Banking sector confidence slumps, says CBI

UK banks and building societies have reported a dramatic drop in confidence for the future, following a slump in business volumes and wide-scale job cutting in the third quarter, according to the Confederation of British Industry's latest Financial Services Survey.

UK banks and building societies have reported a dramatic drop in confidence for the future, following a slump in business volumes and wide-scale job cutting in the third quarter, according to the Confederation of British Industry's latest Financial Services Survey.

The survey, which was carried out with the accountants PricewaterhouseCoopers, found a big gap within the financial services industry between sectors which were confident about the future and those that predicted a tough time.

Ian Dilks, a partner at PricewaterhouseCoopers, said: "The banking sector shows a surprising collapse in confidence and shows the largest number of banks reporting a decline in business since March 1992."

In contrast, insurers and fund managers reported an upturn in business volumes and expressed confidence in the future.

The banks, which include high street clearers and investment houses, said cut-throat competition was a key reason for the gloomy results. Retail banks and building societies also said a continuing decline in mortgage applications had contributed to the downturn in volumes.

Some 55 per cent of banks said they had cut costs, including jobs, by the highest level since December 1992. The news follows a raft of announced mergers within the retail and investment banking industry.

General insurerssaid premiums increases and an upturn in demand more than off-set increased costs. Fund managers' confidence for the future was up on the back of increased fees and higher profitability.