Doubts over banks as UK slips down rankings

BRITISH banks are being left behind by more profitable foreign rivals amid "serious doubts" the sector will ever fully recover from the credit crunch, a new report has warned.

Lloyds and Royal Bank of Scotland both slipped down the Top 1,000 World Banks ranking published by the Banker magazine yesterday, as Asian competitors put the UK under pressure.

But topping the table was likely to be scant consolation to Bank of America (BoA), as it came on the day the US institution took a $20 billion-plus (12.2bn) hit to settle claims relating to mortgage-related financial deals that went sour when the housing market collapsed.

Yesterday's report revealed profits in the global banking industry have bounced back to near pre-crisis levels but those at UK-listed institutions are still 58 per cent below their 2007 peak.

The British banking industry was then the second most profitable in the world after America, but now it has been overtaken by China, France and Japan.

Brian Caplen, editor of the Banker, said: "The British banking sector was the envy of the world in the boom years. It now faces a Herculean task to regain the position of strength it had four years ago. The poor state