Why are banks losing money?

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roker

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When I was young, the banks did not have computers and online banking, they never screwed us for fees and yet they made a profit. What went wrong?
 
roker said:
When I was young, the banks did not have computers and online banking, they never screwed us for fees and yet they made a profit. What went wrong?
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Did they not have very high interest rates back in the 80s... 16% on mortgages??
 
roker said:
When I was young, the banks did not have computers and online banking, they never screwed us for fees and yet they made a profit. What went wrong?
Click to expand...

Your memory and analysis.....

Thirty years ago when I went to work for my first asset management firm, profitability was measured in percent, now it's measured in base points. The reason is pretty simple - it's become a commodity industry.

Asset management went from competing on the basis of returns on well run funds to competing on cost with no responsibility for returns.. so they levelled the planning field and Vanguard etc stole the clients because they could do better than the banks on cost.

Retail Banking.... well you'll never make money if you keep giving a way your stuff for free...

Investment banking was and is only profitable for about the top four or five banks in the world. Everyone else has the odd good year, but it is kept around to service clients that you make fees on on other areas.... except you no longer makes fees in other areas.......

Next step will be a consolidation on cross the Euro Group. It will probably produce 8 to 10 Tier 1 banks and say another 15 Tier 2, with everything else being in name only. Then we'll see profitability return.
 
I don't when you were young but they definitely screwed people on fees/surcharges in previous years too. l remember as a young bank employee who knew how to read a bank statement at that stage meeting the manager of my Dad's bank to query his business loan and current account statements after my mother died suddenly quite young as the business was not in the best shape and neither was my father.. Even I could tell at that stage he was being fleeced with extra charges etc but I got nowhere.

Years later it came to light that there was indeed irregularities with surcharges in particular going on at that bank, this would have happened in mid 80s but of course at that stage we had long since left that bank and had no paper trail. I can't remember the exact details of what was being done wrong etc but there was definitely shenanigans back years ago too!
 
If you take away loan impairment costs, I don't think banks have ever lost money on day to day activities with the possible exception of the deep recession years
 
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