What is feeding the recovery in the UK banking sector?
Over the last few days we have seen more positive news from the UK banking sector than we have seen over the last three years. Lloyds Bank and Royal Bank of Scotland appear to be moving towards profitability and other banks in the UK are reporting near record profits. So what exactly is feeding this banking frenzy in the UK?
A quick look at savings rates in the UK will show that the difference between the rates paid to savers and the rate charged to customers is greater than it has been for some time. Despite the fact that the money markets are calmer than they have been for a couple of years the rates available for savers are still minimal in many cases. This widening of gross profit margin will not go on forever and many people believe that the return to the boom times for UK banking industry may not last as long as many people would have you believe.
When you also take into account the fact that the vast majority of banks in the UK are still fairly light on liquidity levels, reducing their risk going forward, they will come under enormous pressure to increase liquidity in the short, medium and longer term.
Share this..
Related stories
National Savings and Investments income payments delayed
It has been revealed that around 8000 investors in National Savings and Investments (NS&I) income bonds have not received their January payment due to "technical issues". Those affected acquired their income bonds between 24 November 2009 and 28 November 2009 and were due to receive their latest income payment on 5 January. While the government has not been forthcoming with regards to reasons for...
Read MoreJohn Varley rejects HSBC offer
Those in the know understand that John Varley, the outgoing chief executive of Barclays Bank, has rejected a move to become chairman of HSBC and succeed Stephen Green. This would have been a very controversial move, if the rumours are correct, because John Varley has intimate knowledge of the workings of Barclays Bank which would obviously have been of some use to HSBC. However, despite the fac...
Read MoreCall For Privatisation Of Parts Of Royal Mail
Yet again we are hearing more calls for the partial privatisation of the Royal Mail with POSTCOMM the latest group to make such a demand. While there has been much speculation in the press of late with regards to the future direction of the company, there have even been calls for the Saturday post to be scrapped. So what does the future hold? The problem for Royal Mail lies in the increase in...
Read MoreDebenhams slashes dividend payout to assist cash flow
News of a fall in profits at Debenhams and a slashing of the dividend have alerted many UK investors to the problems which may well lie ahead. As money becomes ever tighter in corporate UK, despite the downward move in the libor rate, we should all start to get used to dividend cuts and dividends being cancelled as the need to retain funds to help the underlying business gets greater and greater....
Read MoreUK stock market wobbles on election and debt fears
The gradual decline of the UK stock market continued today with a 1.5% reduction in the FTSE 100 amid concerns about a possible hung parliament and the UK debt situation. This is not exactly the situation a new government would like to face come Friday morning and ultimately major concerns about national debt have transferred from Greece to other areas of the Eurozone. The UK has the largest debt...
Read More