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.

Could be a bad day for lloy Tuesday, see link below re-miss selling rumours with Scottish Widows. With more possible writedowns and a rights issue from UBS and rumours about hidden CDO losses in Lehman Bros it may be a bumpy ride for all banks.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3998860.ece

Anthony Bolton, one of the City's leading fund managers, called the top of the commodities market yesterday by arguing that he would switch out of metals and oil and move his funds into financial stocks. Speaking in a television interview, Mr Bolton, who stepped down from running Fidelity's Special Situations Fund in January, said: After five years of strong commodity markets, a contrarian such as myself would start to get more worried. I would switch out of commodities today and move into financial stocks, reports the Times

Worth a read of a paper report copied below, if I can find out the CDS figures for UK banks I will post them here.

"The debt markets in the US and Europe have begun to flash warning signals yet again, raising fears that the global credit crisis could be entering another turbulent phase.

The cost of insuring against default on the bonds of Lehman Brothers, Merrill Lynch and other big banks and brokerages has surged over the last two weeks, threatening to reach the stress levels seen before the Bear Stearns debacle. Spreads on inter-bank Libor and Euribor rates in Europe are back near record levels.

Credit default swaps (CDS) on Lehman debt have risen from around 130 in late April to 247, while Merrill debt has spiked to 196. Most analysts had thought the coast was clear for such broker dealers after the US Federal Reserve invoked an emergency clause in March to let them borrow directly from its lending window.

But there are now concerns that the Fed itself may be exhausting its $800bn (399bn) stock of assets. It has swapped almost $300bn of 10-year Treasuries for questionable mortgage debt, and provided Term Auction Credit of $130bn.

"The steep rise in swap spreads this week is ominous," said John Hussman, head of the Hussman Funds. "The deterioration is in stark contrast to what investors have come to hope since March."

Lehman Brothers took writedowns of just $200m on its $6.5bn portfolio of sub-prime debt in the first quarter even though a quarter of the securities had "junk" ratings, typically worth a fraction of face value.

Willem Sels, a credit analyst at Dresdner Kleinwort, said the banks are beginning to face waves of defaults on credit cards, car loans, and now corporate loans. "We believe we're entering Phase II. The liquidity crisis has eased a little, but the real credit losses are accelerating. The worst is yet to come," he said.

The jump in corporate bankruptcies has not yet been picked up by the usual indicators, which tend to lag the market, lulling investors into a false sense of security. The true losses are already known to specialists in the business, said Mr Sels."

Interesting video on the FT site which suggested the investment banks such as LloydsTSB are keeping libor up and deliberately starving the non investment banks such as B&B of cash... The intention is possibly to pinch their market share and then buy them up on the cheap...

LTSB will be pleased to learn they are an investment bank!

brianboru

is this the interview with Diana Choyleva

when you think about it, it makes sense for the clearing banks to keep libor higher and take advantage of the difficulties caused to al. bb. and hbos.

Just a thought.

Miners and banks appear to trade in opposite directions. With miners about to break technical levels, it feels as though they have lost their gloss. It may only be temporary of course but with banks at very low levels and RBS and B&B near their rights issue prices, is this the start of the turnaround. Time will tell of course. IMO the initial surge in banks sp's today will disapppear and today at least miners will come back. We shall see!

Buffett did say he would not look into banks until Q3. Are we there yet? I am going to start buying small amounts in a diversified bunch anyway, be most brave when people are most fearful so the Sage says

Sorry, clearing banks and non clearing banks...

Spitfire, yes it is Diana Choyleva under view from the markets...
http://www.ft.com/cms/893ac9c8-757e-11dc-b7cb-0000779fd2ac.html

Now the banks have to sell assets...looks like the banks are far from bottoming out...


Royal Bank of Scotland and other European banks are having to sell assets to repair their battered balance sheets and will have to settle for low prices.

Buyers are scarce because funding is tight for private equity firms and because the better capitalised banks that might be interested can afford to hold off on acquisitions until the price is right.

"RBS Insurance is a classic example where a bank has in mind what it thinks is a fair price but the reality is people's ability to pay is pretty constrained," said Simon Maughan, analyst at MF Global.

"If we do see asset sales it could take a few more months for the sellers to capitulate (and lower price expectations)," he said.

RBS (RBS.L: Quote, Profile, Research) may struggle to achieve the 6 to 7 billion pounds it wants for its insurance arm and it is not alone in looking to sell assets in tough markets, bankers say.

Still, cut-price deals may be better than dilutive share issuance.

Multi-billion-euro rights issues are repairing the most stretched balance sheets, but with more writedowns on toxic holdings and low growth ahead, asset sales could be the key.

