Banks are doing badly?
Well..most banks maybe. For now.
The Bank of England yesterday revealed it has made its biggest profits since its foundation in the late 17th century. £995 million pounds made from lending its money. The bank charges a fee on the money it lends. As the bank is lending far far more than it would under normal circumstances, it has made greater profits.
And the banks themselves are generating greater profits. Or rather greater margins than they could make before the crunch on mortgages and loans. But greater margins will lead to great profits if continued growth and demand can be sustained. Reduced competition as competitors collapsed or retreated to their own countries have left the survivors potentially in a stronger position. Lloyds shares up already since Victor Blank {cheque..OK, MW} decided to slip away yesterday.
The Mail thinks that the Tories may have to split Halifax from Lloyds banking group if they are in power. The worry is the banking groups will grow very quickly and become very powerful once again. Future governments are looking for institutions that are NOT too big to fail.
Would a government do that? With Tesco about to enter the market? And the oft promised, never to materialise Postbank still being vaguely mooted by the government.
I think it would depend a lot on the banking group's situation in 2010.
6 comments:
As a shareholder in the BoE will I be getting a dividend? Or just inflation?
Parliament needs to sort out the banking industry in order to encourage new entrants. Barriers to entry must be lowered somehow. Competition will return balance to the market, not regulation.
picking up from Mark, what exactly are the fees being charged for underwriting the garbage?
btw, no mention of the merve's ample pension pot?
Roym: Ok. Mr King’s pension pot is now worth £5.4m. However he may have earned it if all this talk of UK and US bank's repaying government loans this week are true. If we could, as taxpayers, just break even on the bailouts we will have done well.
MW: Right. Its a shocking return really..
Yet the banks are still complaining that they are being charged too much and so can't rebuild their balance sheets.
Not even with Libor at 1.3% and a £10k loan at 10.5%? Or a mortgage at 5.5%?
By the way BE the credit crunch is over.
http://business.timesonline.co.uk/tol/business/economics/article6315182.ece.
Any "profit" they've made seems to me both illusory and arbitrary bearing in mind their field of operations; no marketing costs, captive client base, and the ability to presumably mark their portfolio to any level they wish, as opposed to an independent market's value.
Bit like awarding bonuses to University lecturers.
Post Office Bank, haven't we been here before, Wislon set up the Giro Bank in the 70's, round & round we go, Maggie sold it off don't where it's at now, I believe Spogget and Sylvester bought it, I wonder what happened to them :-)
TT: Quite. Its easy if you're the only player. But they do have certain constraints.
Anon. At every conference, motion, debate since August on post, mail or Royal mail the post bank has been discussed. Targeted to the audience. For socialists its portrayed as a way to punish fat cat bankers. To Post Office as a way of restoring profits. To Royal mail as a way to bring in cash.
To capitalists as a way to make big profits...
I don't think it has moved on an inch since the reports of it imminently coming into being, back around 2005.
Tesco will clean up.
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