What happened to Uk banks????
Bit of a multi faceted question so I'll split it:
For those who were in the industry prior to the GFC, were more UK banks active in the 'sexier' parts of the industry? I have heard that RBS (NatWest) used to be more respected and reasonably well known in the USA whereas now it is pretty obsolete in the US and has shrunk considerably in the UK.
Share price - I know share price really isnt the be it or end all but its remarkable when you look at the stock price chart of UKs big banks parallel to their US counterparts pre and post the GFC. For the most part, US banks have recovered their share prices pretty well whereas NatWest, Lloyds and Barclays (Volatile but on a downwards trajectory) basically crashed and never recovered. HSBC and Standard Chartered have indeed recovered their stock prices over this period but these 2 banks have alot of their operations outside the UK (APAC, MENA, Emerging markets in general)
So the question is - what happened to UKs big banks and why have they failed to recover anywhere near as well as their US counterparts?
RBS used to be bigger than JP Morgan in terms of Assets before the GFC and used to be the biggest bank in the world.
RBS messed up because it was part of a consortium that acquired the Dutch bank ABN Amro. RBS then started reporting losses and then it went downhill from there. The U.K. Gov then had to take a 70% stake in the bank in order to prevent it from collapsing. It eventually rebranded to NatWest Group and they’ve sold off a lot of their assets in the US, e.g. Citizens Bank, and scaled back all of their operations. NatWest is still part owned by the government (40% stake) and this has arguably restricted it.
Barclays is still largely fine imo but they’re making job cuts.
Lloyds also needed bailing out during the GFC but it was less extensive than what RBS needed.
Ah I see, didnt know they sold off US businesses. What baffles me is how Natwest is still so heavily owned by the Gov I mean we're about 16 years on from the crash and US gov sold its shares in the banks they bought up a while ago.
In your own opinion do you think UK banks will ever reach the highs of pre GFC success? Given Barclays is the only real UK player that is global right now or have UK regulations really killed any risk taking behaviour from the banks and destined them to stagnate.
NatWest still have some assets in the US and NatWest Markets have an office in Stanford, CT in the US. However, they’re not that big in the US.
I don’t think NatWest/RBS will ever get to the pre 2008 highs personally. The U.K. government may sell more shares in NatWest soon but the bailout, for the U.K. gov, has been unprofitable which wasn’t necessarily the case with bailouts in the US.
V interesting. Agree with you and its crazy to think how some of these UK banks w enormous balance sheets haven't tried expanding operations like Wells in US or even Santander.
From my personal interactions i can tell theyre just comfortable w their current positions as largely vanilla retail banks with even barclays going in that direction. Weird to see basically no hunger from the banks to unlock potential.
It's just impossible for EU banks to compete with US banks
The US Gov basically backs US banks with unlimited money supply nd they also have an insanely in-depth capital market... while Europe is too separated (too many banks/stock market) and much more regulated
The only thing EU/UK banks could do to not take too much risk and to survive longer before the US banking fully take the market over
Definitely - I think regulation squeeze has basically created the risk averse culture at British Banks. And I'm not sure as to why they aren't taking note of it either and trying to ease regulations so that domestic banks at least keep domestic market share in areas outside of retail banking.
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