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from Neil Collins:

Goldman shows a preference for Lloyds Banking

Too late to save Sir Victor Blank, Goldman Sachs has decided that the prospects for Lloyds banking Group are little short of glittering. Once the current crisis is past, says Goldman, the British banks will clean up.

Anyone trying to borrow right now would say they are cleaning up already. Loans carrying a small margin over Libor are a distant memory for most commercial borrowers, and woe betide any company that breaches a covenant, no matter how technical.

Goldman has noticed "a strong relationship between market share concentration and long-term returns" which was why Blank fell for the HBoS deal in the first place. By 2011, the bank could be earning over 20 per cent on its equity, so Goldman's analysts have turned the stock into a "conviction buy".

Well, maybe. But if you lack conviction about the ordinary shares, how about the Halifax 13.625 per cent perpetual subordinated bonds? Brokers Collins Stewart are currently offering these strange creatures at 85 pounds per cent, to give a yield of 16.03 per cent for ever.