London open: Mixed reception for latest bank rescues

3rd Nov 2009 08:52

Footsie is lower as investors assess confirmation of bonus curbs, dividend cuts and asset sales from Royal Bank of Scotland and a £21bn cash call from Lloyds Banking Group.RBS will not be allowed to pay dividends for the next two years and have to divest its insurance arm and a raft of other businesses to meet European rules after agreeing to join the UK government's asset protection (APS) scheme. The government is injecting £25.5bn plus a further £8bn is available if things get worse rather than better.Lloyds Banking Group today confirmed the City's worst kept secret that it will raise £21bn through a £13.5bn rights issue and £7.5bn swap of existing debt for contingent capital. The government will take up its rights, investing £5.7bn net of an underwriting fee to keep its stake in Lloyds at 43%. It will pay a £2.5bn break fee to avoid being tied into the APS. The EC also says it won't be able to pay some dividends on hybrid capital securities.On current trading, chief executive Eric Daniels said the group is delivering in line with guidance in all key areas of the business, but still expects to report a loss before tax for 2009, excluding the impact of the £11.2bn credit relating to negative goodwill.Insurer Aviva said shares in its Dutch financial services subsidiary Delta Lloyd have been sold at €16 each. The UK-based insurance giant revealed earlier this year it would be selling 42% of Delta Lloyd via a flotation and a private placement, but has only just announced the terms, which value the whole of Delta Lloyd at €2.65bn. Proceeds from the share sale will be €1.12bn (£1.03bn). Legal & General has hit its 2009 net cash target three months early, with £461m net cash generated in the first three months of the year. Worldwide new business in the first nine months of 2008 was down 7% to £1,058m from £1,137m in the corresponding period of 2008.Aero engine manufacturer Rolls-Royce is still expecting underlying revenues to grow this year and profits to be of a similar level to 2008. In a trading statement covering the second half of the year, the company said trading activity across the group's operations remains consistent with expectations against a background of generally depressed global market conditions.Property firm Hammerson has seen a firming of UK property yields in the second half of the year as a modicum of confidence returns to markets. Demand for commercial property has increased in the UK and France since 1 July, albeit from a low base in the case of France, where transaction levels remain low in absolute terms.Stagecoach, the bus and train group recently spurned in its merger talks with beleaguered rival National Express, has seen year on year growth in UK revenues in the half year to mid-October but it remains 'below the growth rates observed in recent years,' the company said. Dunelm has forecast a much better than expected first half after strong early growth continued with like-for-like sales up by 15.1% in the 17 weeks to end October. "The group is well positioned to achieve a sales and profit outturn for the first half of the financial year comfortably ahead of our previous expectations," chief executive Will Adderley said.