The good news for George Osborne is that Lloyds shares have done well since his Mansion House speech. The stock has barely moved in the past two days – impressive in a soggy stock market after a big seller has announced its intentions.
Demand from City institutions, which will be offered the first slug of shares, seems to be strong.
The bad news is that a reverse-Midas touch has applied at Royal Bank of Scotland. Its shares are 12% lower than they were on Wednesday night, which is a drop of about £4bn in real money. The reason is not hard to fathom. The City sees a communication shambles at the Treasury over RBS and thinks the chancellor is digging a deeper hole for himself via his belated openness towards the "bad bank" idea.
As it happens, the "bad bank" model is well worth exploring – it may be the best way to make RBS a more competitive lender in the UK – but the numbers need to be crunched.
The problem lies in the condition Osborne placed on the Treasury's study. "We are not prepared to put more taxpayer capital into RBS as part of this process," he said. In the opinion of almost everybody who has looked at "bad bank" models, that pledge is probably a deal-breaker.
Why? Well, towing away the assets at today's market valuations would crystallise a loss for RBS and create a capital hole that would need to be filled. And there's little hope of filling it by selling Citizens, the US retail bank. Buyers are not queueing to pay silly prices and a fire sale might create another capital hole.
If there is a way of squaring the circle, it's not obvious. That is why most versions of how to create a "bad bank" involve full nationalisation as a first step. But Osborne has ruled that out. His stance is confused: he seems to be open to the principle of a "bad bank", but not to the most effective means of creating it.
No wonder the City is also confused. Stephen Hester, the chief executive, was shoved out and RBS is suddenly a place where anything can happen, depending on the week's political breezes. In the circumstances, you can't blame the institutions for deciding to steer clear.
Pain in Spain
»The merger of British Airways and Iberia has been a great success, said Willie Walsh, chief executive of the parent International Airlines Group. In fact, it is such a success that he is threatening to close Iberia. "None of us wants to see Iberia disappear. However, that still remains a risk," he told the annual meeting this week.
Welcome to the wacky world of flag-carrying airlines – a world where "success" is constantly redefined, invariably downwards. With hindsight, it's obvious that BA did a poor deal in January 2011 when it traded 46% of itself to get its hands on Iberia. Since then, the two airlines have flown in opposite financial directions. Last year, BA made an operating profit of €347m (£300m) and Iberia lost €351m. In effect, the Spanish airline lost money as fast as BA could generate it.
Back in 2010, of course, the grumbling was the other way around. The Spanish thought the perfidious Brits, with their flying pension fund, were getting a bargain. No, they weren't. If the merger was being agreed today, the Spanish might be lucky to get a quarter of the combination.
Of course, Walsh may yet succeed in making Iberia competitive, as he did with BA, in which case some of the fine words from 2010 about dominating the Spain-to-South America routes may start to become meaningful. But the task looks substantially harder. Look at the list of measures already undertaken: a 15% removal of capacity, 3,300 job losses, pay cuts of 11% followed by further reductions of 4%. That little collection was described by Walsh as merely "a first step" in restructuring Iberia. The road ahead looks very long.
He's sticking to his forecast of group operating profits of €1.6bn in 2015, which would be a minor triumph. But the split in profits between the two halves of IAG will almost certainly be miles away from original expectations.
Generous souls will say that BA had to do the Iberia deal. Its earlier attempt to buy KLM failed and it risked being isolated in Europe via a pincer movement led by Air France-KLM and Lufthansa. It's a point of view. The more persuasive argument is that BA would have been better off staying independent for a while longer and taking its chances on striking a deal later from a position of strength. Too late now.
Taxing questions for Cadbury
»You were imagining things if you thought modern Cadbury was ever run by altruists living the Quaker dream. Remember the promotion that offered free basketballs to children who could eat half their weight in chocolate?
Even so, the scale of tax avoidance by Cadbury, prior to its takeover by Kraft in 2010, is a shock. An FT investigation has uncovered the use of techniques that look aggressive even by the standards of yesteryear. All legal, no doubt, but all at odds with Cadbury's presentation of itself a model corporate citizen.
It's crucial now that the directors of the time give an account of what they thought they were doing. Sir John Sunderland was chief executive and then chairman for part of the period. Ken Hanna was a finance director. Would they regard the techniques as acceptable today? It's not an idle question. Hanna is now chairman of the power-generation firm Aggreko and the car dealer Inchcape. Are Cadbury-style techniques still seen as legitimate? Time to speak up.
Why worry about easyJet's new fleet?
It is hard to understand why Sir Stelios Haji-Ioannou is so upset about easyJet buying more aircraft. Far from being a "vanity exercise," the order announced this week – 135 aircraft from Airbus – looks a necessary piece of spending by a growing company that has always operated a modern fleet.
Some 85 of the planes are intended to serve as replacements. For the expansionary element, easyJet is hardly shooting for the moon in projecting growth in revenues of 3% to 5%. In any case, there's flexibility in the order.
But Haji-Ioannou is upset. Indeed, assuming he loses at the shareholder vote, he may sell part of his family's 37% stake, which is what he pledged to do in January if there was a new order. But selling shouldn't be a wrench. He and his siblings have £1.8bn tied up in a single investment that has trebled in value in two years. It was probably time to lighten the load anyway.
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