Banks top the trading as results prompt private investors to sell

SHARE-TRADING activity was dominated by the banks this week as private investors responded to annual results from Royal Bank of Scotland and Lloyds by selling their holdings, online trading patterns have indicated.

Royal Bank of Scotland saw its share price jump by 6 per cent on Thursday after posting a 3.6 billion loss, while Lloyds Banking Group yesterday unveiled an operating loss of 6.3bn, triggering a 1.8 per cent share price drop yesterday morning.

The majority of investors who reacted to the results announcements opted to sell their holdings, according to share dealing services.

Graham Spooner, investment adviser at the Share Centre, said 74 per cent of all Lloyds trades made by its clients on Friday morning were sells.

"On a pre-tax profit basis, the group made a profit of 1bn.

"Although the bank offers growth potential, Lloyds still remains a high risk investment and investors who have held on hoping for a recovery will have to remain patient."

At Interactive Investor, Lloyds was the second most bought share in the week ending on Thursday evening, with RBS sixth and Barclays seventh. RBS was the top sell on Interactive Investor, with Lloyds and Barclays third.

And Lloyds accounted for over half of all trades made with broker TD Waterhouse yesterday morning as investors ditched their shares on the back of the news that it recorded a 24bn loss on bad loans last year.

The fall in the bank's share price also represented a buying opportunity, however, with the bank accounting for 40 per cent of yesterday morning's top ten buys.

Trading in bank shares had intensified even prior to the RBS and Lloyds results, according to TD Waterhouse, which said they had dominated activity after the news earlier in the week that leading bank bosses were waiving their contractual bonuses.

Angus Rigby, chief executive of TD Waterhouse, said Lloyds was top, accounting for 23 per cent of all trades, followed by Barclays and RBS.

"Trades in Barclays followed closely, accounting for 21 per cent after the banks chief executive, John Varley, and president, Bob Diamond, lead the wave of the bonus forfeiting despite the bank meeting its targets for last year and reporting better than expected profits before tax last week," said Rigby.