Banking stocks in firing line

A report on banking standards has made series of recommendations, which in the current public environment might be easier to implement than might normally be the case.

Following the market collapse in 2007 and the subsequent investigations, banking institutions have had a number of their darkest secrets revealed; since then it has been increasingly difficult for the public to have any faith in what they say. Although the city fully understands the importance of banks in turning around the economy, the broader perception is that they have gotten away far too lightly for the crimes they have committed.

This report on banking standards will no doubt be widely used to drive this point home. The two banks that have been bailed out with taxpayer’s money – Lloyds and Royal Bank of Scotland – are now being heavily handicapped by political opinions that are as proving to be as influential as business decisions.

This leaves the banking sector in the UK with more questions than answers and the likelihood that a number of years’ worth of rule changing and more stringent oversight will follow. This will certainly muddy the waters when it comes to analysts trying to gauge potential profits and costs.

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