnerability in the game of big business and the Bank’s expansionist obsessions…

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WHY NOT ALSO VISIT

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Up, up and away!

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Beagle Flight Pack.jpgNo self-respecting small boy in the 1960s would be without at least one model aeroplane.  Whether the desire harks back to the second world war, or looks into the future of jet propulsion and the go-getting airlines of the day, there is usually either a kit, or a readymade model of the aircraft of your choice available.  Model trains might be popular, yes, but surely it is the SKY that is the limit?  Martins is not simply banker to British Eagle International Airlines, it uses the connection to sell its services to the airline’s customers, in a kind of reciprocal back-scratching arrangement we don’t see much of in the twenty first century – Your British Eagle flight pack doesn’t just contain your tickets.  Martins goes to extremes to be helpful to British eagle customers, by providing a special version of its popular European destination cards complete with helpful conversion tables and handy hints to help the most World-weary traveller…

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It’s only money…

LittlewoodsMartins’ connection with the Moores Family empire is rock solid – and what better than a national bank with a Liverpool Head Office to be banker to a hugely successful Liverpool enterprise?  Martins’ branch at Victoria Street Liverpool has an entire section of staff dedicated to the banking requirements of Littlewoods Pools, as one former Martins colleague recalls: 

 

{“This winner’s cheque depicts one of Littlewoods major processing centres at Edge Lane in Liverpool which is now a listed building about to be converted into two schools. Once completed, the cheque would bear the lithograph signature of Cecil Moores, brother of the company's founder John Moores and be countersigned by J. Cuthbert Clegg who I knew personally in the 1960's he was head of the Littlewoods section at Liverpool, Victoria Street.  The branch had a staff of around 80 and most were in a Littlewoods Pools syndicate that sought its fortune each week. I always remember that Mr. Clegg would arrive at the branch each Monday morning with very large sacks containing thousands of cheques and usually more than a million postal orders. He was normally able to tell us by that time what sort of dividend would be payable that week based on the number of draws on the coupon the previous Saturday. I can remember one particular day when we had 23 points and him telling us that it looked as if we were likely to scoop at least £50,000, an absolute fortune. Sadly, as more coupons were checked more winners with 24 points appeared and we finally finished up with about £4.000 between us but to me my share still seemed a small fortune to a young clerk…”}

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Sailing by…

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For those in need of a somewhat gentler mode of international transportation than dashing about in a sleek jet plane, the traditional liner is just the thing.  Liverpool’s ancient connection with all things maritime gives her a wealth of companies which ship either cargo or passengers to the four corners of the world.  Perhaps the most famous of these is the Cunard line, another of the Bank’s big business customers, capable of providing the kind of romantic setting for all kinds of adventure – inspiring lovers and authors alike with the age of the luxury ocean-going liner.   It is a tradition in Britain that larger businesses have their company title or logo on their banking stationery – this is another way of selling both the products of the company, and its bank, and it also shows the value placed by the bank in be able to host the more prestigious organisations.  In the case of Cunard, the humble Martins cheque, although already a classic has become something of an art form, inspiring those in receipt of one, to long for a chance to cruise in whatever liner is depicted. (Which in the case of the cheque shown above, is “The Queen Mary”)

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Cap in hand.

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BOE Sign.jpgIt is not unusual for banks to be, shall we say “short of cash” on a day to day basis.  In fact predicting how much physical money will be required by customers is nigh on impossible.  Someone will always call in unexpectedly to cash a very large cheque, or to pay in funds at the last minute that takes a branch over its cash limit.  It should come as no surprise then, to learn that banks are well used to lending each other money – often overnight and in order to balance the books on an extremely short term basis.  You may have heard of the London Inter Bank Offered Rate or “LIBOR” which is the percentage that banks charge each other for this service. As the 1960s progress, Martins is going all out for expansion – more and more new branches with lavish interiors and specially commissioned artworks.  At the same time we are trying to satisfy the cash needs of customers such as those mentioned above.  Something has to give.  Martins finds itself increasingly going “cap in hand” to the other banks, to the point where we start to appear vulnerable – perhaps we have too many fingers in too many pies?  What will happen if the money runs out? It is at this point in the Bank’s history that the most serious threat of takeover exists, and whilst Martins has been courted on other occasions by a number of bed-fellows, it is now faced with an offer it can’t refuse:  The only way it can carry on is to provide Barclays with something it desperately desires, a huge Northern presence, in return for the majority of the Branch Network being kept open and jobs secured.   The only consolation is that Martins Bank will last until the very end of the affluent 60s, which at least enables it to go out with a bang.

