Banks are back in fashion

The banks got us into this and the banks must get us out of it. Robert Peston is not the only commentator to lay out the arguments in favour of calling the lynch mobs off the hated financial sector. “Statements today by Barclays and Lloyds indicate that banks should be over the worst.”
Whatever happened to all those demands for tougher regulation? Peston touches on the debate that the EU haven’t the competence to lay down a new regulatory framework. Lurking behind their upfront good intentions may be the ambitions of Frankfurt and Paris to dislodge the City as the financial powerhouse of Europe, maintains the Indy’s Jeremy Warner. Banking uplifts are only the tip of the iceberg of recovery but all the angst about the bankers’ greed mustn’t lead us into cutting their noses to spite our own faces.

Yet here comes the inevitable downside to this counterswing of opinion on the banks, flagged up by John Waples in the Times.

(There) may be good news if you are a bank, and encouraging news for governments around the world which need financial institutions with healthy balance sheets for economies to recover. But it is bad news for anyone in business. It is business that is paying for the banks to recover, and it is a steep price.
The stories from company bosses, both big and small, about the new charges that banks are introducing for even the simplest transaction are horrifying. A covenant renegotiation that a few years back would have cost £250,000 is now £2m. A loan refinancing for a mid-sized company can set you back the cost of a secondhand Boeing 737 (£12m).

So what are to make of all that? The latest round of quantitative easing is clear evidence that general recovery still lies over the horizon. Hamish McRae reckons slow, modest recovery is the best we can hope for.

Prices are “normal” again. If that is right, there is scope for several years of steady, unremarkable advances. Unexciting? Sure, but after the recent madness a bit of a relief.

  • Rory Carr

    While it is commonly accepted that it was the banks’ greed for profits at all costs in a futile attempt to satisfy the insatiability of its shareholders that put us all up shit creek in the first place we are now supposed to cheer as a few major UK banks show greater than anticipated profits. Which we might think is akin to welcoming a widespread outbreak of coughs and sneezes as a sign that Swine Fever would soon be over or, in a more local context, and perhaps more appositely, that the recent outbreak of dissident violence should be taken as an indicator of how they were becoming persuaded of the widespread social rejection of their behaviour.

  • pete whitcroft

    I wouldnt believe a word the banks are saying. Its all bluff, they want the others to fold before they let the skeletons out of the cupboard.