Online Stock Trading - UK Banks Have 
No Clothes
UK banks were hammered again yesterday as it became known that RBS had found expensive new toilets down which to flush our money. In fact, as hammerings go, it is the biggest hammering I have ever seen in the twenty-odd years I have been interested in online stock trading (although it was more like telephone stock trading twenty years ago).
(..... The Emperor Has no Clothes!)
RBS 10 Year Chart with 200 and 400 Moving Averages
Barclays 10 Year Chart with 200 and 400 Moving Averages
LLOY 10 Year Chart with 200 and 400 Moving Averages
It seems like RBS and LLOY may be headed for nationalisation, even though they say they won't be.
It seems "Let Them Eat Waste" Gordon Brown is a bit miffed, he thought he had "saved the world" (his own words) - it turns out his bail-out package Version 1 was full of bank bugs and now needs a patch. Just what did he expect from bankers? That they would actually tell the truth or do something competent? Or did he just hope that things could only get better (remember that jaunty slogan? - it was the "change we can believe in" of its day.) Dear oh dear.
So who would want to own shares in a bank that may be nationalised, personally I think I'll pass on that opportunity tyvm.
Barclays, despite saying they will report profits of over £5 billion, and despite declining all offers of state help and intervention is now at 88p, that's a 16 year low (so much for long-term investing).
Talking about RBS and Barclays, a fund manager told The Times: “These are two broadly similar institutions. Yet one (Barclays) is telling us that annual profits are going to be better than we all expected at £5.3 billion (the bank is currently worth £7.5 billion), while the other (RBS) is saying that it lost £8 billion last year.”
Neil Dwane, CIO for Europe at RCM, part of Allianz, said : “The market is telling you that it does not believe a single word that Barclays management says. I would want to find out why their management credibility is a negative number. As a board, they are beginning to face a serious issue in that they have lost credibility with everybody.”
Barclays lost all credibility with me about 15 years ago when I had a business account with them, but that's another story.
According to Mr Dwane the difference in profits between Barclays and RBS is down to accounting practices. "RBS uses mark-to- market accounting, Barclays heads off potential writedowns by valuing its assets based on their worth at maturity."
Well, I'm not an accountant so I'll have to take his word on it for that one, but I do know a bit of German and one word that springs to mind is 'Schadenfreude' - there must be lots of people up and down the country, despite the fact that the demise of the 'blue chip' banks is a disaster for the economy, who are secretly happy that the truth is finally out about banks. We've known all along that they were smug useless bankers, we just haven't been able to prove it.
So what will today bring? Well we won't have long to wait to find out. The Nikkei is down 3% at the moment. HSBC is down 8% and there is talk that they may need to sell shares to raise cash.
He who must be listened to says on his blog : "The fear of investors is that with taxpayers providing so much support to the banks, any spoils would go to the state in the form of fees, and to UK households and companies in the form of lending mandated by the Treasury at uncommercial interest rates.
As for shareholders they would receive the slimmest possible returns for years to come."
So not much incentive for anyone to buy their shares, except for a quick gamble that they might shoot up for an hour or two.
But, surely banks can't keep falling for ever? Well we could have said that back in November/December when they seemed to be rallying. Just how low can they go? I've got no idea and I would bet that a lot of people are exactly the same as me, just like those guys on Million Dollar Traders, if in doubt stay out.
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