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Should you bank on the Banks yet? |
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20 April 2011 |
Justin Urquhart Stewart is one of the most recognisable and trusted market commentators on television, radio, and in the press. Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market's roles and benefits for the private investor.
Justin Urquhart Stewart is one of the most recognisable and trusted market commentators on television, radio, and in the press. Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market's roles and benefits for the private investor. Justin provides financial advice to clients of Kester Cunningham John Financial Planning LLP.
After the interim report from Mr Vickers, it is still a valid question to ask if the banks are still a risk. Presumably his initial views were designed to smoke out the arguments from the various ends of the spectrum from the extreme banker bashers to the integrationalists (if there is such a word?) of the giant banking combines. It is very easy to slip back into a level of complacency to think that all is fine just because nothing else has gone wrong, but in fact there are still some significant risks.
Vickers, of course, must be in a quandary. By pressing for more ring fencing and capital reserves he could be accused of constricting any potential lending; equally by taking a more relaxed view to the requirements, he could be accused of increasing the risks of repeating the banking failures of before. The answer of course lies somewhere in the middle, and inevitably the one thing he can be certain of is that he will never please either end of the scale.
One area of risk is that of the sovereign debts from the weaker Eurozone members. Although the chance of a default is being denied thrice by all concerned, the restructuring or extension of the loans is almost inevitable no matter what imaginative titles are used. Currently giving further facilities to nations like Portugal is like giving to debtors who have maxed out on their credit cards, another credit card |
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