UK Banks Fall on Dubai Fallout

Mayank Mehta
26 Nov, 2009
New York City

Banks in London trading fell sharply on the worries that the recent debt rollover in Dubai may generate losses for UK banks. Barclays, Royal Bank of Scotland and HSBC dropped more than 4%. Daily Mail and General Trust slips to an annual loss in fiscal 2009.

[R]4:00 PM London, 11:00 AM New York – Banks in London trading fell sharply on the worries that the recent debt rollover in Dubai may generate losses for UK banks. Barclays, Royal Bank of Scotland and HSBC dropped more than 4%. Daily Mail and General Trust slips to an annual loss in fiscal 2009.[/R]

Stocks in London traded lower after banks declined and commodities prices edged lower.

In London FTSE 100 Index closed lower 145.69 or 2.7% to 5,219.12 and the pound edged lower to close at $1.650 and edged lower to close at €1.098.

Banks led the decliners after Dubai proposed a debt roll over as it faces a liquidity crunch. The news unnerved investors and HSBC, Credit Suisse, Lloyds Banking Group and Barclays fell on the worries that banks may have to take additional losses.

HSBC Plc declined 4.8% to 705.6 pence, Royal Bank of Scotland decreased 7.8% to 32.99 pence and Barclays dropped 8% to 291 pence.

Dubai World the parent of Nakheel Limited has $59 billion of liabilities and $10 billion of its debt maturing before the end of the first quarter of 2010. Dubai World recently completed $1.93 billion of Islamic bond offering and sought emergency assistance from the central bank in Abu Dhabi of $5 billion and may need additional $5 billion in the next three months.

Gainers & Losers

Assura Group Limited decreased 3.1% to 31.00 pence after the healthcare firm said first-half revenues rose 20% to £26.8 million from £22.3 million a year ago. Net profit for the first-half was £3.82 million compared to net loss of £39.8 million a year ago.

Clinton Cards PLC fell 0.5% to 46.75 after a Halloween enabled cards and gifts retailer said like-for-like sales for the 16 weeks to November 22 increased by 3.9% reflecting a solid performance across all product categories and with Halloween performing exceptionally well.

Daily Mail and General Trust PLC declined 2.1% to 428.30 pence after the newspaper publisher said full-year revenues fell 8% to £2.12 billion from £2.31 billion a year ago. Net loss for the full-year was £305.4 million or 79.8 pence per diluted share compared to net profit of £16.8 million or 0.1 pence per share a year ago.

DSG International Plc rose 2.2% to 37.39 pence an electrical and computing retailer said first-half revenues fell 2.6% to £3.33 billion from £3.42 billion a year ago. Net loss for the first-half was £17.8 million or 0.5 pence per diluted share compared to net loss of £40.3 million or 1.9 pence per share a year ago.

Falkland Oil and Gas Limited plunged 14.8% to 115.00 pence.

Future plc fell 1.2% to 20.00 pence after the special-interest media group said full-year revenues fell 6% to £153.1 million from £162.9 million a year ago. Net profit for the full-year fell 59% to £2.8 million or 0.8 pence per diluted share compared to net profit of £6.8 million or 2.1 pence per share a year ago.

Hampson Industries PLC dropped 7.3% to 72.25 pence an international aerospace and specialist engineering group said first-half revenues fell 12% to £97.0 million from £110.5 million a year ago. Net profit for the first-half rose 8% to £9.4 million or 5.83 pence per diluted share compared to net profit of £8.7 million or 6.42 pence per share a year ago.

Helical Bar plc fell 0.9% to 332.30 pence after the property developer and investor said first-half revenues fell 58.7% to £22.8 million from £55.2 million a year ago. Net loss for the first-half was £8 million or 7.5 pence per diluted share compared to net profit of £8.4 million or 8.8 pence per share a year ago.

Heritage Oil Limited fell 2.3% to 436.50 pence said that it has commenced drilling the Miran West-2 appraisal well in the Kurdistan Region of Iraq.

Jarvis plc plunged 11.2% to 13.75 pence after the rail network services company said first-half revenues fell 43.5% to £114.7 million from £203.1 million a year ago. Net loss for the first-half was £5.8 million or 2.7 pence per diluted share compared to net profit of £2.9 million or 1.4 pence per share a year ago.

Mitchells & Butlers plc fell 1.5% to 253.00 pence an operator of managed pubs and pub restaurants said full-year revenues rose 2.6% to £1.96 billion from £1.91 billion a year ago. Net profit for the full-year was £4 million or 1.0 pence per diluted share compared to net loss of £176 million or 43.7 pence per share a year ago.

National Express Group PLC closed unchanged at 338.00 pence and John Brodribb stepped down from his post as Chairman of the East Suffolk Community Rail Partnership.

PZ Cussons plc fell 1.1% to 257.00 pence after the soap maker said that Richard Harvey is to be appointed as a Non-executive Director of the Company and as Chairman-elect.

Severn Trent Plc gained 3.8% to 1,044 pence after UK water regulatory authority said the monthly water bills for home customers will decline less than previously estimated. Other water utilities operators gained on the news. Northumbrian Water Group Plc increased 2.8% to 263.1 pence.

WorkPlace Systems International plc the business software supplier rose 0.4% to 7.31 pence.