UK Banking Shares Still Under Pressure
Despite holding there hands up to a number of problem loans and the need for more capital liquidity it seems that the UK Banking sector is still short of friends. Over the last week we have seen the price of Royal Bank of Scotland, HBOS and Barclays fall by over 10% with some analysts still unwilling to recommend the sector.
Anthony Bolton, who ran the Fidelity Special Situations fund for many years, believes that it is the secrecy of the banks which is causing problems with the sector. Unlike for example traditional Building firms, Bolton suggests that it can be difficult for many investors to understand exactly what investments the banks hold and their capital adequacy positions. In fact he goes on to suggest that a number of the banks appeared to be a little naive in there understanding of the mortgage backed bond market â€" the real reason for the credit crunch sweeping the world.
It will be interesting to see how the sector performs over the weeks and months ahead because it has taken a real battering of late. Investors still appear to be a little wary of the market as nobody quite knows how far the worldwide economy will fall before recovering.
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