The Investment Column: Banking on US deals
Friday 10 April 1998
Following the announcement earlier this week of a pounds 100bn mega-merger between Travelers and Citicorp, the US financial services giants, UK banking shares soared. But, as the week has gone on, the pace of trading has slowed, and with good reason. There is no logical argument why UK banks should be at all affected by the deal.
Take the retail banks. There are certainly growing commercial pressures for the industry to consolidate. But that has more to do with the influx of competition from the likes of supermarkets and hungry competitors such as Virgin than the Travelers-Citicorp deal.
What about the UK's rapidly dwindling number of merchant banks? The argument here is that a bank has to be a global player to survive. Even if this is true, it is hardly relevant to the UK.
Most UK merchant banks - Close Brothers, Singer & Friedlander and the like - are specialised outfits. They were never competing with the big boys even prior to Monday's news. And how about UK groups which have both retail and investment banking arms? Barclays and NatWest are unlikely to reverse their recent decisions to scale back on investment banking, and HSBC - which owns Midland - is not known for its hasty decision-making. HSBC could be mulling an acquisition, but it is difficult to believe this banking giant has been pressurised by the Travelers-Citicorp link-up.
Monday's share price rises look like a knee-jerk reaction in an already pricey sector. Although there may be some mileage to be had in selective buying of banking stocks, the sector as a whole is beginning to look overheated. And recent evidence that UK fund managers' brief flirtation with the sector could be coming to a close seems to suggest the peak could come sooner rather than later. Buyers beware.
- 1 Michael Brown shooting: Amnesty International sends team within US for first time as National Guard deployed
- 2 James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – and warns Obama of more to come
- 3 Reading Festival 2014: Tesco branch replaces salad and potatoes for Jagermesiter and vodka
- 4 Here’s the damning letter Robin Williams wrote to his Mrs Doubtfire co-star's principal after they expelled her
- 5 Ferguson protests: 90-year-old Holocaust survivor Hedy Epstein ‘arrested’ by police during St Louis demonstrations
Michael Brown shooting: Amnesty International sends team within US for first time as National Guard deployed
Michael Brown shooting: Ferguson police shoot and kill second young black man
James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – and warns Obama of more to come
Iraq crisis: Islamic State's message to America - 'We will drown you all in blood'
Ferguson: In the heartlands of America, a descent into madness
Isis threat: Cameron wants an alliance with Iran
Crisis? What crisis? A visiting US doctor gives the NHS a rave review
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Ukip MEP calls for reintroduction of death penalty on fiftieth anniversary of last deaths
Russell Brand calls for Israel boycott: Comedian urges big businesses that 'facilitate the oppression of people in Gaza' to pull funding
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
iJobs Money & Business
£475 - £550 per day + competitive: Orgtel: Senior Technical Accountant-Insuran...
£200 - £290 per annum + competitive: Orgtel: Sales Performance Manager, Key Ba...
£25000 - £30000 per annum + bonus+benefits+package: Harrington Starr: Junior D...
£600 - £800 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, ...