Whisper it, but the big banks are finally getting their houses in order

By and large it was a good week for the big banks — underpinned by encouraging news from the wider economy, in which every little uptick brings a few more zombie borrowers back to the land of the living.

Lloyds returned to profit, promised to start paying decent dividends again and declared itself oven-ready for return to the private sector, with the market anticipating an immediate sale to institutions of a first tranche of the taxpayers’ 39 per cent stake. HSBC reported varied performance around the world but still clocked up a fat result for the half-year — and asked the Vatican to close its account as part of a sweep against money laundering.

RBS’s Treasury masters took note of James Forsyth’s recent essay on the ‘colonial’ takeover of British public life and picked a sensible Kiwi, Ross McEwan, to succeed Stephen Hester as chief executive — and on a smaller pay packet. RBS also moved back into the black but reprivatisation is still a way off, and I sense the pressure from George Osborne on that front has receded; Hester has dealt with the most toxic problems, and McEwan can now get on with the re-engineering of the core retail business where his own expertise lies.

And then there’s Barclays, whose clean-hands chief executive, Antony Jenkins, has made a good impression with ministers as far as changing the bank’s culture is concerned but has lost an argument as to how much equity it needs to meet the 3 per cent ‘leverage ratio’ imposed by the Prudential Regulation Authority, and how soon. The result is a £5.8 billion rights issue, causing yet more pain to loyal shareholders, plus further shrinkage of riskier parts of the balance sheet. But that’s all to the good in the long run, and the fact that (despite a dip at Barclays due to mis-selling provisions) the big four banks made first-half profits of some £16 billion between them, compared with a £10 billion mixed bag last year, is at the very least a reassuring note on which we can all depart for our holidays.