Geffen says the size and scope of these capital raisings should remind people of the scale of the problem they face.
He says: “They are actually raising more cash than their current market capitalisations; given that they are looking for £54billion with a current market cap of £23bn for Lloyds and £20bn for RBS. We are not looking to participate in either company given that this is a rescue operation rather than an investment opportunity.”
Geffin’s comments come after Cavendish Asset Management senior fund manager Paul Mumford has warned that a salary restriction on banker bonuses at Lloyds TSB and RBS could lead to an exodus of talent to their competitors.
Mumford believes the Government may be forced to enforce the bonus freeze imposed on RBS and Lloyds Banking Group across the whole sector to avoid a mass exodus of the banks’ staff.
He says: “The question the market may want to consider is whether or not the rest of the banking sector could be in for similar restrictions on cash bonuses, on the grounds that the remaining banks are now in a highly competitive position for attracting staff from their taxpayer-funded rivals.
“If it was perceived to create an unfair market advantage, we may find more surprises in store on the issue of bonuses, with limits introduced across the entire banking sector so as to even the playing field.”