Equipment Leasing

Year-end results have been announced for seven of the eight biggest UK banks, and it seems that the banking industry is not in such bad shape after all.

The biggest casualty of all, of course, was Northern Rock, nationalised as it crumpled under the pressure of lack of cashflow. A clear victim of the sub-prime crisis which originated in the US, Northern Rock was unable to sustain its business model and had to resort to a loans lender of last resort, the Bank of England before the Government decided that temporary nationalisation was the best option for the time being.

Other UK banks revealed that they thought to be their losses from write-downs related to sub-prime funds, but none of them seemed to be as badly hit as US banks like Citigroup. It lost £12.1bn and UBS lost over £9bn.

The UK results have been nowhere near as bad. The total of losses and write-downs is so far just over £5bn, mostly down to Barclays and Royal bank of Scotland. Others, such as Lloyds TSB, Standard Chartered and HBOS appear to have got off lightly, losing only a few hundred million pounds.

Nevertheless there are still fears that other personal loans write-downs may not yet have come to light, and no bank chief executives are prepared to announce that the credit crunch has ended, or forecast when it will end.

This week’s announcement by RBS as described by Carla Antunes de Silva, analyst at JP Morgan, as 'the messiest set of figures we have seen', saying that RBS’s write-downs were inadequate. She identified exposures totalling over £29bn covering all things from collateralised debt obligations to monoline exposures.

It is apparent that, although UK banks seem to have fared well – some even riding out storm with increased dividends – the credit crunch still has some way left to run.