Improving risk/reward from the consumer's side will be difficult
We believe the recapitalised UK banks have sufficient capital to weather the
downturn which we see in train for 2H08 and 2009, at least. We expect high bank
wholesale refinancing requirements and rising borrower risks (allied to increasing
unemployment and falling asset prices) will see lending remain scarce for the
foreseeable future. This is especially so given the difficulty which consumers will
have, in our view, in significantly altering their perceived riskiness, a topic we
review in this short note.