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Menage a trois?

 

Monopolied Commission BL and M.jpgMergers of several banks into one became commonplace in the late 20th and early 21st centuries.  As the banking “crisis” worsened, we had the spectacle of Lloyds, TSB, Halifax Bank and Bank of Scotland all being owned by one bank – Lloyds Group. British banks (when not being propped up by the taxpayer) do seem to merge (and split again) all the time - sometimes with banks from abroad taking them over, or by being taken over themselves. Indeed no sooner has one merger taken place than the newly formed company sets its sights on owning yet another. The Monopolies Commission report of July 1968, is ordered by Parliament to enable them to decide whether Barclays Lloyds and Martins should be merged into one.  There is a telling paragraph within its pages that sums up the slightly desperate situation that Martins will find itself in, if it does not merge with someone, soon:

 

{Special factors affecting Martins

 

92. Some of the reasons for merging discussed in the foregoing sections apply with especial force to Martins, particularly the potential increase in the size of facilities required by large companies and the need for wider overseas connections.  Equally significant from the point of view of Martins are the problems created by incomplete national coverage at a time of growth in the geographic range of industrial and commercial customers and of greater mobility of personal customers, and the high capital cost of attempting to achieve national coverage by the establishment of new branches.  Furthermore, in recent years there has been an increasing tendency for the banks to compete by moving into related fields and by developing ancillary services – export houses, factoring, leasing, credit cards, etc..  Martins by reason of its size, is at a competitive disadvantage in this respect.}

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1969 a special act of Parliament has to be passed to allow Barclays and Martins to merge. The way things might have turned out for Martins could, however, have been very different.  On 16 April 1968 the Management Services Department of Barclays Bank submits a detailed paper to the Monopolies Commission on the impact of its automation activities, and of a proposed merger between Barclays, Lloyds and Martins Banks.  The reason for proposing the merger is of course in the best tradition of companies who have to answer to shareholders - major cost cutting – and this would mainly be achieved through the amalgamation of computer operations resulting in the loss of hundreds of jobs.  This is referred to as ‘savings’, which in monetary terms are estimated at a cool £4.6million in capital alone, and a further £1.2million annually.  For 1968 this is indeed BIG money. In the end, a Barclays merger with Martins only is approved, and Lloyds Bank itself goes on to live another day and even to perform its own mergers and acquisitions whilst always preserving both the historic name of Lloyds and the iconic symbol of the Black Horse.  We are pleased to be able to show below Barclays’ report to the Monopolies Commission regarding the proposed merger of the three banks.  It is clear that Barclays is keen on the idea of merger, and in its report the Bank takes the view that there are valuable savings to be made.  It is also apparent that the Spread Eagle has its beady eye firmly on the credit card business and advanced computerisation of the Black Horse!

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Barclays

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Barclays’ submission to the Monopolies Commission

Barclays

Report For Submission To The Monopolies Commission

re The Automation Activities Of Barclays Bank Limited

and The Savings Which Will Result From

the Merger Of Barclays, Lloyds And Martins Banks

 

This report is intended to present a factual survey of the Automation activities upon which Barclays Bank Limited are engaged. The second part of the paper seeks to give an indication of the gains which will follow the proposed merger.

