Are Banks on the way to become Utilities?

This weekend's reports that some major international banks may be interested in joining the bidding for Gatwick Airport here in the UK raises an interesting question: will the regulators allow banks to put their equity capital at risk in proprietary investments that are basically unrelated to their main business?
The lesson of the past 14 months should be that banks (and their cousins, in particular the major investment banks) have strayed too far from their raison d'etre which is intermediation in the credit or securities markets.
Instead, managements have pursued a strategy of gambling their capital on ever-rising asset values in a variety of asset classes - be it in property or 'private' equity.
If the banking and securities industry is to be put on a more stable footing it will be necessary to for both sectors to behave more utilities. If banking provides the basic 'plumbing' for a market economy the similarity between the banking and utility sector should be obvious.
26-Oct-08