BRITAIN’S BANKS have had a tough time of late, often finding themselves in the unenviable position of repaying consumers for mistakes they themselves have made or finding themselves in national or international scandals. With this in mind, we in the business section thought it would be a good time to see how Britain’s four largest clearing banks are faring seven years after the financial crisis of 2008.
Lloyds are in a reasonably stable position as the government plans to sell off its shares next year to private investors with discounts being offered to members of the public. Profits were up in the third quarter of this year but the bank has suffered hugely from the mis-selling of Payment Protection Insurance (PPI) which it has spent a massive £13.9 billion pounds repaying. Lloyds has also set aside £535 million pounds this year to deal with various other compensation complaints including poor handling of PPI mis-selling complaints. However, with its return to the private sector gathering pace, Lloyds is on the road to redemption.
Pre – tax profits at HSBC are up by 32 per cent from last year although revenues are still down thanks in part to the slow-down in Asia. HSBC has benefited from not having to pay out the amounts that its competitors have had to for mis-selling various products. Indeed, the bank appears to have avoided any of the truly embarrassing international scandals that its competitiors have endured. However, the future remains uncertain for the bank as to whether its HQ will stay in the UK; previously HSBC had stated that were the UK to leave the EU then the bank would swiftly follow. A move back to Hong Kong or potentially the US appears to be the next step for the bank which could announce its relocation at the end of the year.
73 per cent of the Royal Bank of Scotland is still owned by the tax payer and it continues to fair badly. Last week the bank made $1.1 billion when it sold its US Citizens Bank but this is little consolation as revenues continue to fall. The bank has also had to set aside $129 million to resolve its legal battles and was only last week accused of issues with its compensation practices by The Times, an accusation it denies. RBS also has yet to settle its Euribor (European Interbank Offered Rate) case so the compensation and legal fees can only be expected to rise for what is perhaps Britain’s most troubled bank. Seven years on, the crisis at RBS is still ongoing.
Barclays are going through a period of reassessment and have recently dropped a number of events from their sponsorship portfolio including the Premier League and “Boris Bikes”. Recent reports prove that this may be a necessary manoeuvre as profits dropped 10 per cent during the last quarter. The bank has mainly suffered from having to settle a number of legal disputes with payouts relating to mortgage bonds in the US and only this week Barclays has managed to settle their Euribor case for $94 million. Although things could be about to change as Barclays has announced a new chief executive in American Jes Staley who joins the company in December.
So seven years after the financial crisis, British banking is recovering steadily. Although the banks themselves indicate a mixed picture, the banking sector in London is growing well. London was awarded the most important financial centre in the world highlighting the dominance of the British banking sector.