2013 may be remembered as the year the banking sector shook off the shadow of the financial crisis and really came back into its own. Profitability is up, lenders are at last overcoming tough new regulatory hurdles and a stable future could be just around the corner. Here is our pick of the top five in this come-back kid sector.
It has been a tough 12 months for Barclays, taking on a new leadership team, reviewing every single one of the giant’s business units and facing a grilling from the Bank of England over its capital levels. But the bank has come out leaner and tougher, taking out inefficiencies and defying the worst fears of the financial crisis to maintain a strong and lucrative presence in the investment banking world. Chief executive Antony Jenkins has big plans on keeping the industry relevant to customers over the next decade.
Challenger bank Metro made waves when it became the first new bank in more than 100 years to hit the high street. After overcoming the enormous hurdles to getting regulatory approval to establish itself, the lender has not slowed the pace. Metro aims to become a major player in retail banking in the south east with 200 stores by 2020. After beginning with four in 2010, it now has 19 acrosss the greater London area. The bank’s key selling point is convenience and good service, to the point that it gives dog bowls to pet owning customers.
BANK OF AMERICA MERRILL LYNCH
Bank of America Merrill Lynch has made a real impact in capital markets this year and is working on some of the biggest deals of 2013, including Barclays’ £5.8bn rights issue this month and the upcoming privatisation of Royal Mail. The investment bank also ran two block trades in Lloyds for the sell down of its stake in insurance firm St James’ Place. The combination of the big deals shows Bank of America Merrill Lynch making a strong comeback after a shaky period in which the institution lost a series of key staff.
Just five short years ago Lloyds was a broken bank, wrecked by the acquisition of a troubled giant rival and in dire need of rescuing by the government. Now it is thriving, a profitable retail lender ready to pay large dividends and return to an eager private sector. The dramatic turnaround compares favourably with rivals like similarly bailed out RBS, and those which escaped state-ownership but have gradually had to adapt to a post-boom environment. Even better, the taxpayer could end up with a financial gain from the bailout.
The Direct Line floatation kicked off a great 12 months in the UK for investment banking powerhouse Goldman Sachs, which has been on the ticket for high-profile equities activity like FirstGroup’s £615m rights issue. In debt markets too the bank has performed, taking a lead role on Apple’s ground-breaking $17bn bond issue in April. And Goldman Sachs added to its already impressive reputation for running the world, with alumnus Mark Carney appointed to head the Bank of England.