United Kingdom Commercial Banking Report Q3 2012
Business Monitor International, June 2012, Pages: 62
The United Kingdom Commercial Banking Report provides industry professionals and strategists, corporate analysts, banking associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United Kingdom's commercial banking industry.
Since Q108, we have described numerically the banking business environment for each of the countries surveyed by BMI. We do this through our Commercial Banking Business Environment Rating (CBBER), a measure that ensures we capture the latest quantitative information available. It also ensures consistency across all countries and between the inputs to the CBBER and the Insurance Business Environment Rating, which is likewise now a feature of our insurance reports.
Like the Business Environment Ratings calculated by BMI for all the other industries on which it reports, the CBBER takes into account the limits of potential returns and the risks to the realisation of those returns. It is weighted 70% to the former and 30% to the latter. The evaluation of the ‘Limits of potential returns’ includes market elements that are specific to the banking industry of the country in question and elements that relate to that country in general.
Within the 70% of the CBBER that takes into account the ‘Limits of potential returns’, the market elements have a 60% weighting and the country elements have a 40% weighting. The evaluation of the ‘Risks to realisation of returns’ also includes banking elements and country elemens (specifically, BMI’s assessment of long-term country risk). However, within the 30% of the CBBER that take into account the risks, these elements are weighted 40% and 60%, respectively.
Further details on how we calculate the CBBER are provided at the end of this report. In general, though, three aspects need to be borne in mind in interpreting the CBBERs. The first is that the market elements of the ‘Limits of potential returns’ are by far the most heavily weighted of the four elements. They account for 60% of 70% (or 42%) of the overall CBBER. Second, if the market elements are significantly higher than the country elements of the ‘Limits of potential returns’, it usually implies that the banking sector is (very) large and/or developed relative to the general wealth, stability and financial infrastructure in the country.
Conversely, if the market elements are significantly lower than the country elements, it usually means that the banking sector is small and/or underdeveloped relative to the general wealth, stability and financial infrastructure in the country. Third, within the ‘Risks to the realisation of returns’ category, the market elements (ie: how regulations affect the development of the sector, how regulations affect competition within it, and Moody’s Investor Services’ ratings for local currency deposits) can be markedly different from BMI’s long-term risk rating.
Executive Summary 5
Table: Levels (GBPbn) 5
Table: Levels (US$bn) 5
Table: Levels At February 2012 5
Table: Annual Growth Rate Projections 2012-2016 (%) 6
Table: Ranking Out Of 59 Countries Reviewed In 2011 6
Table: Projected Levels (GBPbn) 6
Table: Projected Levels (US$bn) 6
SWOT Analysis 7
United Kingdom Commercial Banking SWOT 7
United Kingdom Political SWOT 8
United Kingdom Economic SWOT 9
United Kingdom Business Environment SWOT 9
Business Environment Outlook 10
Commercial Banking Business Environment Rating 10
Table: Commercial Banking Business Environment Ratings 10
Commercial Banking Business Environment Rating Methodology 10
Table: Developed States Commercial Banking Business Environment Ratings 12
Global Commercial Banking Outlook 13
Regional Banking Sector Outlook 21
Table: Banks' Bond Portfolios 2011 21
Table: Developed States Commercial Banking Business Environment Ratings 22
Table: Comparison Of Loan/Deposit & Loan/Asset & Loan/GDP Ratios 22
Table: Anticipated Developments in 2012 23
Table: Comparison Of Total Assets & Client Loans & Client Deposits (US$bn) 23
Table: Comparison Of US$ Per Capita Deposits (2011) 24
Table: Interbank Rates And Bond Yields 24
United Kingdom Banking Sector Outlook 25
Treading Water 25
Economic Outlook 28
Table: United Kingdom – Economic Activity (2011-2016) 31
Competitive Landscape 32
Market Structure 32
Table: Protagonists In The UK's Commercial Banking Sector 32
Definition Of The Commercial Banking Universe 32
List Of Banks 33
Table: Major British Banking Groups 33
Table: Other BBA Members 33
Credit Suisse International 35
Company Profiles 40
Barclays 40
Table: Stock Market Indicators 41
Table: Balance Sheet (GBPmn) 41
Table: Balance Sheet (US$mn) 42
Table: Key Ratios (%) 42
Bradford & Bingley (Santander) 43
HSBC 44
Table: Balance Sheet (US$mn) 45
Table: Key Ratios (%) 45
Lloyds Banking Group 46
Table: Stock Market Indicators 47
Table: Balance Sheet (GBPmn) 47
Table: Balance Sheet (US$mn) 48
Table: Key Ratios (%) 48
Northern Rock 49
Table: Stock Market Indicators 50
Table: Balance Sheet (GBPmn, unless stated) 50
Table: Balance Sheet (US$mn, unless stated) 51
Table: Key Ratios (%) 51
Royal Bank of Scotland 52
Table: Stock Market Indicators 53
Table: Balance Sheet (GBPmn) 53
Table: Balance Sheet (US$mn) 54
Table: Key Ratios (%) 54
Nationwide Building Society 55
Table: Balance Sheet (GBPmn) 56
Table: Balance Sheet (US$mn) 56
Table: Key Ratios (%) 56
BMI Banking Sector Methodology 57
Commercial Bank Business Environment Rating 59
Table: Commercial Banking Business Environment Indicators And Rationale 60
Table: Weighting Of Indicators 61
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