FinancialAdvice.co.uk Logo

Qualified advisers answering your
Financial Questions
call 0800 092 1245

Have we seen the end of large profits for the UK banking sector?

A report commissioned by the UK government has today been released with a suggestion that major UK banking situations should ready themselves for significantly smaller profits in the future. The report was commissioned by Gordon Brown in October 2008 when the banking sector began to show significant signs of strain and eventually collapse. So what exactly does this mean for the UK banking sector and shareholders?



There are major concerns in the investment markets regarding the apparent suggestion that tier 1 capital ratios should be increased from 4% to 7% for UK banks as this would significantly reduce their profitability in the boom times. However, during more difficult economic times the increased safety net of a 7% tier 1 capital ratio would significantly support the sector and hopefully ensure we do not see a repeat of the ongoing banking crisis.



However, shareholders will be dismayed to hear that literally overnight the potential profitability of the companies in which they hold shares would be severely dented. It is worth remembering that UK banks make up a large proportion of the FTSE 100 and hold a significant weighting at this moment in time. If profits are to be reduced in the future then inevitably the market capitalisation of the U.K.'s leading financial institutions will also fall, as well as their influence in both domestic and overseas markets.

Share this..

Related stories

Financial Guides

Financial Calculators

Our useful calculators can help you get your finances in order:



Latest News

Blogs

Helpful new tax year facts that could affect you and your money


Blog | Seven helpful new 2016/2017 tax year facts that could affect you and your money. Our recent online blog shares a brief outline on how to stay up to date.


Read more

Useful Links

Popular Searches

Please Enter More Details

 
Enter More Details
Continue