 

Equipment

 

The Bank's total complement of computers, installed or on order, is as follows:-

 

IBM                 1  x  360/65    (purchased)

                         4  x  360/50    (3 purchased, 1 temporarily rented)

                        10 x 360/30     (all purchased)

                         3  x  1401       (2 purchased, 1 rented)

Burroughs

                         1  x  B8500  (purchased)

ICT                  2  x  Emidec  1100  (purchased)

 

Punched Card equipment is being built up; so, too, are the number of Branch Terminals, Input Machines and Amount Encoding Machines.  In all fields the objective has been to order sufficient hardware to permit completion of the Bank's current plans

 

Computer Centres

 

There are seven of these either in being or in course of preparation as follows: -

 

No. 1 Computer Centre

 

154 Drummond Street,

London, N. W. 1.

 

Lombard Street Computer Centre      

(In our Head Office building)

54 Lombard Street,

London,  E. C. 3

 

Greater London Computer Centre

179a, Tottenham Court Road,

London,  W. 1

 

Clearing Department  

St. Swithin's House, E. C. 4.

Barclaycard Centre

St.   Giles Terrace,

Northampton.

 

Northampton Computer Centre

Gladstone Road,

Northampton.

 

Burroughs Computer Centre

Harrow Road,

Willesden,

London, N. W. 10.

 

Staff

 

Operational,  including preparation of Punched Cards

240

 

Technical (Systems Analysts, Programmers etc.)     

157

 

I implementation

183

 

 

580

 

Projects in hand or already completed

 

Barclays Bank Limited first became interested in the possibilities of automating certain of its activities as long as 10 years ago and opened its first branch book-keeping Computer Centre in 1961.  The Bank decided, as a matter of policy, not to commit itself to a large scale programme of automation until suitable third generation equipment became available. It was only approximately three years ago that the decision was taken to move into automation across a very broad front. Some of the projects referred to in this report are already completed and the remainder will be completed by early 1971. The equipment which is shown has been bought or ordered with a view to enabling this to be done and where the choice has been between additional equipment and a manual process (e. g. teleprocessing as opposed to Van Collection of Input) the decision has invariably been to go for the additional equipment and thereby avoid increasing our manpower requirements.

 

The projects to which we have referred above are as follows: -

 

§  Branch Book-keeping

§  Standing Orders and Direct Debiting

§  Clearing Operations

§  Registrar's Department

§  Chief Foreign Branch

§  Executor and Trustee Business

§  Staff Salaries and Statistics

§  Barclaycard

§  Customer Services, e. g   Payroll, Stock Analysis, etc.

§  Magnetic Tape Exchange between Banks and their Customers.

§  Branch Securities

§  Management Information

§  Management Science Techniques.

 

It will be appreciated that many of these projects are of immense magnitude and have involved extensive preparatory work and planning.

 

Distribution of Activities and Computers

 

Inevitably there are from time to time transfers of work and/or machines between Centres, but the following describes the present position adjusted to incorporate changes now imminent:-

 

 

Centre

Computers

Applications

(Current and Projected)

 

 

No. 1

 

2  x  ICT Emidec 1100

Branch Book-keeping

 

 

Lombard St.

1  x  IBM  360/30

 

Branch Book-keeping

(City of London)

 

 

Greater London       

1  x  IBM 360/65

3  x  IBM 360/50

1  x  IBM  360/30

 

Branch Book-keeping

( London Branches)

 

Share Registration

 

Payroll

 

Other Customer Services

 

Chief Foreign Branch

 

Principal Programme

Testing Centre.

