UK: Bank Shares Volatile

There were mixed fortunes for London's financial stocks Monday after it emerged the government will take sizeable stakes in Royal Bank of Scotland and merger partners Lloyds TSB and HBOS.

HBOS was the biggest faller, down 26 per cent or 32.7p to 91.5p, after Lloyds TSB revised the terms of its takeover and the mortgage giant reported a deterioration in trading conditions.

Lloyds was also lower after a drop of 4 per cent, down 8.8p to 180.6p after earlier rising 11 per cent.

Royal Bank of Scotland shares were volatile as traders digested the possibility that around 60 per cent of the company could soon be in government hands, resulting in a major dilution of existing interests.

Dividend payments have also been ruled out for the foreseeable future.

RBS shares fluctuated between positive and negative territories but are currently 16 per cent lower or 11.2p at 62.2p.

Barclays, which plans to boost its capital position through its own means, was 5 per cent higher, showing a gain of 11p to 218.5p.

HSBC rose 67p to 857p as it is not part of today's bail-out announcement.

An excellent summary of how the bailout will work is on the Guardian's website here