Not sure if this thread will catch on, because no-one here seems to have much to say about individual british banks, but thought i would add this header to see if we could discuss dividend yields, exposure to sup-prime, good ones, bad ones, take-over targets, when the crisis will end? do you think they have learnt their lesson? I, for one, as a property developer have seen first hand how much stricter they have become with lending habits, struggling to get decent rates for re-mortgaging, basically they appear scared to lend to anyone.

Why not look at their website, webster? The answer is covered in detail.

Abbey are now following RBoS, only not quite as far.
This looks like the start of a turnround in policy across the banks. They were fighting to ensure they were not exposed as a lender of choice and now they appear to be positioning themselves to be more attractive.
This is a good sign, as it will encourage the niche lenders to dip their collective toes back in to sub prime markets and prime lenders to eventually stop competing on price and start to compete again on criteria.
Whos next?
My guess is for the HBOS group to extend its existing customer range to new customers.

And now the Chelsea have pulled their deals, from tonight. No idea what the new ones will be, up or down, but they are changing.

My opinion, FWIW.
The first stage in the rehabilitation of the consumer lending markets is underway.
Within the industry, the word exposure is gradually being replaced by the word compete. As a caveat to that, this does not yet apply to new build and BTL, or to sub prime, but it does to <90% LTV.
Because of this, I think its time to go long on banks (except Barc). The timing may not be perfect, but the future is brighter than people may believe.
For many lenders, margins are up and volumes are between 10 + 20% higher, due to a disproportionate reduction in the number of lendes compared to the amount of cash being lent out.
We all read of lower mortgage approval rates, but it should be remembered that the lenders who have disappeared accounted for almost 40% of lending last year. Those that are left have a bigger slice.
Lenders are also suggesting that while houses are admitedly not selling, prices are more robust than predicted by their risk management teams, and while prices may not rise at all, the drop predictions are getting smaller as liquidity starts to very slowly return.
Stage 2 of the rehabilitation will be signalled by lenders relaxing LTV criteria on new builds. These are currently restricted by some lenders to 65% as they fear that the exposure would be too great when one adds the possible fall in value to the premium loss suffered when a new home becomes a "2nd hand" one. When this restriction moves to a more reasonable rate, I think it will signal banking confidence that a crash is not on the cards any more.
Stage 3 will then be a slow return of higher risk lending as property markets start to edge higher and lenders are more comfortable lending to equity.
It could, of course, all stall if the wider economy slows too much, but most of the factors causing the poor outlook are related directly to financial turmoil.
Having said all the above, Yesterday saw one minor lender close its doors, and one major player (GE Capital) pull out of the BTL market, so it is still finely balanced, and Barc seem to have an internal rift on how or indeed if, to capitalise on its position as a lender with an increased market share.
But for me, banks are now underpriced given the way they are relaxing a bit.
All IMO, DYOR etc, etc.

Analysts yesterday heaped further pressure on Barclays by predicting a 3 billion capital raising this month, on top of 3 billion in further writedowns, and the payment of a paper, rather than cash, dividend.

The note from analysts at Dresdner Kleinwort came amid speculation that Barclayss chief operating officer was departing because of infighting at the top of the bank and an absence of merger and acquisition activity. Paul Idzik will step down later this year.

Barclays has so far played down the possibility of a cash injection, despite plans by Royal Bank of Scotland (RBS) and HBOS to raise 12 billion and 4 billion respectively in rights issues to bolster their capital cushions.

Dresdner yesterday downgraded Barclays from hold to reduce, ahead of the banks first quarter update on May 15. James Invine, banks analyst, said a further 3 billion in writedowns would drop Barclayss equity Tier 1 ratio a measure of financial strength to 4.7 per cent. RBSs rights issue will boost its ratio to 6 per cent and HBOS is aiming for closer to 7 per cent.

Baclays may well be stalling to allow the RBOS and HBOS rights issues to be digested by the market first. Moreover, they may be in discussions with Sovereign Wealth investors as an alternative. It is mentioned in the press today that proposals to pay dividends in shares will present problems for income orientated investment funds,which has or may result in these Funds having to reduced their exposure to the sector.

Very interesting weekend on the secured lending front.
A whole raft of new product has been launched across the market. Nothing earthshattering, but a slight lowering of rates, or of tracker margins, or of SVR.
Then today we have Merrill Lynchs' UK commercial landing arm closing its doors to new business and RBS deciding not to accept any more Buy To Let applications from "professional" landlords. Amateurs only should apply.
What this signals, I haven't worked out yet, but I'll be speaking to those who know better than I!!!!

Hot off the press.....
Merril Lynch's UK sub prime residential arm is no longer accepting applications for secured lending.

I have copied and pasted a shares article written on 16th August 2007, it draws heavily from Sandy Chen from Panmure Gordon. It's well worth reading because it shows that at the time he really had a grasp of future problems instore for banks.

Published date:Thursday, August 16, 2007

UK banks have been slow to confess how exposed they are to the current bad debt crisis but an apocalyptic note from stockbroker Panmure Gordon suggests they could have around 80 billion of loans at risk.

Banking analyst Sandy Chen says these debts are wrapped up with many others in exotic packages ranging from Credit Derivative Products (CDPs) to Asset Backed Commercial Paper Obligations (ABCPOs)

Too much cheap money has resulted in over-lending to high-risk borrowers. Worst of all, the banks dont know what is in the various packages and the extent of their liabilities. The Bank of England last month instructed the clearing banks to clean up their act. They were given the quarter day as a deadline (September 31) to identify and write-down bad debts. Some of these loans will have to be taken on board by the banks.

