Sustained recovery of UK banks still uncertain

A recent report has claimed that whilst the banking and financial industries have seen some level of recovery since the end of the recession there is still a long way to go. In fact, industry experts have said that the sustained recovery of the UK’s banking industry is far from certain.

Ratings agency Standard & Poor’s has said that the UK banking sector’s chances of a sustained recovery is still very uncertain, and this is despite the fact that many major banks recently reported healthy profits. The agency said that it was still sceptical about whether the impressive interim results marked the start of any sustained recovery.

A number of reasons were given by the agency for its outlook on the recovery of the industry. One of these factors was the prospects for the UK’s economy, which is said were far from clear at present. Another reason given was that many banks still had significant refinancing requirements, and would have for the next couple of years.

The agency also said that a major policy review would have potentially important implications when it came to banking industry risks. The policy review will be from the Independent Commission on Banking, which was set up by the government to determine whether big banks should be broken up and their investment and retail sectors separated.

An official from Standard & Poor’s said: “A sustained improvement in the performance of the major UK banks remains far from certain despite recent interim results which represented a significant milestone in the industry’s recovery. Standard & Poor’s is cautious as to whether the banks’ improved performances represent the early stages of a sustained trend toward growing, recurring earnings, and capital accretion.”