Aug. 29--Lloyds Banking Group and Royal Bank of Scotland shares could slump by as much as 50 percent over the coming months, a leading analyst has warned.

Jonathan Pierce of Credit Suisse believes the recent rally in the banks" shares cannot be justified given the huge uncertainties facing the two ailing lenders.

RBS has quintupled in value since January following the government's move to insure more than UKpound 300bn of the lender's toxic debt through the asset protection scheme (APS).

Lloyds shares have more than tripled over the same period.

Following the spectacular run, the combined value of the two banks now stands at over UKpound 60bn and is steadily closing in on their 2007 peak.

According to Pierce, the heady valuation does not square with the vastly diminished earnings power of the bailed-out lenders.

Lloyds shares closed 6.64p higher at 111.34p on Friday but Pierce believes the stock is worth no more than 55p.

"Fundamentally things remain very difficult for (Lloyds) and there are many challenges ahead," said Pierce.

He warned that RBS shares could slide to 30p -- compared with last night's 57.6p (up 2.10p) close.

The gloomy prediction came as the pressure mounted on Lloyds boss Eric Daniels, who is desperately trying to lessen the bank's reliance on the APS.

Lloyds is said to be considering spinning off or selling its Scottish Widows and Clerical Medical insurance wings -- a move that could raise upwards of UKpound 10bn.

The windfall would enable Lloyds -- which is already 43 percent owned by the taxpayer -- to lean less heavily on the APS and give up less control to the government.

A cash call is also believed to be under consideration. However, many investors would only support a rights issue if Daniels were shown the door.

D0 you have "personal credibility, gravitas and authority" to negotiate on complex issues? If so, you could be just what UK Financial Investments needs.

UKFI, the body set up in November 2008 to manage the government's stakes in bailed-out banks, is advertising for a new chief executive in The Times, The Sunday Times and The Economist.

It won't be the most financially lucrative job, but managing stakes in Royal Bank of Scotland, Lloyds Banking Group as well as supervising Bradford & Bingley and eventually Northern Rock, will be interesting and could pave the way towards a knighthood.

John Kingman, the civil servant currently running UKFI on a salary of UKpound 143,000 a year, is searching out more lucrative opportunities in the City. UKFI wants to hire a replacement from the commercial sector, with "extensive financial services experience." It knows the salary will need to be raised but says any potential bonus will be modest.

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