The weekend FT has a good article about the plight of some of the UK’s leading banks. The numbers are pretty sanguine and make dire reading for anyone holding bank shares – which of course is all of us, either as taxpayers or as investors. Since June 2008 Lloyds has seen nearly 75% of its share price lost. It is the worst financially performing bank this year, in the UK (according to the FT). RBS has fared better in 2011, increasing its value by 5.9% but still 83.4% less than where it was in June 2008.

The key question that is prompted is really whether or not holding bank shares is a good idea. Everyone has a view of course. Importantly, following the credit crunch a review of banking practice is underway, with the basic notion that Banks should be more careful, hold higher reserves and stick to their core functions. The Independent Commission on Banking (ICB) [an unfortunate use of words] is conducting the review and is expected to report and present its findings in September. New global rules about capital are also expected in the Autumn.

I’m not a stockbroker, so I cannot comment on the merit of holding shares in Banks, other than to point out the obvious (what has happened). We need Banks, but we all know that they need to change, yet most of us put up with pretty rubbish service and fairly excessive charges. The Government could do with their (our) money back and so are fairly keen to offload the banks back into the private sector as soon as possible. This is an almost unwinnable scenario and I can see it going badly for whatever Government is in charge. Suffice to say, that generally its a given principle not to sell at the bottom, which is presumably where many Bank share prices are near… but who knows!

As if you needed reminding that Banks are somewhat cavalier with your money and personal details, there is a BBC programme this evening at 8:30pm on BBC1. Panorama will be showing “Can You Trust Your Bank?”… I will be watching the programme with interest, but doubt that it will tell us anything that we don’t already know or sense. Whatever the outcome, we need Banks, we need them to be better, both as customers and investors. Banks to me are akin to oil tankers, it takes them ages to turn around and few searching questions are asked about their ability to perform. It normally takes a disaster to prompt discussion about reform, but invariably this ebbs away with the next tide…except for those left nursing the consequences.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email