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Published on Sep 28, 2016
UK banks are being 'assaulted on all fronts' and have to find a new normal, says Cantor Fitzgerald analyst Keith Baird.
He was speaking to Proactive Investors, the day it emerged that Royal Bank of Scotland Group plc
(LON:RBS) was to pay US$1.1bn to settle two
claims it sold toxic mortgage-backed securities in the US ahead of the
global financial crisis eight years ago. Under the cosh Deutsche Bank
has also been in the news this week- facing an eye watering US$14bn bill
for the same kind of claims.
"Regulators have been slapping fines on the banking sector, and to my way of thinking, without much in the way of due process, but the banks have got no option from a reputational point of view, but just to pay up..," said Baird.
"But it must be coming to an end," said the analyst. "Otherwise, banks, I think, are going to be forced with commercial decisions about what markets to participate in."
Baird noted that US$14bn was a "very great deal of profits".
Baird believes there to be a "highly political" element to these fines and going back to the financial meltdown of 2008, it would be wrong, he believes, to lay the blame solely at the feet of the big banks.
He believes UK banks are on a journey to find a new normal in terms of profitability, having been very profitable, pre- the financial crisis.
"All in all, investors I think, don't really know at this point, what the future profitability of the banks is going to be and therefore, it';s very hard to put a valuation on bank shares."
But Baird added he believed UK banks were "quite a long way" down the path to recovery..
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