Britain’s big five banks rake in €50bn

BRITAIN’S big five banks unveiled combined profits of £33.4 billion (€49.68bn) last year — a figure which has fuelled outrage among consumer groups.

The profits are equivalent to more than £1,000 (€1,457) a second and are higher than the annual GDP of countries including Kuwait, Bangladesh, Morocco and Luxembourg.

HSBC, the last of the big five to report, notched the biggest haul by a British-based bank when revealing annual profits of £11.91bn yesterday.

And with NatWest owner Royal Bank of Scotland posting profits of £7.94bn, Barclays at £5.28bn, HBOS £4.8bn and Lloyds £3.47bn, there is plenty to irk consumers who feel overcharged and exploited, while calls for a windfall tax continue.

However, banks have pointed out the majority of profits were earned away from the high street in corporate banking and with international clients.

HSBC does just one-fifth of its business in Britain, while Barclays said that overseas business may account for 50% of its profits in three years' time representing 40% of this year's profits.

In addition, RBS acquired Charter One in the United States and leading a group of investors in the purchase of a stake in Bank of China that country's second largest bank.

Richard Hunter, head of UK Equities at Hargreaves Lansdown Stockbrokers, said the main change in this year's reporting season was diversification overseas and into investment banking.

He said: "Banks are not just relying on personal or retail banking but increasingly relying on the wholesale market, investment banking and moving away from the UK."

The problems posed by consumer slowdown and the rise in unemployment would be offset by diversification, he said.

Eddy Weatherill, of the Independent Banking Advisory Service, called for Chancellor Gordon Brown to impose a windfall tax on the banking sector, but remained pessimistic about the possibility.

"The Government has resisted every opportunity to tax the industry so we can assume it is not going to happen," he said.

Mr Weatherill warned of problems ahead as banks see the results of "irresponsible lending" hitting their bottom line.

Consumers, meanwhile, are starting to move away from banks they are dissatisfied with, Mr Weatherill said.

"Younger people do no have the same sense of allegiance as their parents or grandparents and they can see they can easily change to a bank that serves them better," he said.

"There has been a plundering of the consumer by banks," he added. "The industry is under-policed with no real control."