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Reporting Season Begins UK Banks Bracing Themselves

by Jim ONeil on February 16, 2011

in Personal Finance News

This week, unemployment could reach over 2.5 million in the UK. It comes at the start of the reporting season for financial institutions. Wage growth is less than stellar and inflation is rising. The situation has left many people facing the sharpest drop in living standards that the UK has seen since the 1920s, according to Mervyn King, Bank of England governor.

Despite this, it is anticipated that Barclays will announce £5.8 billion in profits and pay out £2.7 billion or more in bonuses, including at least an £8 million bonus for Bob Diamond, its new chief executive. Former Barclay head John Varley departed his leadership post three months earlier than anticipated to work on Project Merlin. He was able to negotiate £190 billion in additional bank lending in 2011 with the Treasury.

Before small business owners get too excited about the additional lending, some clarification is required. The figure is based on gross lending, meaning that old loans can be recalled at the same pace the

new loans are granted, without banks reneging on their commitments. Included in the project is a promise to lower bonuses and whether that will occur will become evident starting with the Barclay announcement.

Mr. Diamond rapidly expanded Barclays by purchasing the collapsed Lehman Brothers. He formerly ran Barclays Capital, which made 90 percent of the profits for the bank in the first half of 2010. Even under normal conditions, the investment branch of the institution makes more profit than the retail banking segment.

It is expected that Barclays will announce a reduction in its targets due to requirements to hold more capital. In addition, Project Merlin may recommend the breakup of institutions like Barclays. Bankers themselves say they are saving money and expect lower bonuses. They hope that banks lend more to help small businesses who are now laying off more workers than they did during the recession.


Wait, I figured that families elevated children, not the darn government. Make a decision! And also the French? Nothing They are saying is sensible, right?! So the reason for estimating them?


Lloyds Banking Group: £3.5bn loss after billions set aside for insurance claims

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