What should I do with Abbey?

By THIS IS MONEY
Updated:

 

SHOULD I hold or sell my Abbey National Shares? CB, Scunthorpe.

Richard Banfield, Senior Analyst at Barclays Stockbrokers says: Following the Government's decision to block the proposed merger between Abbey National and Lloyds TSB on competition grounds, Abbey National is now seen as bid-proof.

On a stand-alone basis the shares now appear expensive given their current rating and pedestrian growth outlook. The interim results announced at the end of July highlighted the slow growth and the shares were marked down.

Additionally, bad debt write-off in the wholesale bank (relating to its US junk bond portfolio) are likely to worsen in the future. Given these circumstances we would encourage investors sell the shares.

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