RBS and Lloyds Banking Group have now both reported their 2011 results. And how disappointing that 4 years after the crash, they are still losing £5 billion a year between them. Compare and contrast HSBC and Barclays, yet to post a loss and still making multi-billion profits. Another example in fact of how wrong it is to tar all bankers with the same brush.
At the heart of the losses for both Lloyds and RBS are the continuing losses on loans made in the run up to the credit crunch. Every 'Non Core' sale results in another hefty loss being taken, as the banks shrink, their losses increase. At some point soon, probably next year, the worm will turn. The core retail banks are profitable as are the corporate bank loans made since 2008. The day will come when profits from these outweigh the losses of the old loans - indeed most loans are 5 years at the very most, so one would think that 2013 would be the turning point.
What is odd overall though is the impact of IFRS accounting. With all these bad loans, the banks are able to massage their figures, taking losses when they can. It's a bizarre bit of accounting that ignores mark to market in reality and fully embraces the more fun, mark to make believe. banks too cheat by rolling over bad loans at poor rates in order to not take the hit of closing out at a loss - this latter point is why 2013 won't be the end, but the beginning of the end of the crisis.
Worse new though is the impact of events. Every year the banks are facing more headwinds. This year is what the PPI scandal - a mis-selling tale that started a very long time before any of the current management were in place. Plus, of course, Greece. The thing is every year there is some external crisis - Eurozone, Japan, abysmal markets. It's hard to see when the excuses will stop. it's quite likely the taxpayers will get their money back on a nominal basis - but at a distant point in the future, inflation will have had its way on the real investment.