4.1 Before the financial crisis that started in 2007, the economy in UK was constantly growing. In 2003 the Governor of the Bank of England, Mervyn King, defined the previous years the “nice” decade” (cited in Banking Crisis, 2009, p 12). Other critics have defined this period as “The Great Moderation” (cited in Banking Crisis, 2009, p 12). 4.2 Bellow is demonstrated a table showing nine UK banks in the Financial Times Stock Exchange 100; on the 2 April 2007 the estimated value of the nine was £316.9 billion where a year after there was a decline by 23%, finding Bradford & Bingley along with Northern Rock out of the index; lastly, on the 6 April 2009 the FTSE 100 dropped by 56% compared to the total market capitalisation in 2007; five out …show more content…
However, the degree which they were affected varies and a variety of factors need to be considered (Banking Crisis 2009). 4.4 Lloyds TSB In 2007, Lloyds TSB’s profit before tax form UK retail banking was £1.73 billion against a slight deterioration at £1.67 billion. However, the profit before tax of the investment and insurance sector fell by 85% from £1.04 billion in 2007 to £0.15 billion in 2008. The Lloyds’ international banking and wholesale dropped at -£6m in 2008 against £1.82 billion in 2007 (cited in Banking Crisis 2009). 4.5 Halifax Bank of …show more content…
The HBOS’s 2007 Annual Report showed that the company held 16% of the savings market and 20% of the mortgage market. The company was involved in Retail and Corporate and property lending. The collapse of the company is caused on its property lending. In 2008 the company made a profit of 1,267m from its retail part and a loss £6,793m from its corporate part (cited in Banking Crisis 2009). In 2007 when the market started to show the first signs, of the crisis the Corporate Chief Executive of the company, Peter Cummings, was held responsible for the rapid increase in loans to customers of 22% against of 8% in 2006; Lord Stevenson acknowledged that the company “lent too much” and that the Board was “hugely engaged” (cited in Banking Crisis 2009, p 23). In 2007, the company recorded an increase of debt in issue by 51% at £231 billion compared to year 2003 at £112 billion; an expansion of total assets by 39% compared to 2003, from £408 billion to £667 billion; the company in 2008 showed on its statements that the bigger proportion of its funding was drawing from the wholesale markets at £248 billion rather than the retail deposits at £243 billion (cited in Banking Crisis 2009). 4.6 Royal Bank of