 

 

Clearing Department

 

8  x  IBM  360/30/1419

 

General Clearing

 

Standing Orders

 

 

Barclaycard Centre

 

1  x  IBM  1401

 

Barclaycard

 

 

Northampton

 

1 x  IBM  360/50
(with  2  x  1419)

2  x  IBM  1401
(each with 1419)

 

Branch Clearing

 

Barclaycard

 

 

The Willesden Centre, which is to receive the Burroughs computer, should be commissioned later this year.   Initially it will undertake only branch book-keeping, retaining spare capacity for later developments. Current plans are to move the book-keeping now performed at the No.1 and Lombard Street Centres and concentrate this at Tottenham Court Road and Willesden by 1971. Lombard Street Centre will be closed. No. 1 Centre will be used for computer processing of the Foreign work for the three banks.

 

Constraints

 

In its planning the Bank has had to act within two main constraints, namely: -

 

1.

The need to complete its automation of branch book-keeping by 1971 – the penalty for failure being the purchase of further conventional machines for use after decimalisation.

 

2.

The extended delivery periods for equipment, Post Office lines, etc.

 

Because of these the Bank has had to continue with its plans and the execution thereof during the period since its proposal for a merger with Lloyds Bank Limited and Martins Bank Limited was referred to the Monopolies Commission.

 

Expected Gains from the Proposed Merger between Barclays, Lloyds and Martins Banks

 

This part of the paper gives an indication of the total gains, both short-term and long-term, which may be expected in: -

 

(a)

the Automation and O. & M.  Departments

and

 

(b)

some other departments where the work load is already, or is planned to be, subject to computer processing.

 

Both Barclays and Lloyds have particularly heavy commitments in respect of branch automation programmes, which they need to meet in full before decimalisation.  This date, February 1971, therefore becomes a convenient demarcation line between “short-term” and “long-term”. The short-term gains can be more readily assessed than the long-term ones, though there is no doubt that both will be considerable.

 

SHORT-TERM SAVINGS

 

Systems and Development Staff

 

Barclays and Lloyds each have a Systems/Programming strength of 150 skilled staff, whilst Martins have 34. These numbers are growing and, of necessity, there must be some duplication of effort, so that a saving of 125 in the short-term maybe regarded as a conservative estimate. It is emphasised that these are highly qualified people whose skills are becoming yet more pronounced as computer development progresses Their short supply is a national problem which is likely to grow rather than lessen in the years ahead.

 

Management Science

 

Management Science in banking is an exciting new prospect to which Barclays are increasingly devoting resources.   Their team will grow to some 30 highly skilled analysts, comparable in strength to that of Bankers Trust Company of New York who are leaders in this field. The Barclays’ team will handle the work for the three banks following the merger and there will be no need for their duties to be duplicated by Lloyds and Martins. A team of at least equivalent numbers to that of Barclays can thus be saved in entirety. These are the elite of the operational research area; M.Sc’s and B.Sc’s of high calibre who are nationally in great demand.

 

Organisation and Methods

 

Barclays, Lloyds and Martins all have resources allocated to this field of operations and Barclays, in particular, are in the process of building up their O. & M. section from 50 to some 120 staff so that a clerical work improvement programme (Work Study) may be introduced throughout the entire bank. Lloyds and Martins will benefit from the manual of predetermined time data which is being established, and in addition it is considered that one O. & M.  Team instead of three will produce short-term savings of at least 25 staff.

 

Martins Branch Automation

 

Martins are about to plan the automation of their branch network, which would involve them in central computer equipment costing £1,500,000. Their 1 million accounts can be accommodated either on Barclays’ Burroughs computer, or on Lloyds Birmingham Computer Centre, at an estimated cost of not more than £500,000, principally for disk storage. There would be related savings of space and of some 60 skilled operating staff.

 

Clearing Departments

 

The total staffs of the three banks’ Clearing Departments number more than 2,000. The major savings will follow the long-term amalgamation, but short-term it is considered that at least 50 staff, principally concerned with distribution tasks in the City of London, can be saved.

 

Share Registration.

 

Lloyds’ Registrar’s Department is already fully automated, using an IBM 360/40 at Worthing.  Barclays’ Registrar’s work is in the process of being automated and could be comfortably accommodated on the Lloyds’ computer. Apart from releasing the Barclays’ computer for other tasks, it is estimated that some 100 Barclays’ staff would be saved, over and above those that would have been surplus following their own automation programme.

