Fines and conduct costs set to stop lenders hitting profit goals

Tim Wallace
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BRITAIN’S biggest banks will strug­gle to hit their target returns on equity this year as sustained fines and compensation costs drag them down, analysts at ratings agency Standard and Poor’s warned yesterday.

Despite hopes that the bills for past wrongdoing would come down, the four big lenders paid £13.8bn in legal and restructuring costs last year – down just £0.2bn compared with the previous year’s total.

Standard and Poor’s does not expect a significant fall in those this year, particularly pointing to RBS and Barclays as banks with substantial restructuring costs ahead.

“These exceptional expenses, along with ring-fencing and other regulatory changes, could make achieving their return on equity targets challenging,” said the report.

However, it did acknowledge that banks’ revenues are improving as the economy grows, and that their cap­ital buffers are much improved.