Bank stocks seem to be continuing their decline.

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.
www.searchifa.co.uk

Are the UK banks going to need more state help?

Barclays is one of the banks, which has turned down the offer of help from the UK government. The British bank has raised money from Gulf investors for example. Independence means that it can exploit international ambitions. This compares with the Royal Bank of Scotland, which looks likely to dispose of quite a few foreign assets.
Barclays has attracted brickbats for ignoring pre-emption rights but has argued that conventional rights issues did not work well with HBOS and Bradford and Bingley. These latter banks were hit by the long delay between announcing the capital raising operation and actually getting the money. The new shares were also issued at a discount, which hit the existing stock price.
Let's hope Barclays is not hit by toxic debt or by increasing loan losses.
www.searchifa.co.uk

Are we going to get any Spanish lolly?

Are we going to get any Spanish lolly from the Banco Santander paper bid for UK mortgage bank Alliance and Leicester? Santander might end up bigger in the UK than in its home market of Spain. OK, that might be unlikely but the car manufacturer Volkswagen
has a presence in Brazil similar to the size of its operations in Germany.

www.searchifa.co.uk

With the share bids for Abbey National and Alliance and Leicester, Briitsh shareholders are accepting a major player in the UK banking market. Does it matter
if a foreigner holds a certain percentage of this market? Would the authorities be
so welcoming if some foreign group took over HBOS (Halifax Bank of Scotland)? Or perhaps the British authorities will give
Sr Emilio Botin, Santander chief, a knighthood for rescuing two mortgage banks?

HBOS affiliate Clerical Medical stops trail commission.

MoneyMarketing reports that Clerical Medical has stopped trail commission to quite a few independent financial advisers (IFAs). The British financial company, which is part of banking group Halifax Bank of Scotland (HBOS), justifies its move by saying that many customers no longer deal with their IFA.

www.searchifa.co.uk


MoneyMarketing cites a Clerical Medical spokesperson, who says customers have been telling them they no longer have an IFA and the move is to keep in line with the requirements of the Financial Services Authority (FSA).

I think Clerical Medical has shot itself in the foot over trying to grab a small amount of money. This might mean it is under financial presure. Who knows? The
Halifax share price looks pretty miserable at the moment.

Will banking problems hit wider UK economy?

Will banking problems hit the wider UK economy? The mortgage market has shrunk following the travails of Northern Rock. With the number of loan products being reduced and with hefty deposits required, the British housing market is going
to be travelling at a reduced speed. Some homeowners will be trapped and will be
unable to move despite the job offer, downsizing, divorce, death of a partner
etc.
www.searchifa.co.uk
The Bank of England has cut interest rates but these have been used by the banks to reinforce their profitability. It has been heartening that some banks such as
Royal Bank of Scotland, HBOS and the Bradford & Bingley are reinforcing their balance sheets with rights issues. (The missus has 250 shares in Bradford & Bingley).
HSBC looks big enough and ugly enough to get by so we just have to wait for
Barclays' decision on whether to go ahead with a capital increase.

Profitable and strong banks are vital for an economy even though they can come across as robbing institutions. The British banks have been guilty of pushing cheap credit and it is becoming a shock to the UK consumer for the reverse to happen.
Maybe we are looking at just a further six months of pain.

Mortgage fraud case opens in Glasgow.

A mortgage fraud case has opened in Glasgow and the amount could reach as much as £3.2m. Institutions believed to be affected inlcude HBOS, which operates the Halifax and Bank of Scotland brands, and Lloyds TSB. A total of nine people have been arrested.
www.searchifa.co.uk
A recent BBC report put UK mortgage fraud at around £700m and the attraction was that it was a low risk activity. One surprising issue is how some solicitors and accountants are prepared to risk their professional status by indulging in mortgage fraud.

Later note: the problems of Bradford & Bingley apparently have included fraud amounting to £15m.