Dolmen Butler Briscoe is advising punters to put their money in the banks over Christmas - especially in Natwest and Royal Bank of Scotland. Royal is bidding for NatWest - in competition with Bank of Scotland - and has pledged to retain Ulster Bank which is owned by Natwest, if its bid is accepted.
According to Dolmen's Stuart Draper interest rate concerns in Britain and the US combined with earlier than usual closure of trading books have adversely affected the bank sector.
Draper says that following NatWest's recent rise to more than £15 sterling (€24) there was a significant amount of profit-taking which also sparked a fall in Royal Bank's share price "as the market now considers it the winning bid and its share price as a result to be a function of NatWest's share price."
He says there has also been concerns as a result of the historical under-performance of many financial mergers immediately post-merger.
Draper says value still exists in the two shares, pointing out that the rejection of the increased £15.90 bid indicates that NatWest's share price is still worth more.
He says Royal Bank can afford to pay £16 per share.
