Nomura upgrades Lloyds Banking Group (LLOY.LN) to buy from reduce, and lifts target price to 100p from 58p. “As substantially all the highest-risk assets are believed to be included in the asset-protection-scheme, we believe Lloyds’ tangible book value per share has among the least downside
risk of major banks, after the first loss piece is exhausted,” it says. Adds
that with signs that economies and asset values are stabilising, markets are
beginning to discount recovery and a turn in the credit cycle. “While we still
see risks around credit quality, the read-across from US and European banks
indicates some positives,” it says. Shares +3.1% at 80p.
Latvia and the IMF seem to have come to agreement on lending terms to unlock EUR200M from the Fund, notes RBS. Fails still, however,
to understand Latvia’s logic defending its pegged LVL “at all cost,” instead of
taking “a much easier route” and devaluing to a competitive level. Says doing
so will require restructuring some private sector liabilities, but notes that
these liabilities are owed to foreign, mostly Swedish owned banks, which can
“surely look after themselves.” Adds with “much better credit fundamentals than Latvia,” there wouldn’t necessarily be a domino effect on pegged currencies in Estonian and Lithuania if Latvia devalues.
Bunds remain in negative territory Monday, but are showing little immediate reaction to the latest euro zone money supply data which show the M3 measure growing by 3.5% in the year to June, in line with market expectations. The September bund futures contract is currently down 0.17
on the day at 120.16, unchanged from prior to the numbers. The 10-year bund is down 0.26 at 100.00, yielding 3.50%, unchanged from prior to the money supply data.