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Myners set to examine bank profitability

CITY minister Lord Myners will delve deeper into how investment banks are generating a crop of bumper profits next month, after highlighting concerns that they may have been generated unfairly as a result of taxpayer bailouts or taking advantage of market chatter.<br /><br />Myners will stop short of launching a full-scale official investigation but will return to the issue of examining sources of investment banking profitability in a speech in early December, a Treasury spokesman confirmed yesterday.<br /><br />The news comes after Myners last week told the House of Lords that the scale of recent profit hauls at the banks &ldquo;defies rational analysis&rdquo; unless they have some kind of competitive advantage. <br /><br />He believes this advantage could have come in the form of a boost from the injection of public money into the sector over the course of the crisis, or alternatively as a direct result of so-called &ldquo;market colour&rdquo;, the exchange of gossip between traders to aid investment decisions.<br /><br />Dominant players in the banking sector have stunned investors so far this year by posting soaring profits, distancing themselves from harder-hit rivals.<br /><br />Wall Street giant Goldman Sachs said last month that third-quarter profit climbed to $3.19bn (&pound;1.93bn), putting it on track to dole out record bonuses early next year.<br /><br />HSBC chief Michael Geoghegan said earlier in November that the bank&rsquo;s global banking and markets division had &ldquo;maintained its record performance for the year to date&rdquo; over the third quarter.<br /><br />And Barclays Capital, the star-performing investment banking arm of Barclays, booked a &pound;2.7bn pre-tax profit for the first nine months of the year, excluding a &pound;1.3bn charge on its own credit, boosted by the acquisition of the US business of failed bank Lehman Brothers last year.