Newspaper article The Evening Standard (London, England)

Banks in the Spotlight after RBS's Cash Raiser

Newspaper article The Evening Standard (London, England)

Banks in the Spotlight after RBS's Cash Raiser

Article excerpt

Byline: HUGO DUNCAN

ALL eyes were on the banking sector today after Royal Bank of Scotlandtook its begging bowl to the City and asked investors for a staggering [pounds sterling]12billion.

The headline number was at the top end of expectations and traders were leftdisappointed by some of the details, including more than [pounds sterling]8 billion ofwritedowns and a cut in the dividend.

RBS shares tumbled 91 . 2p up to 363p, a fall of nearly 3%, and were followeddown by rivals on speculation that other banks will announce rights issues oftheir own.

Barclays and HBOS are among the favourites, and their shares fell 121 . 2p and21p respectively to 466p and 519p. The HBOS slide of nearly 4% made it thebiggest blue-chip faller.

It weighed on the wider market, with the FTSE 100 index sliding 11.5 to 6041.5p.

Citigroup gave Rentokil Initial some gentle encouragement after the royalratcatcher yesterday warned its City Link parcels business was likely to makesignificant losses this year rather than break even as had been hoped.

Analyst Marc Van'T Sant downgraded his profits forecasts for the year andhalved the dividend forecast but argued that new chief executive Alan Brownpresented " a credible turnaround plan". Raising Rentokil's price target to120p from 110p, Van'T Sant added that the core business is performing well and" does well in a downturn, thanks to top- line resilience". The shares eased112 p to 96p.

Credit Suisse lowered its price target on Northern Foods to 85p from 100p butraised its pre-tax profits forecast for the year by [pounds sterling]1 million to [pounds sterling]50.2million.

It is concerned about the soaring cost of food Northern buys in, some of whichcan be passed on to the consumer but not all. "A retailer backlash remains apossibility," said the broker in a note.

The shares fell a penny to 88p.

Dairy Crest was given similar treatment, with Credit Suisse warning of "yetmore pressures on raw milk costs". …

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