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Does Lloyds Banking Group chairman Sir Win Bischoff know something the rest of us do not?
That was the question in the Square Mile today, after the man brought in to replace Sir Victor Blank made a first-time purchase of 250,000 shares in his own bank at 89.69p each. This parcel of shares will allow Sir Win to participate in Lloyds's forthcoming £13 billion rights issue, the deadline for which is on Friday.
The curious thing is that Sir Win and his fellow Lloyds directors are not expected to reveal the terms and pricing of the rights until Tuesday of next week, although they have indicated it will not be less than 15p a share. Lloyds shares were changing hands today 0.1p firmer at 90.5p.
The bank needs to raise £21 billion to avoid joining the Government's asset protection scheme which would have raised the taxpayer's stake in Lloyds from 43% to 60%.
The rest of the banks traded mixed. Barclays retreated 7p to 316¾p despite the Japanese broker Nomura raising its rating on the shares to buy and its target to 420p. It says Barclays will continue to manage its capital base and does not expect it to turn to shareholders for further cash calls. State-owned Royal Bank of Scotland marked time at 37.5p after ING cut its target from 46p to 40p.
Meanwhile, share prices on both sides of the Pond have been trading at their best levels in more than a year, so stock market investors could be forgiven for thinking the worst of the global recession and banking meltdown is over.
Not so, warns one of Wall Street's most-respected analysts who predicts that the US economy will experience a “double-dip” recession and that the big banks will eventually have to turn to shareholders to raise more cash.
In an interview with the business channel CNBC, Meredith Whitney confessed: “I have not been this bearish in a year.” She went on to repeat that the banks will be forced to raise capital again and criticised Federal Reserve chairman Ben Bernanke for not being open enough about the US economy in a rare address he gave to the Economic Club of New York.
The independent banking analyst said Bernanke should have given more detail on how he plans to exit programmes, even though they are almost finished. She still does not feel that the big banks are well capitalised and claims there is another leg to go in the commercial property slump.
Whitney also mocked most banks for assuming that house prices will not fall further and for their forecasts that unemployment would not reach 10% of the workforce until next year, when it had already done so.
Everything points to the fact that the “US will experience a double-dip recession,” she said.
Her remarks may have spooked some City investors, but today's fall in share prices could have been more accurately attributed to profit-taking after four consecutive days of gains. The FTSE 100 index, which yesterday burst back through the 5300 level, was left nursing a modest fall of 32.42 at 5350.25. Selling pressure was described as light.
Mining shares and the price of gold came under the hammer as the profit takers moved in after yesterday's gains. Platinum producer Lonmin fell 51p to 1688p on further reflection of yesterday's results. There were also losses for Xstrata, down 16p at 1077p,
Kazakhmys 11p at 1290p, and Rio Tinto 56½p at 3249p.
There was a flurry of speculative buying in Dana Petroleum, lifting the shares 16p to 1283p as a heavier than usual 900,000 shares changed hands. Word is BP, down 4p at 584¼p, wants to bid up to 1800p a share. That would value Dana at £1.6 billion. Neither company wanted to comment.
Aurelian Oil & Gas put on 14p at 1282p after announcing the results of a further evaluation of its Voitienl-1 well in Romania. The company calculates there is between 50 billion and 100 billion cubic feet of gas in the well, making it Aurelian's largest discovery to date in Romania.
Supermarket chain Wm Morrison advanced 4¾p to 297p with Société Générale repeating its buy rating and jacking-up its price target from 311p to 338p ahead of results on Thursday.
Enterprise Inns fell 11¾p to 121¾p despite announcing that the number of its pub tenants now receiving assistance had dropped from 800 to 600.
