European stocks rise on BP dividend and Spanish bonds despite further fines for the Banks
European benchmarks posted moderate gains this morning, as a dividend hike from BP and rallying bond markets in Spain overshadow a fresh flurry of fines that continues to handicap European banks.
Whilst Banks will claim that they are now rid of the kind of behaviour that led to the astronomical fines of the last few years, investors will wonder just when they will be able to judge an institution on current merits, rather than fearing that every quarterly update is likely to be overshadowed by another set of impairments for historical foul play.
BP stock was up after profits beat expectations and it raised dividends to Shareholders . There was also some rare good news from the mammoth Deepwater Horizon suit, with US courts agreeing with B.P assessment that around $400 million of claims were not viable, with some cases of fraud now under investigation from authorities. The firm also confirmed the sale of another $10 billion of assets over the next 2 years, with the majority of funds raised to be returned to shareholders.
Quarterly profits at Deutsche Bank are down a whopping 94% as trading slows and a 1.2 billion provision is made for legal charges linked to scandals unveiled during the financial crisis. The bank has also not reached any settlement over Libor manipulation as yet, a scandal that has already cost the likes of Barclays and RBS billions. Unfortunately for investors, it seems the costly trend of lawsuits is set to continue with the bank admitting expectations that “the litigation environment will continue to be challenging”.
UBS stock was hammered down over 5% in early trade despite posting a return to profit in Q3, after delaying key earnings targets due to extra capitol demands from the Swiss regulator. The top up is potentially linked to a probe into alleged FX manipulation from the bank, which investors will fear to be prior warning of yet another heavy fine awaiting for the bank.
For the UK banks, Lloyds operating profits near doubled in Q3 on a reduction in costs and increased lending margins. However, yet again increasing impairments soured the numbers with a £750 million charge taking the total PPI bill over £8 billion. Although there were no such charges for Standard Chartered, the stock headed in the same direction after revenues declined, with corporate banking business faltering, a division accounting for around 3/4 of profits across the firm.
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