British bank stocks are again on the rack. Royal Bank of Scotland (RBS) is trading at 58 pence despite the fact that it is going to get quite a wodge from the British taxpayer. Halifax Bank of Scotland (HBOS) reached 90 pence, which is also receiving largesse from the taxpayer. These judgements by the stock market do not show any confidence for the future. This future seems to be one of hard grind sorting out the mess of toxic debt, derivatives and funding issues.
When Abbey National hit the buffers, it was helped by a benign environment to resolve its treasury book and it took several years and a sale to a stronger bank Banco Santander. The HBOS takeover could sink Lloyds TSB. If the combined bank does well I think at a later date the Competition authorities could order a reduction in its UK share of mortgages and savings.
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