British banks 'uninvestable', study states

7 December 2012

British banks are widely perceived as "uninvestable" in the aftermath of the global financial crisis, a new report has warned.

According to a study by the Association of British Insurers (ABI), the government is risking strangling the life out of the financial sector through its over-zealous efforts to make the industry safer and more secure, the Daily Telegraph reports.

Following the banking collapse, the Conservative-Liberal Democrat alliance has tried to shore up the market by implementing several regulatory reforms, including the potential ring-fencing of banks' retail and investment divisions.

However, such significant changes are "unrealistic" and would result in financiers needing to double their profits just to meet the cost of new capital requirements, the ABI stated.

Robert Hingley, director of investment affairs at the organization, said that while it is "in everybody's interest" to make sure banks are in no way reliant on taxpayer funding, it is vital for lenders to be able to be profitable.

"The greater focus on safety is having adverse consequences this side of the table," he added.

By Claire Archer

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