Will 2010 be the year of the banking sector?
There is no doubt that 2008 and 2009 have been disastrous years for the UK banking sector and the UK financial sector as a whole. However, as we move into 2010 with the vast majority of UK banks now fully funded and recapitalised, is 2010 going to be a year of recovery for the UK banking sector?
It is fairly obvious that the health of the UK banking sector today is very much better than it was just 12 months ago. There is no immediate concern that any UK bank could collapse in the short to medium term and indeed we are starting to see a return of liquidity to the corporate and personal finance market. However, those who believe the sector will be back to the boom and bust scenarios we have seen the past may well have to think again because there is still much work to be done.
The UK government has significant stakes in Royal Bank of Scotland and Lloyds bank as well as owning Bradford & Bingley and Northern Rock outright. It's only a matter of time before these banking operations are disinvested and returned to the private sector which will in itself offer its own unique challenges. While the worst may well be over for the UK banking sector, 2010 will not be a walk in the park and the blue skies of 2007 are still some way off.
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