Dont agree any banks rushing to sell assets generating good earnings must be in serious difficulties at this time when asset sales are unlikely to realise their true worth.The banks able to weather the credit crunch storm without selling assets on the cheap are the banks worth buying into, the market share price of a bank or any company does not necessarily reflect the true value of that company and those who hold their nerve will succeed whereas those that dont will fail.

rbs is solid to come out ok eventually.....and i think worst is over now.

if rbs goes bust, most of uk will go bankrupt!!! here's hoping then, lol.....at least gordon brown has increased his pension by millions in recent years so he will be ok.....oh and tony the war criminal who aint been tried yet in the hague who is earning more than 10 million a year for doing he-haw....plus his stupid book too

brown and blair.....more like laural and hardy.....thats another fine mess...

i have been informed by an rbs manager that when nrk were bailed out by uk peoples money to tune of several thousands pounds for each person in country, if rbs are to be bailed out, then you can easily put an extra zero on the figure at least.....ouch!! that means every person in uk has to pay 40,000 each!!!

and most people r struggling.......even the aussie bankers r leaving london to go back to oz as they r fed up looking at poor people in uk

In the Financial Times today, many brokers including Hargreaves Lansdowne said Bradford & Bingley is a SELL.

It's been a day to forget for shareholders of struggling building-society-turned-bank Bradford & Bingley (LSE: BB.) . B&B's shares were suspended from trading at 7.52am, only to be reinstated at 8.10am after the lender issued a profit warning. In a stock-market announcement, the UK's eighth-largest bank revealed five shockers:

1. US private-equity firm Texas Pacific Group is buying a 23% stake in the bank at 55p a share, for a total of 179 million.

2. B&B's recently announced rights issue has been scrapped and replaced by a restructured issue of 258 million. The original rights issue, announced last month, offered new shares to existing shareholders at 82p. As the market price is now below this level, shareholders can buy B&B shares more cheaply in the stock market. Hence, the previous rights issue was cancelled. The new deal offers shareholders 19 new shares at 55p for every 25 shares held.

3. B&B made an 8 million pre-tax loss for January to April, versus a 108 million profit in the same period of 2007. B&B had expected to make 150 million in the first four months of 2008.

4. The lender warned of tough times to come for the UK housing market, as write-offs, bad debts and arrears rise in buy-to-let lending.

5. B&B's chief executive, Steven Crawshaw, is suffering from a heart condition and has stepped down. We wish him a speedy return to health.

There may be trouble ahead...
Naturally, B&B's share price plunged, with other banks' shares following suit. Having closed at 88.25p on Friday, Bradford & Bingley's share price dived as low as 60p (down 32%), before recovering to 66p (down 22%) as I write.

Bradford & Bingley is particularly exposed to specialist mortgage lending, including buy to let (where it is the market leader), self-certification (alias liar loans') and negative-equity and 100%+ loans.

The big worry for Bradford & Bingley (and other mortgage lenders and property investors) is that its buy-to-let business model has never been stress-tested in a housing downturn. B&B is the UK's largest lender in the buy-to-let sector, with a share of a fifth (20%) of this 120 billion market.

No one knows how buy to let will play out if house prices fall for a sustained period. It may even be the case that the buy-to-let bubble has burst and this model has broken down. When times get tough, homeowners will be a better bet than property investors, so the future looks grim for B&B.

You'd have to be a very brave investor to buy shares in Bradford & Bingley at present. The long-awaited housing-market downturn has only just begun, and the UK economy has yet to go into recession. Nevertheless, B&B is already showing signs of financial strain, even though the worst is still yet to come.

Therefore, things look pretty nasty for B&B's owners. TPG Capital is paying 55p a share for almost a quarter of Bradford & Bingley, with the replacement rights issue at the same price. Therefore, there is no reason why existing shareholders should value their shares at much above this level. What's more, the dividend will definitely be cut later in the year.

In short, if I were a shareholder in B&B, I would head for the exit by selling my shares.

Virgin Money rules out B&B bid - By Philip Aldrick
Last Updated: 12:55am BST 11/06/2008

Jayne-Anne Gadhia, chief executive of Virgin Money, has ruled out a bid for Bradford & Bingley, insisting that buying such a "damaged brand... would be insane", despite pitching a 1.25bn offer for Northern Rock last year.

Ms Gadhia, who led the bid on behalf of Sir Richard Branson's outfit, claimed B&B did not fit Virgin Money's strategy to take customer deposits and offer mortgages and investments.

She said: "It would be insane to pay for access to the banking world by taking on risk that was unmanageable.

Northern Rock would have given us huge scale and profile immediately. The big difference between Northern Rock and B&B is the quality in the balance sheet."

B&B's mortgage arrears are above the industry average at 1.98pc and its profit margins are deteriorating. Northern Rock was appealing because it made "sound and sensible" investments, Ms Gadhia said. Its arrears level was 0.95pc in April, below the industry average of 1.1pc.

"Looking at the liability side of B&B's balance sheet, it wasn't as good as Northern Rock's because the buy-to-let and self-certification loans they made are perceived as high risk," she said.

market collapsing. RBS 216p and HBOS at rights price!

would suggest this is a good time to hold cash and be in a position to buy cheap(er) banking shares like RBS. They have already had their rights issue (RI) and raised cash so hopefully despite their weak trading statement they will recover without any further dilution in the short term.

If HBOS go below rights issue SP will they have to re think RI price?
I mean those that hold wont take up their holding as they can top for less if that is there wish.

I hold a very small number of HBOS and LLOY and am not about to increase my holdings in them any time soon. RBS is on my watch list

I think HBOS will have to reduce it and heads will roll.

If RBS gets less than rights price heads should also roll.