As the bidding war rages for the London Stock Exchange, Geraldine Lambe looks at how the 200-year-old-institution lost its lead in the European charts.

When a company gets a bid approach, analysts are entitled to come to one of two conclusions: either the management was underperforming and a would-be owner can see hidden value that could be achieved by new management; or the management did a great job in making assets attractive for sale and getting a great price for shareholders. With London Stock Exchange (LSE) in play again, things are more complicated.

The Banker’s listing of Foreign-owned Banks in London, shows the UK capital still has pulling power.

The Bank of England isproposing reform of the sterling money markets in a bid to reduce the volatility of short-term interest rates. In what the bank says are the “most far reaching reforms for a quarter of a century or more”, it will replace the present system, which involves frequent bank intervention to stabilise rates, with an arrangement modelled on best practice that should minimise interest rate swings.

The financial sector is finally catching up with the demand for Islamic banking services. This year hopes to see the ground-breaking establishment of the IBB, which will cater to UK Muslims while also hoping to attract business from further afield.

Paranoia is in vogue in UK financial circles. The EU’s recent move to ban internalisation could hit London exchanges hard and the europhobes are out in force.

Henry Harington looks at the effect of September 11 on foreign banks in London, and finds many questioning their policy of maintaining all their operations under one roof.

Karina Robinson talks to Fred Goodwin, group chief executive, Royal Bank of Scotland.

Karina Robinson talks to the FSA’s Sir Howard Davies.