RBS are doing better- but still have a long way to go

May 11th, 2009 by admin | Filed under Daily News, Recession, Saving, UK Bank Accounts, UK Banks, UK employment, savings accounts.

In the strange times in which we are forced to live in, when it is considered a major achievement to only make losses of £160 million in a quarter seems to be beyond imagination. But when it is the Royal Bank of Scotland’s (RBS) making that announcement then everything falls into place. And where does the “achievement factor” come in? It comes in when compared to the losses that the bank made in the comparable quarter of 2008. Almost £600 million, making for a recovery of £440.

To be fair to the much maligned bank, income for the period rose from £1.7 billion to £3.7, and much of the losses were attributed to writing off some £2.9billion of the toxic loans handed out by the bank when it was under a different and considerably more reckless management team.
On the results, RBS shares rose by 13.9 per cent (6 pence to 47.4) largely due to the positive performance returned by the bank’s global banking and markets division.

As the weekend closed in, Carphone Warehouse Plc finally announced that it reached an agreement with of Italian broadband firm Tiscali to acquire the company’s U.K. operations for £236 million. And to prove that patience is indeed a virtue, the price that Carphone Warehouse paid is less than half of the offer that the Italians rejected a year ago. Shrewd!

On the FTSE, stocks in the property sectors were underperforming on Friday.
British Land dropped by 9.4 percent (40 pence to 437), while Liberty International fared just as badly dropping by 8.1 percent (32 pence to 404)

Commodities are doing well as forecasts of the global economic recovery begin to gain ground. Vedanta Resources’ shares crept up by 8.4 per cent (105 pence to 1301), while Kazakhmys moved upward 7.1 per cent to (6 pence to 767) as the market appeared to be moving only forward

Equity fund raising fears caused some turbulence in the retail sector. Builders’ merchant Travis Perkins dropped by 3.8 per cent to (30 pence to 753) after rumours that the company is about to launch a rights issue of around £300million.

Retailing group Debenhams were also tarred with the same brush, and their shares dropped by 3.4 per cent (3 pence to 93) as a result.

Also on the hunt for a major cash injection from their shareholders are 3i. Their recently appointed chief executive admitted on Friday that the company’s £800million 2007 share buy-back may have been a trifle premature, and in order to renew their cash reserves they will be to organise a £700 million rights issue.

The FTSE 100 advanced a further 63.4 points on Friday to close on 4,462.1, maintaining a consistent 28 points daily increase since the beginning of 2009. Over, the week FTSE 100 gained a commendable total of 220 points.
The FTSE250 closed on 7,806.18 down 36 points.

The dollar had a bad day on international currency markets, put down to reduced interest rates from Europe and the UK, as well as slightly less encouraging results from the stress tests carried out on the leading US banks and the increase in unemployment statistics, with levels reaching 8.9 percent. 539,000 jobs were lost in April, making for the seventh worst month for job losses since the late nineteen fifties.

Pound/US dollar 1.523

Pound/Euro 1.1168

Pound/Japanese Yen 149.89

Pound/Swiss Franc 1.6823

Wall Street shares rebounded slightly on Friday’s trading, after dropping on the back of the stress tests results. The Dow Jones Average rose by 164.8 to close at 8574.65. NASDAQ rose 22.76 points to close at 1739.0

For the first time since 2001, the Berkshire Hathaway group, headed by legendary investor, Warren Buffett, posted a quarterly loss. While principal blame was attached to the group’s ill timed investment in oil company ConocoPhillips, Buffett admitted that the bulk of the group’s businesses were hurt by the recession. Berkshire Hathaway losses for the first quarter were of $1.53billion, against a profit of $940m for the same period of 2008. .

Another iconic company reporting a loss for many a long year were car maker Toyota who announced a loss of 766billion yen (£5.2billion) as well as issuing a profit warning for the financial year.

The major commodities were down over the weekend, with crude oil averaging a loss of 48cents a barrel at $57.91. 100Oz Gold was also down 30cents an ounce at $914.60 Copper dropped $0.93 to close at $212.70