Updates from Lloyds, RBS and British Land
A +1.15% boost for the FTSE 100 yesterday with the index rising to 5,870. Biggest gainer was Kazakhmys, up almost +6% while Wood Group saw the largest dip, down -4.29%.
Most markets were also up - debt hopes doing their bit - with the French Cac 40 rising +1.53%. Overnight, the Nikkei continued to climb, up +0.48% to 9,446 while the Hang Seng rose +0.60%.
We start with a warning from the Bank of England that several British banks, including Lloyds, may need to take on as much as £15bn in extra provision in order to cope with more fines and European debt.
Some restructuring could be involved. However Bank of England Governor Sir Mervyn King, in his Financial Stability Report (FSR), claims no more taxpayer cash should be directed at the banks. Bank risk levels also need to be recalculated.
Overall the FSR report has not rocked bank shares to the extent some had anticipated, with a raft of players seeing modest risers. Write-offs by the banks also continue to slip; new data from the Bank of England claims write-offs declined to £3.5bn in the last quarter compared with £4bn in the previous quarter.
However, RBS could be made to sell more assets following the FSR report. Although RBS is in the throes of off-loading more than 300 branches - a deal with Santander has collapsed - it may need to examine other assets in order to raise more capital.
Nationwide is in the running to snap up some of the RBS branches, which would also help it accelerate its move into SME business lending as well as diversify its income base. However a number of private equity players could also be interested at the RBS assets.
RBS recently confirmed that it was ejecting from the interest-only mortgage market (along with the Nationwide and the Co-operative Bank).
Finally, British Land claims that that Aramco Overseas Company UK Ltd has agreed to let 24,392 sq ft of office space at its new West End development at 10 Portman Square. The company has agreed to lease the fifth and part fourth floors at a headline rent of £92.00 per square foot.
The announcement comes a week after it was confirmed that investment manager Aspect Capital Limited has also taken 24,520 sq ft of office space on the top two floors of the building. British Land claims the offices at 10 Portman Square are now 43% pre-let with the development on schedule to be completed in April 2013.