PERHAPS the best that can be said for the Royal Bank of Scotland's decision not to issue a statement on its debt situation last week was that four of its directors bought shares in the company.
Among them was chairman Sir Tom McKillop, who helped himself to 118,000 shares on Thursday as the bank resisted pressure to clarify its position. In a way, McKillop and his colleagues silently answered the baying market mob in a show of unity which a
lso hinted that maybe the shares are now a bit of a bargain.
Similarly at Barclays, Frits Seegers, the bank's head of global retail and commercial banking, bought 127,000 shares in his own company, belying any worries that it was on a one-way route to oblivion.
However, their actions could not arrest the steep declines of the past week and more volatility can be expected. A clamour for information is building on all the banks to disclose what exposure they may have to the liquidity squeeze, and a stubborn silence will merely give way to louder voices who suspect that something is not right.
Barclays, beset with rumours that its senior executives were briefing investors with different messages, issued a denial that it was about to unveil a large write-down and even the departure of chief executive John Varley, and while the bank ended the week with a smaller fall than three other UK banks, it was not enough to stop the rot.
What worries the markets is that both Barclays and RBS have been big players in the leveraged loan market and there is no escaping investors' fears that one of the UK banks will follow the Americans - Citigroup and Merrill Lynch - who have been hit for billions and seen their chief executives lose their jobs.
Barclays is expected to put its cards on the table in a regular trading statement due on November 27 with some observers wondering if the markets are prepared to wait that long. If the news is bad it will be difficult for RBS to withstand the onslaught until its own statement on December 6.
These are tense times for banks, investors and depositors alike and the air of confidence at RBS headquarters, following its triumph in the battle for ABN Amro, must have been shaken along with the market sentiment.
While insiders talk of the need for discipline and the avoidance of knee-jerk responses to short-term circumstances, there is also a case for transparency and the boards of Barclays and RBS will not be looking forward to another week of stock market pressure to disclose their positions.
Clydesdale in the good books
CONTRAST what is happening among the big banks to the announcement last week from Clydesdale and Yorkshire, which do not have the direct exposure to the sub-prime markets, though they do suffer from the knock-on effects of the turmoil.
Last week's annual results statement revealed that recent market turbulence has increased the cost of wholesale funding at the banks, 35% of this extra cost in the past two months.
But Clydesdale and Yorkshire, also have the protection of a parent company, National Australia Bank, which is also largely immune to the housing-inspired crisis.
Of particular satisfaction to the UK banks is that they are now out of their recovery phase and set on a firm growth path. As we forecast here last week, the cost-to-income ratio has once again come down, now at 58.4%, and while high by industry standards, it is heading in the right direction.
Achieving these savings and driving up income has meant much pain and considerable hard work, but has led to a simplified product range reduced from 400-plus to 120 and a network of business centres that appear to have over-achieved even internal targets.
There will be more work ahead to get those costs and efficiencies down further to even match those of NAB itself. It is no secret that this was a cut-or-bust strategy that appears to have paid off and NAB now seems content with its UK operations. Whether that means they'll remain part of the Aussie family, or whether they're now more attractive assets for a buyer, is unclear. But at least they look like being here to stay.
Standard Life outgunned
STANDARD Life's cash and shares proposal for Resolution Life always looked underweight and with the shares falling on Friday to around the level of last year's flotation it is well short of Pearl's all-cash bid. If Standard Life is considering a revised offer, why did it issue a detailed document last weekend outlining the case for its existing proposal? This has not been its finest hour.
The full article contains 798 words and appears in Scotland On Sunday newspaper.
