UK banks: Only halfway through the healing process?

Over the last three months, UK bank shares have enjoyed a strong rally, helped by the ECB's and US Federal Reserve's liquidity moves.

Inevitably, this has led to some speculation that the UK banks may have turned a corner – the Lehman collapse was after all more than four years ago, and billions have been spent globally in an attempt to return the banks to better health. While sentiment has undoubtedly improved, the actual healing process for banks still has some way to run – indeed, we would regard it as being only halfway complete. In the UK, Bank of England (BoE) governor Mervyn King has talked about how the banking solvency crisis will not be resolved with cheap central bank funding. King was talking about Europ...