Trust, confidence in Asian banks continue to rise in Q3, but Europe, US banks suffer declines

THE market's trust in the top global financial institutions remained positive in the third quarter of 2014 as confidence in Asian banks continue to grow.

Thomson Reuters' TRust Index, which provides the metrics for tracking the state of trust and confidence in the Top 50 Global Financial Institutions, said confidence in the world's largest financial institutions remained unchanged from Q2, with a score of 0.5 per cent in the third quarter.

Regionally, 13 institutions in Asia posted a considerable rise in trust sentiment - from one per cent in the prior quarter to 6 per cent in Q3.

In contrast, 19 American institutions posted a trust score of 4 per cent, down slightly from 5 per cent in Q2. Over in Europe/UK, 18 financial institutions recorded a further decline, from -5 per cent to -8 per cent in Q2.

David Craig, the president of Financial & Risk in Thomson Reuters, said: "Our TRust Index recorded positive sentiment across the financial industry as a whole for the second consecutive quarter.

"The results were led by a steep rise for Asian financial institutions, due to positive economic news, including cross-border investment in China and supported by positive US sentiment resulting from stronger earnings reported by US banks. This deeply contrasted with European institutions, which continued to fall due to negative news primarily relating to benchmark probes.

"Given the disparity between analysts' optimistic expectations and investors' pessimistic outlooks for the sector, we will see how these conflicting messages impact the index next quarter."

Based on its analysis, while earnings recovery headlines have accounted for some of the increased confidence in news sentiment in the sector throughout 2014, Q3 data was most strongly driven by negative headlines in Europe and the UK. Among them Lloyds Cuts 500 Jobs; Dark Pool Probe Puts Pressure on Barclays and ongoing news coverage stemming from FX and Libor investigations.

The TRust sentiment scoring ranges between -100 per cent and 100 per cent, with neutral sentiment at zero; it is derived from the daily average trust sentiment score for the Top 50 Global Financial Institutions to produce the 120-day moving average reported.