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The amount of "short" bets out against UK bank Lloyds has fallen toa two-year low, according to data from Markit, as Lloyds' shares have surgedthis year on signs of a recovery at the bailed-out bank.
According to Markit, "short" interest - as measured by the amount of acompany's shares out on loan - are at a two-year low for Lloyds, with less than0.5 percent of Lloyds' shares out on loan.
Markit adds that the amount of "short" bets against rival part-nationalisedlender Royal Bank of Scotland is also at a relatively low level, withless than 1 percent of RBS shares out on loan, despite concerns over RBS'exposure to a U.S. mortgage-backed-bond mis-selling probe by regulators anduncertainty over the company's future structure.
Short selling or "shorting" is a way to profit from the decline in the priceof a security, such as a stock or a bond. In contrast, investors who "go long"with an investment hope the price will rise.
To profit from the stock price going down, short sellers can borrow asecurity and sell it, expecting that it will decrease in value so that they canbuy it back at a lower price and keep the difference.
Lloyds shares have risen by around 68 percent since the start of 2013 andRBS shares have risen 13.5 percent, while Britain's benchmark FTSE 100 index has risen by around 14 percent.
In September, the British government sold a 6 percent stake in Lloyds for3.2 billion pounds ($5.2 billion), raising the prospect that the UK could sellall of its Lloyds shares before a 2015 general election.
($1 = 0.6186 British pounds)
Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net
