Afternoon:
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There is something deeply incongruous about banks increasing their dividends in these troubled times.
Here we are, in the throes of what many say is the worst credit crunch for a generation, with banks in Europe and America so beset by losses and write-offs that they are scrambling to raise new capital - and, where they fail, succumbing to a rescue takeover or a government bailout.
Yet last week we had Barclays and todaywe have Royal Bank of Scotland, flashing their wallets to show how strong they are, by mixing news of massive write-offs with a hike in their dividends. But do they really mean it, or is it just bravado? In a world that is rediscovering the virtues of cash, why have these banks become so cavalier with it?
Around the country, companies are quietly abandoning their share buyback programmes - or not so quietly, in the case of Cadbury - because the boards are putting prudence before promises. They want to hold on to the money because they think something might happen where they would need it in a hurry, and they reckon if they gave it to shareholders now they would not get it back in six months.
Banks, too, need to conserve cash. Even the healthy ones are vulnerable to the slow unwinding of leverage which is now taking place around the world, when no one knows which of last year's fashions will be next to unravel. The boards, though, obviously think in a crisis it is vital to appear confident, and the overriding imperative of those who are not in deep trouble is to demonstrate that they are strong - hence dividends before cash conservation.
Unfortunately, rather like the braggart who pretends a punch has not hurt, the demonstration is not always convincing. If you are a customer, such actions may be irritating as well.
Many companies remain unaffected by the credit squeeze because they locked in their money when times were good - rather like some homeowners locked in their fixed-rate mortgages on terms they certainly could not hope to get now. But other companies, again like home owners seeking to remortgage, find they live in a different world.
In a survey featured in these pages a few weeks ago, almost half the finance directors reported that bank managers who last year were all over them like a rash, are this year failing to return their calls. Bank credit committees are looking at every proposal with a jaundiced eye. Their instincts are to cut or say no. It is hard even for companies with good credit to raise money of any size, and the weaker ones get very little comfort indeed. They are left in no doubt that they are in a credit squeeze.
So perhaps the banks should think again about the signals they are giving. Is it wise to be so generous to their shareholders and beastly to their customers at the same time? Which signal are we supposed to believe?
Superfast ways to win - or lose
There is a theory that the investment bank trading floor of the future will consist of a computer, a man and a dog. The man's job is to feed the dog. The dog's job is to bite the man if he tries to touch the computer.
But if that is ever going to be true we are certainly not there yet. Back in January, when shares and bonds decided to fall like there was no tomorrow, many of their systems decided that was the moment that they should fall over too.
All these expensively bought computers - and those houses certainly know how to spend on technology - just could not cope with the sound of battle and either decided to run slow or not to run at all.
So many strategies, so much trading these days is based on the assumption that deals will execute within milliseconds, to exploit the most minute of price differences before the competition does. When the machines failed to deliver it added quite a few millions to firms' losses on the day and served an uncomfortable reminder to the humans supposedly in charge of the boxes that their partners weren't always reliable.
A couple of months on and the winners are beginning to emerge. Today Winterflood issued one of those anorak press releases saying that it had signed a contract with a firm called Fixnetix. The deal is for Winterflood's trading desks to receive market data from the London Stock Exchange, Euronext and Xetra directly via Fixnetix, and use the link the other way for direct market access to those exchanges when they want to deal.
Competitive edge in these markets is all about speed and reliability. Fixnetix says a round trip from trading desk to exchange and back to trading desk can be achieved in 0.4 milliseconds or four thousandths of a second. But the release goes on to say that Fixnetix has got the new contract, not just because it is fast but because its systems worked properly on those fateful days - the implication being that a lot of others did not.
All we need to do now is find out who they were.