Chen says the European bank with the largest exposure is Dutch giant ABN Amro with 27 billion. So buying the bank for around

40 billion could prove a poisoned chalice for bidders Barclays (BARC) and Royal Bank of Scotland (RBS).

Barclays is already up to its ears in dodgy debt, says Chen. He estimates it could be owed 25 billion substantially more than its capital reserves of 19 billion which would make it the most exposed UK bank.

RBS is relatively safe with only 6 billion at risk, representing a sixth of its capital. Lloyds TSB (LLOY) has 11 billion poor quality loans only a fraction under its 11.5 billion capital. HBOS (HBOS) has

20 billion and 22 billion capital, while giant HSBC (HSBA) is not too exposed at 15 billion against 55 billion capital, according to Chen.

The good news is that probably just a fifth of these low-quality loans will never be repaid, totalling some 15 billion and spread over several years. But banks will need to raise extra capital from rights issues and/or selling stakes to better capitalised competitors in the Far East.

Chen has had to field some irate phone calls from the banks after his estimations. The problem is there is no disclosure. There is a lack of clarity about their ABCPOs and likely asset impairment charges. The over-arching risk is the drying up of liquidity. The banks will probably have to use their cash to top up their own products, which means less to lend to companies, he said.

Shares says: A fully blown financial crisis is still unlikely but the banks will come under more pressure.

My reason for posting the above at this time, is because of Panmure Gordon ( Sandy Chen ) latest reccommendations. Firstly RBS which they have as a sell with 195p price target, Second BB. which is a sell and price target of 135p.

Position they have on banks are below, to the best of my knowledge, please correct me if any are incorrect.

RBS, 23 April, Sell, Price Target 195p.
BB., 24 April, Sell, Price Target 135p.
HBOS, 30 April, Sell, Price target 350p.
BARC, 19 Feb, Sell, Price Target ?????
LLOY, 7 May, Hold, Price Target ?????
AL. 20 March, Sell, Price Target ?????
HSBC, 28 Jan, Sell, Price Target ?????

I will certainly keep a close eye on his updates and opinion.

Looks like Mr. Chen did good research or had an excellent crystal ball!

I hope his crystal ball is still working, I was looking at RBS with a view to purchase at some point. But will hold off and follow Mr Chens recommendations closely.

More hot off the press news.
Several large lenders are to reduce fixed rates this week, including Nationwide and Halifax, while Skipton is offering a USA LIBOR tracker.
As I stated previously, this is a signal of the lending market starting to be more competative. When margins are so tight that further reductions are not economically viable, then criteria relaxing will start, in order to attract business.
Rates offered are as 5.85% or less for medium term fixes, with small fees and there is little margin left after that.
A report from Hometrack has also caught my eye. It claims remortgage volumes are down only 3% and that the mortgage market remains healthy. It goes on to say a wide disparity between lenders performance is hiding the true overall performance and that the media are making a potentially bad situation into a crisis by creating a self fulfilling prophecy.
Overall, I am confident the worst is behind us, and it is not as bad as the reports would have us believe.
Time will tell.

Suggest you read RNS today released by GFRD which gives their view of the new build housing sector.

New build always suffers more and longer than any other sector of the market due to the simple fact they overprice their houses by as much as 20%, and many have business models that rely on investors buying off plan over the last decade or so.
It is the first area lenders turn the screw on, by reducing available LTV.
This has been magnified in this cycle because a larger percentage than ever before of new builds are aimed at first time buyers, who have no equity from previous purchases, and so restricted deposits.
The lending market as a whole has not yet suffered the meltdown many predicted, and now looks unlikely to. When the lenders recover confidence, so will the housing market. When that moves, so will new builds, but they are quite aware they are last on the list.
Lenders keep saying the same thing to me. They have more applications than they can deal with and so are cherry picking the lowest risks and keeping margins high. New build is high risk lending.

If that is the case why do the banks finance the builders building new houses?

Think you will find most new builders only working on existing sites. Banks in a pickle because their greed on exotic "trading portfolio assets" has stretched their own capital resources and until these rebuild they just do not have the funds to support other than the bare minimum (and most profitable) of deals.

Halifax,
The banks have the problem that not financing the builders means builders going bust, owing them a fortune. Their finance to them is not being extended and the conditions are more onerous. The builders are not starting new developments, but do need help with completing existing ones.
This is why some sites can offer 90% mortgages through a particular lender when the lender only lends to 75% on new builds generally. Its a case of risk management, and the risk of the builder going under is higher to the bank than the risk of a few dozen borrowers defaulting.

Partridge,
Most big lenders are reporting higher volumes of lending. The issue is there are fewer lender to share the burden. 2007 saw 150 Billion of secured lending. Since then lenders responsible for 52 Billion of that have closed their books.
The higher volume of applications they are therefore dealing with is causing problems of service as much as money. To counteract this they make their rates and criteria unattractive, leading to a lower level of applications. This keeps service standards high (as demanded by the FSA), margins high and has the added advantage of ensuring they do not over commit or take unnecessary risks.
As service levels normalise, and the higher margins make more money available, lending will relax, but new builds will still be bottom of the pile until surveyors regain confidence in house prices in general.

Interesting that Redrow are placing particular emphasis for its poor performance on restricted lending policies. They also say cancellations are over 20%.
I would suggest that these cancellations are not due to people not wishing to buy. They are due to speculators buying off plan and then cancelling because losing the deposit is cheaper than selling at less than they would pay, or because they cannot get a mortgage for the balance, and FTB who deposited early, when 100%+ lending was available, only to find they now need a 25% deposit they do not have, or that on valuation, the surveyor is undervaluing the property and the buyer and builder cannot agree a new price.
All IMO.

Thanks for the target price. I feel the banks will drop much further.