ANYONE KNOW WHY THE ROYAL BANK OF SCOTLAND IS SHOWING A SHARE PRICE AROUND THE 6.59 MARK WHEN IT WAS 18.00 OR SO THE OTHER WEEK OR AM I GOING STRANGE?????????????

Borrowing to Lend.

It was mentioned over the weekend that many banks, building societies have started reducing their mortgage lending rates.
As already stated here, these financial institutions are in the business of lending money. As obvious as it sounds, to gain sufficient cash to lend out, they need to encourage those with money to invest with them. Due to lack of investment cash, investment/interest rates have been steadily climbing as they all vie with each other for our savings. As the amounts lent out have dropped drastically, partly due to more prudence on these institutions lending criteria, but mainly due to the lending interest rates being higher than any time in the last decade and the increased costs of just about everything, meaning the chances to save greatly diminishing.
Over the last 6 months every time I have read that lending interest rates would not reduce until well into 2009, I have failed to see why not.
It's supply and demand. If something is too expensive (loans/mortgages) to buy, the prices are reduced in order to encourage custom.
If these financial institutions want to continue in business, they NEED to lend money out just as much as they need to get money in. How else are they going to pay investors the high interest amount they continue to tempt us with.
The situation is different from the last 2 financial crashes when interest rates continually climbed for many months, with inflation well into double (official) figures. If my memory serves me right, banks/building societies were not fighting for your cash as they are now, and most of the money problems were home grown not so much world lead as they are now.
Not being an expert I have tried to fathom out the view of the so called financial experts.
Perhaps the view that I have is too simplistic, and no doubt others with a better/deeper understanding will argue to above points of view, which are obviously all IMHO.

theres no money market.....its as simple as that!

hbos is mainly uk and its suffering too like other banks which are more world-wide.......globally banks rsame problem whether its swiss, german or usa

Exactly, as you say there is no market, but that is why the banks etc need to try to make one. In the crisis of the 80s with inflation in double figures and unemployment far higher than now less people were looking for loans. Also the general loan mentality was different as people were more wary of debt.
There appeared to be a higher fear of debt factor, than there is now. Now days people are more likely to look at debt as a way out of money problems. If you look at the average person debt in 2008 it is far higher, after taking inflationary facts into consideration than it was in the 1980,s. People have an ever increasing belief of spend now pay back whenever.
The huge percentage of GDP government debt is not assisting in a message of prudence either, so whilst I agree the market is not there, the financial institutions are fighting for a slice if the savings cake more than they ever have.
At the moment some are offering saving bonds of 6 months duration, something which I have never seen before, not to none corporate clients anyway.
Once their savings books build they can't just sit on it, they have to lend it out.
Not saying it won't take time to get back to pre credit crunch levels (if ever) but the monetary circle will always go round.

If there is no money market why haven't the money brokers gone out of business?

Hi Halifax,

When I said "There is no market", I meant and should have said "There is hardly any market".

there is massive personal debt now and governments are up to neck in debt too.

plus house price crash which is worst since depression in 30s

banks have to shore up balance sheet and thats going to take time, probably a couple of years.....

Afternoon all.

From my simple view of how the Banks operate, they have been packaging up 'liabilities' and selling them on to others as 'assets' and they have been caught out. But even worse than that, they have supposedly had 'security' of the property at one end and they have had 'insurance' of the Freddie and Fanny variety at the other end. And they still are 'bleating'.

OK, take the hit and move on, but please don't ask Joe Public for 'more cash' to do the same. Sounds like a bunch of wide boys to me.

For what it's worth, not all banks are struggling, just those that have no money of their own. :-)

Anyway, I found this little gem, which to me shows RBOS is on the right track.


'Royal Bank of Scotland and Riyad Bank confirmed for Ras Tanura'

'Royal Bank of Scotland (RBS) and Saudi Arabias Riyad Bank have been confirmed by Saudi Aramco as the financial advisers on the $26bn Ras Tanura refinery and integrated petrochemical project.'

