Banks are in focus today and - HSBC excepted - not in a good way. It is of course the continuing uncertainty over the amount of exposure they have to dodgy loans that is doing the damage again.
HBOS is the leading faller in the FTSE 100, down 32.5p to 571p in the wake of a couple of downgrades. Bear Stearns has downgraded from market weight to peer perform, and while the terms may be cloudier than a straightforward buy or sell, the message is clear.
Commenting on last week's results, Bear Stearns said: "Although asset write-downs on credit market assets were consistent with previous guidance, new disclosures showed exposure to asset-backed securities (£41.9bn) and other debt securities is greater than expected. Exposures to Alt-A assets [mortgages just above the sub-prime level] of over £7bn came as a surprise. We expect further value adjustments to ABS in future periods."
Meanwhile UBS has cut its price target from 720p to 650p. It said: "HBOS's full year results were broadly in-line. However, it finds itself in the unfortunate position of
being exposed to the majority of the market's current areas of concern: commercial property and mortgages, private equity gains, a high level of wholesale funding and, post the results, concerns over the quality of treasury assets. In the short-term these are likely to continue to weigh on the group's share price."
Alliance & Leicester also suffered, down 26p to 537.5p while Barclays and Royal Bank of Scotland were both down around 4%. Bradford & Bingleyy puffed up late on Friday by takeover froth, dropped nearly 7% this morning.
But HSBC added 6p to 772p as its results were broadly well received. Collins Stewart, for example, said: " This bank continues to show capital strength, earnings diversity and surplus liquidity - it remains a safe haven, in our view."
The general mood though is one of caution, mainly due to fears the US is heading for recession. Following overnight falls in Asia, a 0.6% drop in US futures and downbeat comments from investment guru Warren Buffett on CNBC at the moment, the FTSE 100 is off exactly 100 points at 5784.3.
