THE return to health of the UK’s state-aided banks, Lloyds Banking Group and Royal Bank of Scotland, will be tested this week, alongside results from BP and BT.
Third-quarter figures from RBS – the first from new chief executive Ross McEwan – on Friday will be overshadowed by a UK government-commissioned report into whether the bank’s “bad” assets should be hived off.
The study by investment bank Rothschild has advised Chancellor George Osborne on the merits and pitfalls of separating operations such as Ulster Bank and £40 billion of non-core loans in order to accelerate the privatisation of the remaining good parts.
Any such move could also result in the accelerated sale of its American retail bank Citizens, valued at some £8bn.
Taxpayer-backed Lloyds and rival Barclays will both update the City on their third-quarter performance amid a period of upheaval for both businesses.
Tomorrow’s update for Lloyds will be the first since the Treasury began the process of returning its stake in the bank to the private sector, selling a 6 per cent chunk for £3.2bn to institutional investors last month. Official figures showed profit on the sale provided a £500 million boost to the public accounts.
Lloyds, which owns Bank of Scotland and Scottish Widows, may set aside more cash to compensate customers who were mis-sold payment protection insurance (PPI).
Barclays reports to the market on Wednesday.
BT unveils second-quarter results on Thursday amid concerns that it has overestimated the size of the market for its TV sports channels as it vies with BSkyB over English Premier League football coverage. Analysts at UBS have downgraded shares in the telecoms giant, judging that it may struggle to make good on its major investment in the project.
Oil giant BP posts third-quarter figures tomorrow after a legal victory to limit compensation for the 2010 Gulf of Mexico oil spill.
A US federal appeals court said the terms of a compensation agreement struck with BP last year should be reviewed to help stem bogus or inflated claims for damage by businesses from the disaster, when an explosion on its Deepwater Horizon oil platform killed 11 men and sparked the worst oil spill in US history.