Banksters update 2; Divide of the banks

A very interesting statement out of Lloyds Bank today. A lot of people in the City and Private Investors have run up the share price on the hopes of good news to come from Lloyds, in a similar vein to Barclays.

However, today's statement by Eric Daniels pours a lot of cold water on this. The losses from HBOS seem expected to be large enough to need the Government asset scheme after all. Plus Insurance business is down 22% (Aviva up 11% yesterday) and retail banking is more or less flat.

That leaves the Bank with only a good angle on cost-cutting post the merger, which it does seem to have got an early grip on. This will deliver savings for years to come. This also won't bring back any dividends to shareholders.

On the same day, Barclays has announced at 15% rise in business in the first quarter. Barclays almost looks like it is away again now, like HSBC.

RBS is due to report tomorrow, on the basis of the moment, the Government owned banks look like the laggards. A small short position for me on RBS today at some point.

Barclays in Tax Schemes Shock ! Furore !

Well, they all get there in the end. Back in October we gave the reason why Barclays was so keen to avoid taking the HMG shilling:

"there’s [a] price to pay for the Darling Dole: banks must forswear promoting and funding ‘tax schemes’. Long the bane of the HMRC, banks have had whole divisions beavering away, on behalf of themselves and numerous clients, corporate and private alike, at wheezes to deprive the government of tax revenues. And none more so than Barclays, whose clever (and entirely legal) tax schemes, particularly on the VAT front, are a significant business line. Some of their wheezes – that trick of avoiding VAT on new computer systems, eh, lads ? – have sent the HMRC into apoplexy."

Finally, Vince Cable – keep up at the back there, boy – has received material from a ‘whistle-blower’ (strange terminology because it’s most probable that nothing illegal or technically improper has happened) detailing some of Barclays’ cunning plans, and almost everyone else has piled in.

Barclays has some champions in odd places – well, John Varley does anyway, here in the Grauniad, which is also rather coy (is this the best they can do ?) about what the HMG shilling may entail:

“Allowing the government to take a stake in the bank is likely to come with conditions attached. These could include forcing it to … comply with restrictions on its activities” (our emphasis)

But the FT’s excellent Alphaville blog pulls no punches, seemingly because they are miffed at Barclay’s PR efforts to thwart their reportage (and perhaps they didn't get as good a lunch as the Grauniad chaps). They give us

“a little story about Barclays, a bank that in our view could now unravel at frightening speed …all the time it has to continue spinning the line that its balance sheet is somehow less toxic than its rivals … State-interference must be avoided at all costs since that would cost Barclays its lucrative tax avoidance business and also cost Messrs Varley and Diamond their jobs”

What, honest John Varley ? Barclays unravelling at frightening speed ?
Say it ain't so !

ND

UPDATE: it's all getting a bit heavy.
But where is Pesto ? Usually so quick off the mark, with so many banking stories, over so many many months ! What are we to infer ?

UPDATE 2: Alarm over, Pesto has posted ! (but he wants to hug the bankers - and no mention of the big B ...)

UPDATE 3: whisper it softly but they do say that the Grauniad's scoop is still available somewhere on the interweb

Bail-out indigestion: the good, the bad and the ugly?

Lloyd's asset insurance scheme participation was announced on Saturday; but the share performance today has been poor, with the price dropping 10% or so in early trading.

RBS, whose shares jumped on the back of their participation to over 30p, have dropped back to 18p. Quite a fall in the space of a week or so!

If Lloyd's was the good bank in Brown's eyes for saving HBOS, then RBS was the ugly, in that it just accumulated huge debts under the now despised Fred Goodwin. (HBOS too could be seen as ugly were it too still exist...)

However, now it is the turn of the bad, Barclay's. As we have reported before, Barclay's makes much of its money out of selling tax avoiding schemes. Barclay's more recently is guilty of gilding its results with some interesting number crunching post its Lehman takeover.

When the treasury mandarins have had their sleep, it will be Barclay's turn to negotiate with the Government. RBS had a share price bounce, but fell back, LLoyd's share price fell 50% odd. The omens do not look good for the Varley and Diamond show.

All clear sounded, Barclays up 73%?

Well, my post on BARC yesterday proved to be right. Today was a day the markets decided that perhaps Barc and its muckers are not quite as screwed as we thought. Interesting to note that Barc's write-down loss was actually as much as RBS, sans ABN-Amro.

Even Lloyds perked up. As the US is steady tonight in terms of close I would not be surprised to see the rally continue a bit tomorrow before profit taking on Wednesday or later in the week.

So the question in the media will be, is this it? Did 'we' just win the high-noon shoot-out?

Sadly, I think not. There is another delay until the next leg of the crisis in a few weeks. I note Gold and Silver have spiked to over $900 and $12 respectively and are staying there. In the US another bank went down on Friday - there is a long-way to go yet. The UK Government's insurance plan is not a bad one, albeit very late in the day. However, if banks balance sheets deteriorate again there are no bullets left. Nationalisation will make us vulnerable as Iceland has been.

A good battle, but the war is not going well overall.

Weekly Outlook : Lots to Barc about

Another week, another crisis?

I hope not. However, I will be interested to see what happens to Barclay's this week. After last weeks share crash - down 66% in a week, there is a limit to how much more the shares can fall.

Normal city trading would suggest a strong rebound is due, but if it really is institutional investors selling out then the day-trading community will have its work cut out trying to find enough cash to engineer the re-bound.

In all of this in normal times you would fully expect the CEO and Chairman to resign, perhaps the finance director too. At least the new boys could then take over and tell the truth with some credibility. We do not live in normal times though. The City is credulous of Barclay's exec's after they tried so hard to win ABN Amro - had they achieved victory they would now all out of jobs like their ex-colleagues at RBS.

The week will be determined by Barc on Monday and Tuesday - if there is stability and a recovery then the next phase of the crisis may be postponed for a few weeks. Certainly RBS is trying to hog the headlines to get some positive press about itself....