Financial stimulus more important than the actions of bank bosses to economic recovery, S&P’s claims

27 August 2010

Senior executives at banks have had little influence over the recovery of the banking industry, a credit rating agency has claimed.

According to a new report from Standard & Poor’s (S&P’s), factors beyond the control of bosses at financial institutions have led to improvements to the health of the sector.

Lloyds Banking Group, Barclays, the Royal Bank of Scotland and HSBC have all showed improved performance during the first half of the year.

Although actions at managerial level have helped the banks, more “important contributory factors” were behind the recovery, the agency explained.

In the report, S&P’s said: “In particular, these were the considerable monetary stimulus, the partial recovery of the residential and commercial property markets, and the relatively resilient employment market.

“We expect that economic and market developments that are largely beyond the control of banks' management teams will continue to disproportionately influence UK bank ratings through the remainder of 2010.”

Elsewhere in the report, the agency suggested that the long-term outlook for the UK’s economic recovery as a whole was “far from clear”.

The Royal Bank of Scotland and Lloyds Banking Group were two financial institutions which reported an improved performance for the first six months of the year.

RBS recorded a profit of £9 million while Lloyds posted £1.6 billion worth of profit during the period.

By Jim Ottewill

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