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Market report - Evening Update: A further £160 million was wiped off Royal Bank of Scotland's market value today, the shares slumping to yet another record low as institutional investors continued to dump them.
More than 50 million shares changed hands as the price fell 3.3p to 41.4p. That compares with the 65.5p at which the bank's £20 billion Government-sponsored fundraising has been priced.
Scotland's biggest bank is now worth just £1.6 billion, having seen its share price collapse from 410p since the start of the year following huge write-offs relating to the credit crunch and its overpriced acquisition of Dutch bank ABN Amro.
The other two banks held in the Government's lifeboat also came under fresh selling pressure, with Lloyds TSB dropping 19.2p to a record low of 129.8p on turnover of more than 17 million shares and HBOS losing 13p at 61.5p.
Both their fund-raisers remain under water, with their shares trading at a deep discount. Lloyds' issue has been priced at 173.3p and that of HBOS at 113.6p. It is unlikely institutional investors will take up the shares, which means they will all be left with the Government.
Barclays fell 13.1p to 144p, HSBC 33¾p to 675p and Standard Chartered 29½p to 692½p. Confidence in the banking sector took a further knock from reports that Bank of America's $50 billion (£33 billion) acquisition of Merrill Lynch has run into trouble. Word is BoA will have to take a big hit because cost savings from the deal have melted away. BoA had originally expected savings of up to $35 billion, a figure now seen as unachievable.
The cost of living may be getting less, but that is scant comfort for City investors who have already lost a large part of their wealth and may soon lose their jobs.
Shares drifted, leaving the FTSE 100 index 18.79 lower at 4113.37. An opening rally on Wall Street was pared back after US Treasury Secretary Hank Paulson gave evidence to Congress on his bank bailout proposals. The Dow's lead was cut to 17.84 at 8291.42.
The speculators were chasing debt-laden Taylor Wimpey yesterday on talk of a private-equity bidder emerging. But the price was down 0.05p at 9.84p today, the shares showing signs of running out of steam as investors faced up to the problems still besetting the housebuilders.
Barratt Developments, 6p better at 70½p despite Dresdner Kleinwort repeating its sell rating, says deteriorating conditions in the housing market mean it will have to write down its land bank further, along with work in progress during December.
Housing's woes are also reflected at plumbing supplies group Wolseley, which plans to cut another 2300 jobs because of a 45% drop in first-quarter profits. The shares rose 17¾p to 289p. Wolseley is braced for a further deterioration in trading conditions. Only last month, it announced plans to shed 3000 jobs in the US.
There was a brief backwardation in shares of oil-services group Wellstream Holdings when the bid was higher than the offer price, such was the pace of the fall following a cautious trading update. The price fell so quickly that sellers could not keep up.
Wellstream showed a loss of 140¼p at 363¼p after warning of potential project delays. Arden Partners continues to rate the shares a buy, and says product-backed companies such as Wellstream provide investors with good earnings streams in challenging markets.
JPMorgan has begun coverage of Sibir Energy, ½p lighter at 151¼p, at neutral with a 315p target. The broker says the group should be able to generate cashflow of $225 million next year, assuming an oil price of $75 a barrel. But the group's sensitivity to the oil price and corporate governance issues could pressure the stock, which is why JPM gives it a neutral rating.
