It’s a mystery all right…12 Feb 2024 22:43
The governor of the Bank of England has said that UK banks have emerged from a volatile few years in "sound health", but said the stagnating share prices of major lenders remained a "puzzle".
Andrew Bailey, speaking in a lecture at Loughborough University, said there had been major macroeconomic disruptions over the last four years, since the onset of the Covid-19 pandemic.
"UK banks have come through the turbulence of the last four years in sound health, and that has enabled them to contribute to maintaining financial stability and to support the economy and their customers during these difficult times," he said.
"That was not always the case in the past," he added, referring to the 2008 global financial crisis which led to wide-reaching reforms in the banking sector.
Banks now hold much greater levels of capital reserves with the Bank of England, which helps to maintain financial stability.
And in the future, banks may choose to hold more reserves than previously expected, the Bank chief said.
Bailey also said that the UK banking system had proved to be more resilient, but that there was a "puzzle expressed often by banks", asking: "If this is a good news story, why are the valuations of banks so much in the doldrums?"