RBS & Barclays: A case of Can’t Lend, Won’t Lend!

Whereas my esteemed predecessor as Editor of Spreadbet Magazine has had a penchant for mining stocks and calling the floor in that particular asset class after a near two-year rout (or not as the case may be!), one of my many obsessions is the banking sector and the services to the community it provides (or not also as the case may be!). I would love to provide a long list of exactly what all these good works are and will get back to you hopefully well before my State Pension starts rolling in…

Today, my friends in the sector have been in the news for a couple of reasons, both of them somewhat negative. The first is that RBS (RBS) has apparently failed to lend £20 billion to small businesses, even though it has been urged to on many occasions, and even though if all of the £20 billion was lost within a week there would likely be no repercussions as the part nationalised organisation is clearly a charitable institution run solely for the benefit of its management.

Of course RBS might retort that as most small businesses fail in the first year, apparently as many as 90%, lending to them would be like throwing good money after bad. But of course after five years of taxpayer’s money propping them up, this issue is hardly likely to be taboo. In the meantime, I have changed my view regarding the banking bailouts of five years ago. They should have been broken up then, just as they should be broken up now.

Onto the charting picture, with all the near-term moving averages of the RBS daily chart now falling, it would not be too surprising if there was a return towards one year support from last summer around the 200p level, perhaps as soon as the end of this summer, especially if the renewed turmoil related to Portugal/Austerity Fatigue starts to filter across the English Channel.

Of course, fellow bank Barclays (BARC) had the good grace not to tap the Great British taxpayer and instead go to your friendly Middle Eastern wealth fund as its saviour in the wake of the financial crisis. However, it would appear that since the departure of Bob Diamond last year, the company has lost some of its (devilish) mojo. This state of affairs will not have been helped with the latest announcement by the US credit rating agency S&P of a downgrade of European banks and of which Barclays is one. Although I’m not one for conspiracy theories, these downgrades can be very enjoyable in terms of entertainment. On this basis I would ask whether anyone believes that the result of S&P’s move may have been based on information acquired through the type of surveillance which has been highlighted as practised by the US authorities in the recent past?!

But whatever the real trigger for the S&P movies, the massive 2013 double top of the Barclays daily chart does mean that bulls of the stock will have some work to do in order to reverse the recent sell off and prevent a retracement of the great H2 2012 rally which saw the share price double going into the beginning of this year.