Feverish bid speculation gives banks a boost

Feverish bid speculation gives banks a boost, says Euan Stuart - at Moneyweek.co.uk - the best of the week's international media.

Generally speaking, the UK's high-street banks are terrible places to put your money thanks to the pathetic rates of interest they pay on most accounts. But the same cannot be said of holding their shares. Indeed, in recent months Britain's big banks have made their shareholders very happy - Lloyds TSB is up 40% since last July and Barclays 32%. This is partly down to good fundamental performances from the firms - Barclays recently announced that profits rose 20% to a record £4.6bn in 2004, for example - but share prices have been given an extra spark by the emergence of speculation about takeover activity. This is always around in the sector, but right now it is particularly feverish.

Thank Matt Barrett for that, says Andrew Cave in The Daily Telegraph. The chairman of Barclays Bank has been very publicly sounding a warning about the fact that UK and European banks are at risk of being "swallowed up by the huge banking groups that are emerging in America" unless they protect themselves with major pan-European mergers. Once the Americans have finished bulking up at home, he says, the natural next move is to acquire other banks globally to create a"tri-polar focus on Asia, Europe, and North and South America". Barrett isn't alone in giving these warnings, says Jason Nisse in The Independent on Sunday. A few weeks ago, Josef Ackerman of Germany's Deutche Bank used the threat of the Americans coming to justify cutting more than 6,000 jobs.

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