UK Financial System Facing A Long Road To Recovery

It was at the summit on Global Leadership at the London Business School that John Kingan, top dog at UK Financial Investments, Anshu Jain of Deutshe Bank, Stephen Hester, Chief Exec of RBS and Julian Franks, Professor of Finanace at LBS, all arrived at the same conclusion that a full recovery of the financial system was a long way off, despite the recent improvements.

“No one can say a system is mended when the bulk of bank lending is dependent on huge government guarantees and where the government is the main shareholder,” said Mr Kingman, who said that the banking crisis had moved on, going on to say, “when the crisis is shaken off, it will not be a question of going back to 2006. The banks will operate under a very different regulatory regime. They must also re-learn lessons of how to manage themselves and in particular how to manage risk.”

Mr Hester confirmed that changes were already underway at RBS after the recent overhaul of the bank’s senior management and that he “was turning upside down” the usual traditions of the bank and introducing a “syndication of leadership, rather than focusing the power with  the people at the top.

Xavier Rolet, chief exec of the London Stock Exchange and previously of Lehman Brothers said, “Regulators around the world are doing more than comparing notes. They are looking at systemic risk. Necessity is creating a new environment from which will come a more homogeneous world.”

While Professor Franks added “If we have global banks we need global regulation.”

While this certainly mans a tightening of regulations for banks, we can expect to see a large rise in the use of credit checks as banks and other financial lenders aim to ensure that loans and mortgages that they are providing are offered to the correct people who are less likely to fall into arrears and increase the need for repossession or the use of debt collection.