Lloyds Banking Group has responded to the announcement of the government's bail out of Royal Bank of Scotland, saying it is in talks about participating in the asset protection scheme, but no terms have yet been agreed.
It added that "there can be no certainty that Lloyds' participation would be on the same terms as those announced by RBS." It hopes to provide an update tomorrow with its results. This came a slight surprise, since traders had believed that the terms for both banks would have been agreed at the same time, albeit announced to coincide with their respective results announcements.
As for the terms, City minister Lord Myners has said this moring that the RBS deal would not be an "industry standard" for all banks. This could mean Lloyds gets worse terms, but it could also mean of course they are better.
Relief that a deal has been done - or nearly done - at all has boosted both banks. RBS is now 6.4p higher at 29.5p while Lloyds is up 15.1p at 72.5p. The rest of the sector is also in demand, with Barclays 11.3p better at 116.9p and HSBC 31p higher at 523.5p.
With insurers also higher following better than expected results from RSA Insurance, up 11.4p to 137.4p, the FTSE 100 is now 42.94 points higher at 3891.92. But Joshua Raymond, market strategist at City Index, warned:
"Traders are also looking towards US durable goods orders this afternoon and this may dictate whether this morning's gains are sustainable."
The omens from the futures market are favourable at the moment, with the Dow Jones Industrial Average forecast to open 92 points higher.
Not everything is heading higher. Outsourcing specialist Capita has fallen 29p to 644.5p on profit taking after full year profits rose 16%. Robert Morton at Investec said:
"[Capita's] final figures were excellent with strong organic growth achieved and cash generation outstanding. Visibility is high, with the bid pipeline remaining strong. Whilst this is a very impressive trading performance, the rating is high and we believe that this is already reflected in the current share price. We are therefore not changing our hold recommendation, but would look for buying opportunities on any weakness."
And sell recommendations from Goldman Sachs have left AstraZeneca down 66p at £23.34 and GlaxoSmithKline off 29p at £10.65.
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