McLean: Scale of banking sector problems underestimated

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Analysts are underestimating the extent of the problems facing the banking sector, in a scenario reminiscent of the collapse of Lehmans, said Colin McLean, managing director of SVM.

McLean said analysts' profit forecasts and price targets for the banks are unrealistic, as they are failing to understand the underlying problems banks face. "Some analysts are not taking into account the regulatory pressures and the determination of the government to make sure banks are not too big too fail. "Although the banks have unwound part of the balance sheets, they are still large with a lot of derivatives. A lot of the positions are not mark to market so we do not know what their real value is exactly." McLean said there is the potential for substantial further impairment...

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