 

Credit Cards

 

Lloyds intention to enter the credit card field would entail the employment of a minimum staff of 385.  Barclaycard have now developed an extremely able staff and have, too, acquired considerable expertise. Their Management consider that the Lloyds work could be absorbed into their existing organisation at the cost of 100 staff, thus saving 285 people. Computer and ancillary equipment savings can be conservatively assessed at £200, 000, whilst Lloyds would also benefit from not having to undertake the considerable development work inherent in such an operation.

 

Foreign Work

 

Barclays are well advanced with the automation of their Chief Foreign Branch. This is an involved and complex task, and Lloyds and Martins can take advantage of all the preparatory work which has been completed. In addition, by re-arranging their computers Barclays will undertake the whole of the Foreign automation work for the three banks, thus freeing Lloyds’ and Martins’ computers of an equivalent task.

 

The No. 1 Computer Centre (Drummond Street) will be vacated pre-decimalisation and into there will go the IBM 360/50 earmarked for Barclays’ Chief Foreign work, together with the “Barclaycard” 360/50 from Northampton.     Back-to-back these two computers will handle the total foreign work and provide stand-by. Into Northampton for the Barclays branch clearing will go the IBM 360/30 which is at present spare in the Greater London Centre and to this will be linked the duplex 1419’s. The Barclaycard updating run, at present processed on the Northampton 360/50, will be run overnight on one of the “Foreign” 360/50’s.

 

Trustee Work

 

Lloyds Bank have already made much progress in the systems/programming studies which precede the automation of their Trustee Department. Barclays can benefit from the acquisition of this work.

 

Customer Services

 

This is an area into which all the banks will increasingly make inroads, undertaking a wide variety of services such as payroll, stock control, discounted cash flow and cheque reconciliation. Barclays have already developed computer programs and can make these available to Lloyds and Martins.

 

Branch Terminals

 

The intention of the three banks is to link all their branches to main computer centres by means of terminal equipment and G. P. O.  telephone lines.  The terminal equipment costs from £3,000 to £4,000, depending on type, whilst the running expenses vary inversely to the capital expended.  For every branch closed, or not opened,  following the merger, there would therefore be an immediate capital saving of up to £4,000, together with lower running costs, whilst the demand for Post Office telephone lines would be reduced at a time when the G. P. O.  is faced with a major programme of line networks for the banks, to be completed by decimalisation.   (See also BRANCH ACCOUNTING)

 

The short-term savings may be summarised in the following chart:

 

 

Operations

& Skilled

Technical Staff

 

Programmer

Man-Years on Specific Projects

 

Equipment

Premises

Systems & Programs

125

 

 

)

12,500 sq ft

Management Science

30

 

 

)

O. & M.

25

 

 

)

Martins Bank Central Processing

60

 

1,450,000

 

10,500 sq ft

Clearings

50

 

 

 

 

Registrar’s Dept

100

 

200,000

 

10,000 sq ft

Credit Cards

285

30 x 2 = 60

200,000

 

32,000 sq ft

Foreign

 

15 x 4 = 60

500,000

 

 

Trustee

 

15 x 4 = 60

 

 

 

Customer Services

 

15 x 3 = 45

 

 

 

 

675

225 man-years

£2,350,000

 

64,500 sq ft

 

Annual Savings

675  staff at,  say,   £1, 500 p. a.

£1,012, 500

64,500  sq.ft.  at,  say,  £3 per sq.ft.

193,500

 

£1,206,000

 

Capital Savings

225 man-years of work at, say, £1, 500 each

337,500

Equipment as Above

2,350,000

Closure,  or non-opening of,  say, 500 branches @ £4, 000 each

2,000,000

 

£4,687,500

Long-Term Savings

 

Capital savings on branch terminal equipment, with the corresponding lessening of demand on the G. P. O.  for telephone lines, will continue for as long as does the branch rationalisation programme. Every branch closed,  or not opened,  in the future will mean a reduction of up to £4, 000 on capital outgoings, plus related savings in running expenses.

