BANK shares tend to be more seasonal than most. They tend to peak, relative to the market as a whole, some time between the end of the old year and March. Often, they then slip back only to recover again in the autumn.

This modest seasonality can be explained by recurrent fears that UK banks are about to bear the impact of a stray asteroid of bad debt from the commercial property sector, from overstretched corporate customers, from stock market falls, financial scandals, hedge fund collapses or, in 2004 and 2005, a fall in house prices.

In recent years, however, none of these once-frequent natural banking disasters has struck — possibly because bankers have learnt a lot. As the sense of relief grows towards the end of the financial year, the sector recovers. Interest wanes once the results are published and the shares lose their right to a final dividend.

Lloyds TSB is prone to this effect because its dividend depends on nothing much going wrong. The bank paid £7.5 billion for the Scottish Widows life assurance group at the top of the bull market and then suffered the full blast on the bear market on its share portfolios and profits. Vast sums of capital that could have been used more profitably also had to be earmarked for the life assurance funds and the generous dividend cover evaporated.

Maintaining the dividend has benefited shareholders by providing steady returns at an unsteady time. For those relying on income, the share has been a true friend in need. For about two years, they could be bought with a dividend yield of more than 8 per cent.

Sadly, cutting the dividend remains a live topic among out-of-date fund managers who still see no difference between capital and income returns. It also frustrates investment bankers who think that profits should be used for deals or buybacks that bring them fees rather than being paid, rather tediously, to investors.

The bank’s image has suffered among analysts, for instance, because there is little new to report. Lloyds has to wait for profits to cover the dividend well again before re-opening the door to corporate action. But this is changing.

Sir Victor Blank, a former merchant banker whose reputation rests on domestic financial engineering, has been chosen to become the new chairman in May, when he will take over from a big company man. This week, a month before Sir Victor is due to join the board, let alone take the chair, old bid rumours resurfaced to push the shares up 8 per cent to 555p at one point. It could happen, but don’t bank on it.

BBVA, the other big Spanish bank, might want to ape Santander’s takeover of Abbey National, but probably not. Bank of America or Wells Fargo might bid 700p a share. But it would make more sense for such big, mature groups to buy into high-growth markets, which is why Standard Chartered must constantly look over its shoulder.

The more probable original source of buying was a recommendation in Forbes, a US magazine aimed at wealthy investors. Ken Fisher, of Fisher Investments and the writer who picked out Lloyds TSB, did so on value: a dividend yield of 6.7 per cent and a price-to-earnings ratio of 12.

In London, however, value is no story.

The assumption is now that any consolidation within European banking would involve continental banks buying larger UK ones, rather than vice versa. This is partly because continental investors are not so mad as to sell great long-term earners on the cheap, partly because City institutions are unlikely to allow a UK bank to make a comparably big acquisition. For them, Sir Victor is becoming Lloyds chairman to flog the bank fast to the highest bidder.

Sir Victor should certainly have other thoughts. The key to strengthening the ability of Lloyds to deliver relatively safe, unreplicably strong returns to shareholders is to unlock the value of its life assurance interests. This may be achieved by demonstrating that they are adding value that other banks are missing; or by selling them, or by splitting insurance from banking and giving investors shares in both.

This is where deal-making skills should help. The life side plainly needs building up internationally, either to show its value or as a means of demerging it. The scope for building up specialist credit business would then be enormous, as GE has demonstrated. Until the future is clearer, however, share price spikes could prove strictly temporary.

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