Stockbroker Thoughts of UK Bank Break-up

In light of the decision to break up RBS (LON:RBS) and Lloyds Banking Group (LON:LLOY). The Telegraph has spoken to stockbrokers to gather their thoughts regarding whether investors should take up their rights.

Charles Stanley,s analyst Nic Clarke said “until the 24th we do not know what the rights issue is being priced at. However, we do believe that investors shouldn’t decide to take up their rights just to avoid dilution.” Nick Traynor, analyst, for The Share Centre said “the rights issue is likely to dilute existing investors’ shareholdings considerably and I think it will be a four for one offer.”

So it seems according to the stockbrokers it maybe a time to wait, at least until the 24th November when the rights issue is being priced. Jonathan Jackson, head of equities, Killik said “We believe this announcement draws a line under the HBOS deal. The willingness of the FSA to allow Lloyds to dodge the APS underscores the fact that the regulator believes the group can meet stress test conditions with external funding in place.

To read more on this story go to telegraph.co.uk.