Before condemning banks for making large profits, people should consider the various benefits that successful banks provide. These include:
– job creation and retention. Banks employ many thousands of employees, and the salaries paid help to support many thousands more.
– creation of profit (and employment) opportunities for other companies. Where you have a successful bank, there will be hundreds of suppliers getting paid for providing services to the bank. Many of these suppliers will be based in the local community – e.g. catering companies.
– contribution towards your pension. If you subscribe to a pension scheme, the chances are that banks contribute towards a large chunk of your pension pot. Any attempt to restrict bank profits may result in less money in your pocket when you retire.
– investment opportunities for private investors. Many shareholders are delighted to include banks amongst their portfolios and share handsomely in the banks’ profitability. Not only do they often pay good dividends, but there are also opportunities for substantial capital growth.
– tax contributions. Banks (like all large successful companies) pay large amounts of corporation taxes, which help fund the government’s spending plans.
There are also other benefits that banks provide that are perhaps less obvious, such as large contributions to charitable organisations, and sponsorship of major sporting events and sports stars. Royal Bank of Scotland, for example, supports the young Scottish tennis player Andy Murray.
It’s also worth noting that a significant proportion of many banks profits now comes from non Retail banking activities. Banks have diversified and now own airlines, train companies, etc, so not all their profit comes from the products that they offer to ordinary retail customers.
It is true that some bank accounts and charges will continue to come in for scrutiny and criticism, but people shouldn’t overlook the genuine benefits that banks provide. It should also be remembered that people have a choice when they open a bank account. For customers who take the time to do research and shop around, there are some excellent interest rates on offer.