UK banking analyst attacks Lloyds bank and Royal Bank of Scotland
Jonathan Pierce of Credit Suisse has attacked the recent rise in the share prices of Lloyds bank and Royal Bank of Scotland which between them are now worth around £60 billion, not far from their 2007 high. When you consider the current trading environment as well as the debt situation, maybe the analyst does have a point and potentially the shares have maybe moved ahead too quickly?
When you also throw into the mix the fact that the UK government will at some stage be a forced seller of its stakes in Lloyds bank and Royal Bank of Scotland, probably sooner rather than later, there is particular uncertainty surrounding these two banks. As we touched on in one of our earlier posts, the refinancing of Johnston Press does not appear to have attracted a great amount of interest in the banking industry and it was interesting to see that Royal Bank of Scotland and Lloyds bank were able to offer the best deal. When you consider this deal was struck at nearly 10% on a £400 million plus debt refinancing it would appear that the UK money markets are still very tight.
Is this really a situation which warrants the current rally in the sector and Royal Bank of Scotland and Lloyds bank shares in particular?
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