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 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 2 UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
- 5 This crazy skiing video will leave you feeling queasy
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...