 

There will,  too, be continued saving of Specialist staff and in the long-term it is considered that another 50 systems/programmers will be spared as a result of combining the research and development work. At that stage,  therefore,  the requirements for highly qualified data processing staff will have been reduced by some 290,  quite apart from the savings to be achieved in the short-term from Registrar’s Department, Credit Cards or Clearing Department,  and quite separate from any long-term savings which will follow the amalgamation of the Clearing department or the Computer Centres.

 

An amalgamation of the Clearing Departments of the respective banks can profitably be undertaken. Two courses will be open; to merge the entire clearing operations into one London Centre (as against the present arrangement of three centres in London and one in Northampton), or to process the total branch clearing in Barclays’ branch clearing centre in Northampton and amalgamate the general clearing into one London centre. At the worst,  this will mean two clearing centres instead of four and will produce capital equipment savings in the region of £1 million, since an amalgamation would require 4 fewer reader/sorter systems. Not only will this in itself lead to fewer skilled operating staff, but further substantial staff savings will follow the removal of the need for inter-bank settlement in respect of the considerable quantity of items which will automatically change from the category of general clearing to branch clearing To quantify more exactly the total benefits which will accrue in this area will call for a detailed study by a combined inter-bank team.

 

Further principal gains from the merger will be realised when the various branch systems have been rationalised and are fully compatible. A joint study team can commence immediately to plan this work,  but completion of the task is unlikely to be effected before decimalisation. Subsequently, however, with full compatibility of branch systems,  it will be possible to merge the computer centres of the three banks and to complete such an undertaking by about 1974.

 

The merit in having purpose-built centres is becoming clear, for in themselves they bring economy of operation. Barclays and Lloyds, individually, would certainly have to face this in the seventies. Together, and with Martins,  they could reap the advantages of a combined operation. Whether the three banks, when merged, will wish to go for just two super-centres, one near London and one in the North, or for three or four centres sited at various strategic geographical points, has yet to be decided. There is something to be said for each course. Either way, to a greater or lesser degree, there will stem from such an amalgamation the following benefits:-

 

(a)

Fully integrated use of all computer equipment. This will produce more economic use of the present range of equipment and greater economies when ordering the next range

(b)

Reduction in administrative staff and costs

(c)

Reduction in number of skilled computer operating staff  who are nationally likely to remain in short supply

(d)

Simplification of the distribution of printed output from regionalised computer centres

(e)

Decreased transport costs from centres to branches

(f)

Reduced telecommunication costs

 

At present it is not possible to quantify these long-term savings This will require a detailed investigation of some magnitude

 

What is very evident is that if we job-back to a point in time five,  or seven years ago, we can visualise the time,  effort and capital which could have been saved in the field of automation had we acted in unison as one bank rather than as three separate entities. There is every reason to believe now that comparable gains will be achieved in the future as the result of concerted policy and action.

 

Management Services Department,
Barclays Bank Limited.

16th April, 1968

Special Thanks to Barclays Group Archives

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What might have been?

credit cardShape of things to comeWe can only guess what the Martins Bank of today would look like if it still existed in its own right.  Doubtless the same competition that drove so many banks into chasing savings and loans would have had some effect, but it would be nice to imagine that some of the careful lending practice from the days when the bank manager knew you, and all about you, might still prevail.  It would also not be beyond the realms of imagination to think that Martins might still be FIRST with a number of products and ideas, not least the odd sponsorship deal, and no end of accounts and loans tailored to the needs of specific groups of customers.  Most of all, we would like to believe that instead of getting rid of managers, and removing the local knowledge that gave us good quality banking, Martins would have carried on as it always did, knowing the customer by NAME and financial situation!

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