Comments on the news – BoE turns down £100k and bidding begins on the UK financials

Mervyn King, governor at the Bank of England, is leading from the front with the national call for wage restraint. He had just rejected a £100,000 pay rise (from the Times). I have respect for Mervyn King, but I continue to believe it is irrational for the average man on the street not to ask for higher wages when faced with higher costs all round (fuel, food, financing costs).

On a more positive note, we saw a hefty bid from Santander for building society Alliance & Leicester today, substantially above the current market price. When bubbles deflate, savvy (and lucky) investors can pick off the bargains and make a tidy profit, but buying too early can also spell disaster. One signpost of value that I’ve been looking for in the UK financial sector is bidding activity, and while a bid from either private equity house or sovereign wealth funds would have filled me with greater confidence than a bid from another financial institution, I believe it is still an important signal (especially given the premium of around 50% to the current market price) that we may be near the trough of the dip and that it may now be a good time to start investing in the UK financials as a basket.

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