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Howard Davies said banks - which were forced in March to ditch
dividends and buybacks until the end of 2020 to bolster their
finances against an expected steep economic downturn - could not
suspend payouts indefinitely.
"It's probably fair to say the banking sector is not investible
because when people try to do the models about what banks are
worth they can't plug in any numbers for cash out," Davies told
a City & Financial webinar on Friday.
The Bank of England was not immediately available for comment.
British lenders have lent more than 40 billion pounds ($50
billion) of state-backed funds to struggling businesses during
the crisis, but are bracing for an expected wave of defaults in
the coming months.
"We can see clouds gathering on the horizon, but it hasn't yet
started to pour down with rain, but I think we know that it's
going to, and that's going to be a very difficult period for
us," Davies said.
Anne Boden, CEO of digital bank Starling, meanwhile, said banks
would need government support in handling unpaid state-backed
business loans in the coming months.
RBS's stock has fallen by around half this year, wiping 15
billion pounds from its market value, while rival Lloyds <LLOY.L>
shares are also down around 50%. The FTSE 100 as a whole is down
18% in the year to date.
RBS was rescued by the British government in 2008 and, despite
plans to sell off the stake, it still owns 62% of the bank.
(Reporting by Iain Withers and additional reporting by Huw
Jones; editing by Simon Jessop and Mark Potter)
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