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.

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.

Some banks are less exposed to the domestic property market than others but they all get "tarred with the same brush".

BB. today issued rights issue in spite of the statement below just a month ago.


Bradford & Bingley PLC
14 April 2008

Bradford & Bingley plc

Statement

Contrary to press speculation today, Bradford & Bingley announces that it is not
intending to issue equity capital by way of a rights issue or otherwise.
Bradford & Bingley has a strong capital base, above its regulatory requirements,
and as a result of the Board's conservative approach, has funded its business
activities through 2008 and into 2009. In the current market environment, the
Board will naturally continue to monitor closely the balance sheet strength of
the business and its funding plans.

As previously announced, Bradford & Bingley will release its Interim Management
Statement on 22 April.

82p per share...this is bad news. Trading continues in line with the April trading statement and interim dividend paid in shares?? Looks like BB. has run out of cash.


Bradford & Bingley to raise 300 mln pounds in 16 for 25 rights issue at 82 p/shr - AFX

LONDON (Thomson Financial) - Bradford & Bingley Plc. said it will raise about 300 million pounds, net of expenses, in a 16 for 25 rights issue at an issue price of 82 pence per share.

This represents a 48 percent discount to the closing price of 158.75 pence per share on May 13, the UK mortgage lender said.

It added the proceeds of the rights issue will strengthen the group's capital position and mitigate the impact of the previously announced reductions in the value of some of its treasury investments.

The rights issue has been fully underwritten by Citi and UBS Ltd, Bradford & Bingley said, adding it has also revised its target Tier 1 ratio range to between 8 percent and 10 percent.

The company also said the 2008 interim dividend, due in October, will be paid in shares.

It added trading continues in line with the April trading statement.

"the 2008 interim dividend, due in October, will be paid in shares."

Which means all share holdes end up with the same percentage of the company as they had before - so, what's the point? Why not just cancel the dividend?

Conserves cash for the company,shareholders can sell the divi shares in the market if they need cash.

True hlyeo98 it is bad news but at least we know at which level the underwriters are prepared to underwrite the stock. I expect they have made some strict assessments on future risks. Income funds will not be too pleased either about the dividend situation. Goes to show that not all high yielders are necessarily cheap. Still the rights issue may help draw a line under them and they may be a candidate for take over once it is felt the week housing market has been discounted sp 145p.I am not a holder at present.

Halifax - not issuing shares in lieu conserves cash too - it also saves the cost of issuance. The share price will just be diluted by the percentage of shares issued.

Also what about small shareholders who sell in the interim and end up just holding the dividend shares (maybe just 5 or 10 shares which cost more to sell then they're worth)?

Gus BB's much diminished market capitalisation must make them a prime takeover target for banks prepared to look 2/3 years ahead, just petty cash for say LloydsTsb.

Brian sending out dividend warrants costs money too, when shares go ex dividend the sp usually drops as cash has been paid out.

As regards small shareholders banks paying dividends will no doubt have in place a facility to sell shares on behalf of customers for a nominal sum or free of charge.

Tend to agree, if you wish to conserve cash, just cancel the dividend. Just pay the minimal yearly dividend which will enable the Company to maintain Trustee status. Otherwise you are dividing up the same pie but into smaller pieces. Perhaps paying the dividend in shares means that certain income funds do not have to sell their holdings.

halifax- I am following stock from a take over angle but, against the current housing market background we could see the sp fall further yet in short term.

I agree in the absence of bid talk sp is likely to drift down towards 130p. However their is an opportunity at that level to acquire a bank network very cheaply, who knows even CTT may be a candidate as they are applying for a banking licence and are heavily into sub prime lending!

Re: B&B's divi - Is the stock dividend subject to income tax?

mm. interesting thought.CTT seem mainly to be in personal finance and a merger of the 2 business would diversify the earnings base. I see CTT have been quick off the mark with their rights issue. No dithering there.