8 October 2008
column
Johannesburg — IT WAS a roller-coaster ride for the banks on the JSE yesterday. The ride followed a terrible Monday on the LSE when the UK's five largest banks saw a combined £20bn wiped off their collective value - about 10% of their collective market cap.
Apparently CEs of the top four UK banks met Chancellor of the Exchequer Alistair Darling and senior treasury members on Monday night. Darling proposed the government buy preference shares if the banks ran short of capital.
Absa's 50% shareholders, Barclays, were represented at the meeting, although the bank said it had "categorically not" requested any capital from the government. Still, it's important for any bank that its shareholders should be cash flush in case it needs an injection. It's therefore of concern to South African shareholders of Absa if there is even a slight chance this might transpire.
The market seemed to reflect this yesterday, Absa's stock ending marginally up against a 3% rise for Nedbank and a bit less for FirstRand. Coincidence or investors taking a little insurance?
The Bottom Line is edited by Edward West.
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