Investors pile into banking shares following last week's volatility

Retail stockbroker, The Share Centre, has reported a 316 per cent increase on last week's account openings as investors look to take advantage of volatility in the banking sector. By the end of last week The Share Centre experienced a 113 per cent increase in deals, of which banking shares accounted for 40 per cent of all deals made. The buy to sell ratio of bank shares was 68:40.

Investors witnessed the FTSE100 plummet a massive 559 points during the course of the week; opening at 5416 on Monday and falling to 4857 by Friday morning. The week's volatility started with the news that US Investment Bank, Lehman Brothers filed for bankruptcy. Then, just as the market began to settle, Lloyds TSB announced a £12.2bn takeover for Halifax Bank of Scotland (HBOS).

As a result of the takeover announcement the stockbroking industry saw an unprecedented level of trading activity. In fact, the buying and selling of HBOS shares executed via The Share Centre, accounted for 44 per cent of all banking deals made through the broker last week.

Commenting on the HBOS and Lloyds TSB takeover, Graham Spooner, Investment Adviser at The Share Centre, said: "We hope that once the markets settle the merger will create a powerful entity on the high street and offer some long-term value for investors. However, considering the current climate we would advise first time investors to tread carefully and ask them to consider their attitude to risk and time horizons before investing.

It is a good idea for investors to review their portfolio regularly and set ‘stop loss limits' in order to minimise losses. Likewise investors should be strict when it comes to setting limits and target prices."

Deals in banks for the week commencing 15 September were as follows:

HBOS - 44%
Lloyds TSB - 17%
Barclays & RBS - 15%
B&B - 5%
Alliance & Leicester & HSBC - 2%