A distinct smell of burnt flesh in the banking sector in London on Monday morning: Alliance & Leicester +6 per cent, Bradford & Bingley +6.2 per cent, RBS +6 per cent, HBOS +4.2 per cent…
Some of the gains could be attributed to one generalised feel-a-bit-better factor – the apparent rescue of monoline insurer Ambac.
But the real fire under A&L and B&B came from Eric Daniels, chief executive of Lloyds TSB, making broad hints of acquisitions after Friday’s year-end figures.
Has the turbulence knocked some of the blush off the rose, has it made some [valuations] more reasonable? Absolutely.
As for RBS, the fuel has been supplied by the Sunday Telegraph, where Mark Kleinman brought these predictions along with news that the Qatar Investment Authority is considering buying a stake:
Anyone expecting this week’s presentation to contain details of a dividend cut or rights issue will be seriously disappointed. As this newspaper revealed last month, Goodwin and his boardroom colleagues are relaxed about RBS’s financial health and, barring a stomach-churning deterioration in the credit markets, they see no need to seek recourse to drastic measures that would undoubtedly have posed serious questions about the judgement of Britain’s second-biggest bank.
Goodwin has another trick up his sleeve, however. He’ll tell us that the expected savings from RBS’s acquisition of the Dutch bank ABN Amro will be far greater than previously thought.
It follows a similarly bullish call from the Sunday press a week earlier, when the Sunday Times John Waples confidently predicted that both Barclays and Lloyds TSB would hike their dividends – which they duly delivered a few days later.