Aid is delaying bank overhaul

Ben Southwood
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STATE AID is postponing a necessary revolution in the banking sector, leading to stagnant returns, claims consulting giant McKinsey in a report out today.

Bank revenues grew just three per cent last year – down from nine per cent growth in 2009 and 2010, and returns to equity dipped.

One key reason banks are not undergoing the required radical transformation – slashing costs, streamlining business operations and searching out new growth – is the $1.7 trillion of direct state support in the banking sector, the consultancy says.