We've seen the City's reaction to Stephen Hester's departure from RBS, and it's not pretty. If you had shares in the bank on the day it was announced you would have woken up to find them worth quite a bit less.
The investment community, for which read City institutions, is less than impressed with the way this has been handled, and no wonder. Regardless of Mr Hester's public profile, he had a strong following in the City.
So what do you do with those shares now?
The point about RBS is that much of the hard work is done. It turned a profit in the last quarter. It's making steady, if unexciting progress, and that should continue.
All the really big strategic decisions have either been taken by RBS (eg the decision to part-float its US arm, Citizens) or for RBS (eg the forced sell-off of 300-plus branches as Williams & Glyn's).
Whoever the new top man is – Standard Chartered's finance chief Richard Meddings is linked to just about every big banking job that comes up, but the bookies reckon it'll go to an internal candidate such as Nathan Bostock – it's highly likely that the bank will steer much the same course operationally as it has been doing.
That's not a terribly exciting course. Britain's economy is in poor shape, margins in retail banking are low, while the investment bank, never a top-tier player in the first place, is a shadow of its former self.
RBS will continue its steady recovery, but with all the uncertainty right now it has become a gambler's stock. Will the Government try a break-up if the Parliamentary Commission on Banking Standards recommends one? Will the new guy be able to restore confidence? Are there any more skeletons in the closet?
We just don't know. RBS will be fun for people who like to trade in and out of stocks, and especially day traders. It had recovered some of the initial losses when the stock market opened by lunchtime. Everyone else stay away. There's too much we don't know. And even at just 0.7 times the shares' net asset value, there's an argument that RBS isn't all that cheap given the risks it poses. It's not as if you're getting a dividend for your trouble, and nor will you until (possibly) 2015.
Traders might like to dip in if the shares dip beneath 300p, however.
As for those who are thinking more long term, the safety-first choice is easy: buy HSBC. It trades on nearly 11 times this year's forecast earnings, and sits at 1.4 times forecast net asset value of the businesses it owns. By any metric, it ain't cheap. But here's the thing. The bank is already offering a 4.9 per cent forecast yield (I'm using Investec's numbers here rather than the consensus). There are prospects of that getting higher. Its conservative (good) management are unlikely to splash the cash on deals, but they've got too much of it (even for a mega-bank). Which may mean good times for shareholders, who ought to see some of it flowing to them.
What's more, even if HSBC disappoints on income, costs are coming down, and so are bad loans. Bosses' pay at these institutions never fails to infuriate, but HSBC is an easy buy.
Same goes for Barclays. It's been recently talking up its corporate division (which wins because it's not Lloyds or RBS, but a winner is a winner all the same) and represents perhaps a more risky play. But come on, this is a bank which trades on just 0.8 times the net asset value of its shares. That's silly cheap. It has a secure and rising yield (the consensus is at 2.4 per cent, rising to just over 3 pr cent next year) and is on 8 times earnings.
Management is stable now, and while you'll get some bumps in the road (it's not easy for banks with interest rates being so low) you should make a good return from owning these shares. I've been a consistent buyer of both HSBC and Barclays, and that isn't changing.
As for Lloyds, the shares are high enough right now. If you're in, I'd be inclined to take some profits. They're very dependent on the UK economy. Recently earnings releases haven't thrilled, and I don't see any catalyst to take them higher any time soon.