Banks to reveal state of play

It's judgement day for Royal Bank of Scotland (RBS) and Lloyds (LLOY) as the banks reveal the outcome of months of negotiations with the Treasury.
 
Both are being forced by the European Commission to give up assets in return for receiving state aid although the extent of the divestments has yet to be revealed.

Yesterday RBS saw its share price plummet amid speculation the bank could be forced to sell US business Citizens Financial Group as well as insurance businesses Churchill, Direct Line and Green Flag.

Under its radical restructuring it will have to sell 300 or so branches under the Williams & Glyn's brand. Brussels is also pushing for a reduction in its investment banking division.

Lloyds is expected to announce the sale of Cheltenham & Gloucester and Intelligent Finance.

Last week, the bank calmed market fears with a statement claiming it was in "advanced discussions" with the government and regulators over alternatives to its participation in the Asset Protection Scheme (APS).

The bank, which is 43% owned by the taxpayer, is thought to be looking to raise more than £20 billion through a rights issue of around £12 billion and a debt swap. It could consequently incur a fee of close to £2.5 billion to avoid it by selling shares to the government at a reduced price.
 
The bank, which is 43% owned by the government, hopes that such a move would help to appease harsh demands from Brussels over assets sales.
 
RBS is expected to confirm it will participate in the APS although it will insure a lower amount than previously given back in February.
 
However, David Buik of BGC Partners says: "There may well have been issues over the cost of the asset protection scheme for RBS, which may result in Stephen Hester stalling with his overall plans."
 
Tuesday also sees Associated British Foods' (ABF) final results. The group, which owns Primark and Twinings tea, has put in a solid performance of late, partly thanks to a strong performance from high-street chain Primark. With the Christmas shopping period looming, AB Foods is expected to post good profits.
 
Engine-maker Rolls Royce (RR-) is expected to do well when it posts it trading update on Tuesday as contract wins have been plentiful this year and more look to be on the cards.

Tuesday 3 November

Results
 
(Finals) Associated British Foods
(Interims) Blinx, Endace, Penna Consulting, Volex
(Quarterly) Prodesse Investemnt, Yamana Gold Inc.
 
Trading statement
 
Balfour Beatty, Rolls Royce
 
AGMs
 
Cubus Lux, Hexagon Human Capital, PNC Telecom, System C Healthcare
 
EGMs
 
Independent News & Media
 
Dividend payment date
 
(Interim) Goldenport, Mears Group, Nationwide Accident Repair Services, Smith & Nephew