Stockbrokers urge private investors not to ditch banking shares
Despite the fact that the UK banking sector is yet again at the centre of a controversial move by the authorities, stockbrokers in the UK have urged private investors not to ditch their shares. The US government has introduced not only a levy on the banking sector but also confirmed that the future size of banking institutions will be limited and some trading practices will be outlawed.
While so far the UK government has remained fairly quiet on the subject, many people believe that Gordon Brown and Alistair Darling will use the US blueprint as a means to increase the burden on the UK banking industry. As a consequence we have seen banking shares in the UK marked sharply lower this week although when you consider that UK taxpayers hold majority stakes in Lloyds bank and Royal Bank of Scotland, any increase in the taxation burden would be detrimental to the value of the share stakes.
The move by President Obama took many by surprise and indeed it looks as though the markets have been spooked by the move. How they react next week will be vital to the short-term direction of worldwide stock markets.
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