Is this the bottom of the UK banking sector?
Today's figures from Barclays bank have been well received by the city and many analysts and investors are starting to call the bottom of the banking sector. However, it is worth remembering that Barclays was one of the few banks which declined the government's offer of taxpayer funding and instead decided to go for a commercial deal with investors in the Middle East. Even though this strategy attracted much criticism from investors and analysts it was at the time seen as a very strong move to turn down the governments "cheap" funding option.
The ongoing recession in the UK would seem to have hit the likes of HBOS, Lloyds Bank and Royal Bank of Scotland much harder than it has Barclays bank, which has seen a number of calls for caution. One swallow does not make a summer and one upbeat statement does not signal the end of the banking sector decline. As we have seen before, money markets and investment markets can move very quickly and while there is no doubt that Barclays has to some extent "steadied the banking sector ship" there are still rocky seas ahead.
The next few days are vital as they will dictate the future direction of the UK banking sector, at least in the short term, until we move into the full banking results season which could then see differing statements and differing forecasts for the future.
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