The fat lady ain’t singing yet

Posted by Janice McGinn in on Wed, 25/11/2009 - 08:16

Lloyds' £13.5bn fundraiser is the UK's biggest ever rights issue but it won't be the last.

That finale has yet to be sung.

The fascination with this drama lies not in the size of the issue - although it's massive, even for the banks - but because it's discounted by around 40%. It's a picture perfect example of banks raising finance through alternative means to the banks.

2009 has seen many rights issues flowing through the markets with big names such as Xstrata at £4.1b and HSBC at a headline-grabbing £12.5b, but many smaller companies are using the same mechanism to raise finance.

This is the second time Lloyds has tried to dodge the unsalubrious asset protection scheme and it would go a long way - a 40% discount is a long way – to avoid the scheme. HM Government is the biggest stakeholder in Lloyds and it has no desire to oppose the move this time around, even if the Walker Report advocates greater governmental meddling.

News that China's banks – currently bankers to the world - will need to raise capital saw Chinese shares experience their biggest fall in three months. As we’ve highlighted before, only concerted international action has any chance of tackling the issues that caused the ongoing crisis.

What we did hear loud and clear this week was the election agenda of the major political parties and the and their respective takes on recession and means to recovery.

Sustainability is critical to all parties and almost unseemly competition to cut costs. Part of that agenda will be a wholesale move to shared services, certainly in the public sector, but according to PA's Papinda Bhandal, Finance Transformation Consulting, it is increasingly relevant in the private sector.

If there's any doubt that fat lady ain't singin' yet, we have news of the additional, until now undisclosed £62bn in taxpayers' money ploughed into RBoS and HBOS. As one commentator noted, that's around twice the defence budget.

The economic data isn't good and soberingly, Dominique Strauss-Kahn, head of the International Monetary Fund, warned  that the global economy is still in a "highly fragile" state following the financial crisis, and could face further turmoil in the months and possibly years ahead.

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Posted by pasbans on Sat, 11/02/2012 - 07:03

The Bottom Line:If Mr Cable has his way...

"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more

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