More capital for banks? Not the wisest move.

It comes as something of a slap in the face when banks, the very institutions that got us into the current economic mess, are told they need more capital to help get get us out of the economic crisis. For one thing, to get more capital, banks are going to need more custom, that is for either their bank accounts, mortgages, loans and other products. As national debt, both consumer and government, continues to rise, where are they going to find even more people willing to take out loans with unfair and ever less favourable interest rates?

It simply doesn't seem logical to me that banks need more capital to get back on an even footing, they simply need to spend the money they have better rather than wasting it on expensive, unproven and frequently unethical projects as seen in the past. Apparently, UK banks 'have been taking steps to strengthen themselves since the financial crisis began'. Of course they have, but if the crisis is only getting worse (and only going to get worse), where do they expect to find the capital needed from investors? Given what's happening in Cyprus at the moment, with the Government forbidding savers to access more than €100 of their money per day, we should be ever more wary of the big banks.

So what is the answer? The answer is stop encouraging business for the sake of it. Encourage business in line with what customers need, and not with what you think they want. Offer them a personal, tailored service at the local level in line with local needs, not in line with what the big shareholders and directors think applies universally to the whole country. Only then will you see business returning, and perhaps even a return to the days when people were loyal to their service providers. Do I see this happening? No. At least not for another 20 or 30 years, under another government, and in a completely different reality.