News

The Footsie has fought its way back above 4,000 as the market gives the thumbs-up to the week-end developments in the banking industry.

About the only shareholders not pleased are those with shares in HBOS and Royal Bank of Scotland, both of which lose ground.

HBOS shares are sharply lower after the terms of the agreed bid from Lloyds TSB were revised. Lloyds TSB had originally offered 0.833 of its shares for each HBOS share, but is now only prepared to offer 0.605 of its shares for each share in the Halifax-owner. The revised terms, which have been agreed to by the HBOS board, value HBOS at around 114p a share, or just over £6bn, based on current prices; when originally announced, the deal valued HBOS at more than £12bn.

Royal Bank of Scotland is lower after the group asked the government for £20bn to bail it out of its financial hole. RBS is to offer £15bn worth of new shares at 65.5p to be underwritten by HM Treasury. In addition, the government will subscribe for £5bn of Preference Shares. As widely forecast, controversial chief executive officer Sir Fred "the Shred" Goodwin stepped down, to be replaced as CEO by Stephen Hester, currently Chief Executive of British Land.

Lloyds TSB is up after it revised terms for its merger with HBOS. It will also raise £5.5bn of new capital, with HBOS raising a further £11.5bn.

Barclays has unveiled plans to raise £6.5bn from shareholders and other investors without the need of government help, with a further £3.5bn to come from a dividend cut and other sources.

Despite all the attention focused on the banks this morning it is travel company TUI Travel that tops the list of blue-chip risers on speculation that German parent company TUI AG will lifts its 51% stake in the company. TUI AG said it would focus exclusively on its travel interests after selling off a stake in its shipping unit Hapag-Lloyd.

Elsewhere, Hovis bread and Branston pickle group Premier Foods has confirmed speculation in the press that it is looking at ways of speeding up the reduction of group debt.

Outsource giant Capita Group has paid £13.6m, net of cash acquired, for IP based business networking solutions firm ABS Network Solutions. "The acquisition will add valuable new expertise and capacity to Capita IT Services' existing networks business," said the UK blue chip.

Defence and security firm QinetiQ is to acquire tender assessment and management software group Commerce Decisions for a total of £9.85m. The acquisitions of the Oxford-based company will strengthen Qinetiq's consultancy business, QinetiQ said.

Unexpected costs related to investment in its businesses caused a fall in pre-tax profits at YouGov and prompted the pollster and market research firm to implement cost control measures.

Shares in Clinton Cards are sharply lower after the card retailer plunged into a full year loss as a result of an impairment charge of £30m related to its Birthdays business.