Now thats real Asset building.

Theres plenty of dosh about if you ask me , this was released earlier.

LONDON (Reuters) - German ball bearings manufacturer Schaeffler Group has secured a multibillion syndicated loan backing its hostile 11.5 billion euro ($18.27 billion) bid for German car parts giant Continental AG banking sources said on Monday.

The banks leading the fully underwritten loan are mandated lead arrangers Commerzbank, Dresdner, HVB, LBBW, Royal Bank of Scotland, which is acting as co-ordinator, and UBS, bankers close to the deal said.

rooms gone a bit quiet - no one got any opinions ahead of tomorrows results??

Guessing, but would expect their sub prime (etc) provisions to be greater than Barclays announced today.

only 10:35 50 million shares trade 27/23 in favour of buys - so does that tell uds that the results are maybe gonna be better than the doom and gloom forecast in the press? someone is buying???

Don't know. Got rid of all my rights in this rally and also traded the shares.

Can't help feeling the bank rally has ended and miners will be back in vogue but who knows.

Could be a good trading day IF the B of E don't change rates

well its now 12:04 no change to interest rates - no mad selling 71 million shares traded - 37/34million in favour of buys.... looks like another heavy volume day.
even my resistence levels on charts have been smashed of late - looks like we could get a nice rally?? then again tomorrow might change things?

Big loss reported but about half of what a consensus of 6 analyst average predictions were. I expect recovery to start from here, but it will be a slow job. Not that bothered as long as it is a steady recovery with no more surprises.

Loss not as bad as had been expected 691m against 1.2bn predicted, RBS opened slightly down after the results released, a good long opportunity if I was that way inclined. But I'm not!

It is amazing how Bp announces record profits and then hits a 12 month low whilst the banks release huge losses and go up, though mis-pricing gives good trading opportunities!

Yes there is not much sense in the markets at the moment, although BP dipped to a low mainly due to their prospects over the next 12 months (The Russia problem) whereas RBS are looking hopefully for a climb from here on in.

Do anylysts just think of a number when giving forecasts? yet again they are way of the mark with todays numbers.... no wonder there are so many trading oportunities in so many shares - just buy contrary to the anylasts predictions???
makes you wonder why shares are talked up/down and heavily traded to big dealers advantage;

Ah Analysts.

I regularly follow analyst tables just to see which way the market wind is blowing, more than for individual companies and I have notices that of late you often see the same company being recommended by different so called experts as a Buy/Sell/Hold, (1 of them will be right).
OK I'm sure they know more than I do and are better in their projections than I but it goes to show especially in the resent market climate than sticking a pin in a chart, crystal ball or tea leaf readings are just about as scientifically accurate.
As many of you know a few years ago (I think it was in the USA) they used several monkeys to chose shares at random.

Not to be outdone by monkeys, the smart people at Standard & Poors also track an equally-weighted version of the S&P500. Heres the rub. The equally-weighted S&P500 returned 12.00% annually over the last 10 years (ending February 1, 2006) but the regular S&P500 returned only 8.99% annually. So, the monkeys equally-weighted S&P500 outperformed the regular S&P500 by a whopping 3.01 percentage points annually.

Why did the monkeys do so well? By buying equal amounts of each stock they were effectively putting more money into small value stocks than the regular index. In recent years, and over the very long term, small value stocks have tended to outperform their larger more growth-oriented brethren.

So, with tongue firmly planted in cheek, if you own regular index funds, do you really want to be beaten by a bunch of monkeys? Perhaps its time to tell your regular index funds that youve opted for monkey management instead?

Now I wonder what would happen if Monkeys ran the country.
I thought they already did, I hear many of you reply.

personally prefer to do my own charting for stock picks - its relatively easy to draw a line between peaks and troughs and to decide where the price range will be for support and resistance ( even a monkey could do it )- surprisingly enough often days after i have looked at some particular stock an anylist comes out with a recommendation and price target - pretty much where I expected it to be ... how come they paid so much money for such a basically simple calculated guese.....