Bank volatility dominates TD Waterhouse customer trading activity

Angus Rigby, Chief Executive Officer, TD Waterhouse comments: "Volatility in the banking sector continued at a pace this week and this has resulted in some heavy trading by our customers and one of our busiest weeks so far this year. Banking stock has been the main focus, with banks accounting for 83% of our overall top ten trades during the week.

"The government's latest bank bail-out or ‘insurance' plan, coupled with news that Royal Bank of Scotland (RBS) will report a full year loss of between £7bn and £8bn, has had a huge effect on the sector with speculation about the impact this may have on other banks.

"RBS, Barclays and the newly formed Lloyds Banking Group, in particular, all suffered sizable falls in share price in the last few days. In less than a week RBS saw its share price fall from 41.6p to 12.1p, Barclays fell from 138.3p to 63.8p and Lloyds Banking Group has fallen from 115p to 44.3p.

"The drop in share prices has fuelled the heavy trading in these stocks by our customers who are hoping to make a quick profit on the rebound, and these three banks alone account for 84% of our top ten buys and 47% of our top ten sells, with a buy/sell ratio of 5:1.

"The volatility in the banking sector has also resulted in a rare appearance on our tables by HSBC Holdings this week. Although HSBC is one of the few banks not to have sought extra funding from the Government since the credit crisis began - and in a statement on Monday said that it "cannot envisage circumstances where such action would be necessary" - the global giant could not shield itself from the knock-on effect of a severe drop in confidence in the sector. Our customers have reacted by making HSBC the 7th most popular buy and sell this week.

"Meanwhile, the energy and mining sector accounts for 53% of the top ten non-banking buys and 40% of the top ten non-banking sells. Xstrata is in ninth position on both tables this week and mining giant Rio Tinto sits at 8th position in our top buys and at 5th in our top sells, accounting for nearly a third (29%) of the week's top ten non-banking trades.

"Finally, the latest fall in oil prices may cost BP $6bn in pre-tax profit. BP's President for Asia-Pacific, Gary Dirks, has admitted that he cannot estimate how much further oil prices will fall this year and this may have contributed to BP sneaking into the sells tables at tenth position. It will be interesting to see how our customers react to BP's fourth quarter results announcement next week."