In a new report into the accountability of business, The Share Centre analysed expert views on risk governance within the major banks.
The results show that 43 per cent of the professionals surveyed felt that the banks’ processes were not sufficient to prevent another crisis.
Poor risk management, the eurozone crisis, complex products, significant interlinking of financial institutions and an unreformed banking culture are all listed within the report as potential causes for another collapse.
"With a mixed outlook within the investment industry and continuing uncertainty around the banking sector, the investment opportunity for the personal investor remains a difficult choice," said Oldham, managing director at The Share Centre.
"For those investors with a very long-term time horizon, there may well be the potential for investment rewards; however in the short- to medium-term we firmly believe the sector is vulnerable."
The threat of widespread debt contagion from the stricken eurozone economies has been calmed by the ECB’s introduction of the long-term refinancing option (LTRO). UK banking stocks have rallied in recent months as a result of this policy, with RBS, Lloyds and Barclays all up at least 29 per cent year-to-date.
Performance of banks in 2012
Source: FE Analytics
However, Oldham thinks that there is still a long way to go before UK investors can allay fears of a complete financial meltdown.
"Deleveraging and contagion from the European sovereign debt crisis continue to reverberate around the sector," he explained. "In particular, UK banks retain a high exposure to French banks which are themselves exposed heavily to the weaker southern eurozone countries. So for many investors what was once the bastion of income-seekers now appears as a mere blip on their radar when seeking income opportunities."
The comments echo the views of FE Alpha Manager John Wood, who argues that the process of deleveraging in the UK has hardly even begun.
Despite these warnings, a number of high-profile UK equity managers are happy to be exposed to UK banks. The most notable of these are Fidelity’s Sanjeev Shah and at Jupiter, FE Alpha Manager Ian McVeigh.
McVeigh’s £741m Jupiter UK Growth fund lists Barclays, Lloyds and Royal Bank of Scotland in its top-10 holdings. This high exposure to UK retail banks is one of the main reasons why he struggled so badly in 2011. That said, Jupiter UK Growth has already regained the losses is sustained last year.
Performance of funds since 1 January 2011
Source: FE Analytics
The Share Centre’s report found that half of the respondents felt there was still more to learn about the causes of the financial crisis.
It also hints at the worrying level of mistrust surrounding financial institutions. More than a third of the respondents think it is highly likely that some of the causes of the 2008 crisis are being covered up due to potential repercussions.