British banking stocks gained today after a key report shied away from recommending a full-blown split of their retail and investment arms.
The Independent Commission on Banking (ICB), which is working on measures aimed at protecting taxpayers against the need for future bailouts, instead proposed that big financial institutions should ring-fence their retail arms and bolster capital ratios in those operations.
Barclays and Royal Bank of Scotland were among the biggest winners following the release of the interim report, but despite their positive influence, the FTSE 100 Index closed 2.3 points down at 6053.4, after being marginally ahead for most of the day.
The pound was slightly stronger on foreign exchange markets as traders speculated that tomorrow’s official inflation figures will reveal more price pressures in the UK, making a rates hike more likely. Sterling was at 1.64 against the dollar and 1.13 against the single currency.
Barclays was the the blue chip index’s biggest winner after it added 8.2p to 305.35p and Royal Bank of Scotland rose 1p to 44.4p, as it emerged that banks could continue to transfer capital between divisions as long as their retail banks met the 10% capital requirement.
Even Lloyds Banking Group, which is facing the prospect of having to divest more than the 600 branches originally proposed by the European Commission, rose by 0.2p to 62.4p.
Its chief executive, Antonio Horta-Osorio, said the extension to the sale programme was not in the best interests of customers and may even result in a delay in a new competitor coming into the UK market.
Mining giant BHP Billiton rose 46p to 2631.5p after Credit Suisse upped its rating on the stock and the company itself downplayed reports it is preparing a multi-billion dollar bid for Australia’s Woodside Petroleum.
Other top flight risers included GKN after the car parts supplier reported a 14% rise in first quarter sales and said trading profits were up 42% on the same period a year earlier.
While GKN cautioned over the impact of Japan’s earthquake and tsunami on the car manufacturing sector, shares rose 2.2p to 204.6p, a gain of 1% after Evo Securities said GKN had made a “blistering” start to the new year.
Another earthquake in Japan brought fashion firm Burberry’s shares down 24p to 1159p as investors feared that one of its key markets would be further weakened.
Outside the top flight, Pinewood Shepperton’s shares were 5% or 8.5p higher at 194p after the film studios firm said on Friday night that it had received a 190p a share takeover approach from Peel Holdings, which has investments including the MediaCityUK development at Salford Quays.
The biggest Footsie risers were Barclays up 8.2p at 305.35p, Royal Bank of Scotland ahead 1p at 44.43p, Resolution up 6.5p at 311.7p, and Cairn Energy ahead 9.1p at 454.2p.
The biggest Footsie losers were 3i Group down 7.8p to 267.3p, Burberry Group off 24p at 1159p, WPP down 14.5p to 746.5p, and IMI off 17p at 1027p.