Banking Sector Explained

As you will realise, the banking sector is that on the stock market that contains the major players on the banking market.

In the FTSE the members change from time to time, but essentially you are looking at the biggest of the banks and building society groups, though with Northern Rock going through such well publicised difficulties in Britain of late, then this could well be about to change!

The main banks you will see in this sector are:
Alliance and Leicester, Barclays, Bradford and Bingley, HBOS, HSBC, Lloyds TSB, Northern Rock, RBS and Standard Chartered Bank.

This is a very popular sector that attracts heavy investment, and banking stocks tend to be seen as traditionally quite safe as banks always make money, though actually there can be surprising volatility in the short term in banking stocks, with things like bad debt hits or provisions and general market outlook often adding to the gloom of the banking stocks.

However many banking stocks also have a surprisingly high yield in terms of dividend payouts, particularly traditionally those like Lloyds that have given out decent dividend payments, so this is also something to consider when investing in these stocks which over a longer period of time tend to always ride things out and perform quite well.

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