It’s almost certain that we are heading towards another financial
crisis. That is according to the banking sector’s biggest private equity
investor, Christopher Flowers.
Flowers is one of the industry’s most respected investors. A long time private equity investor, Flowers knows the banking sector well and has raised $15bn since 1998 for his private equity, JC Flowers buyout fund.
His claims are based on the fact that regulation, introduced since the financial crisis, has depressed sector profitability. As a result, Flowers claims that lenders like Barclays (LSE: BARC), HSBC (LSE: HSBA), Lloyds (LSE: LLOY), Standard Chartered (LSE: STAN) and Royal Bank of Scotland (LSE: RBS) will have trouble riding out extended periods of financial instability, leading to another credit crunch.
A survey of 200 banks last year found that their average return on capital was 9.7% last year, marginally above their cost of capital. And these low returns have also put investors off.
http://www.fool.co.uk/investing/2014/07/21/were-heading-towards-another-financial-crisis/?source=uptyholnk3030001
Flowers is one of the industry’s most respected investors. A long time private equity investor, Flowers knows the banking sector well and has raised $15bn since 1998 for his private equity, JC Flowers buyout fund.
His claims are based on the fact that regulation, introduced since the financial crisis, has depressed sector profitability. As a result, Flowers claims that lenders like Barclays (LSE: BARC), HSBC (LSE: HSBA), Lloyds (LSE: LLOY), Standard Chartered (LSE: STAN) and Royal Bank of Scotland (LSE: RBS) will have trouble riding out extended periods of financial instability, leading to another credit crunch.
Poor returns
Regulations introduced following the financial crisis, were supposed to increase the stability of the financial system. However, these regulation have also depressed profitability within the sector.A survey of 200 banks last year found that their average return on capital was 9.7% last year, marginally above their cost of capital. And these low returns have also put investors off.
http://www.fool.co.uk/investing/2014/07/21/were-heading-towards-another-financial-crisis/?source=uptyholnk3030001
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