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.

RBS issues global stock and credit crash alert
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 7:40am BST 18/06/2008

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

Such a slide on world bourses would amount to one of the worst bear markets over the last century.

"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.

RBS expects Wall Street to rally a little further into early July before short-lived momentum from America's fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.

"Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.

US Federal Reserve and the European Central Bank both face a Hobson's choice as workers start to lose their jobs in earnest and lenders cut off credit.

The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. "The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation," he said.

"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets," he said.

Well Bob's a real bundle of fun, pity he couldnt predict the disaster RBS was getting itself into by buying ABN/AMRO!

The banks are likely going to face a sharp drop from here...


Morgan Stanley profits drop more than 50pc

Morgan Stanley, the second-biggest US securities firm, said profit dropped by more than 50pc on declines in trading, asset management and investment banking.

The bank's earnings from continuing operations fell to $1.03bn in the second
quarter from $2.36bn, the Wall Street firm said.

Earnings from continuing operations fell to $1.03bn in the second quarter from $2.36bn, the Wall Street firm said. The news from Morgan Stanley came as John Paulson, founder of hedge fund Paulson & Co and one of the world's richest financiers, warned that global writedowns and losses from the credit crisis may reach $1.3 trillion.

"We're only about a third of the way through the writedowns," 52-year old Paulson told the GAIM International hedge fund conference in Monaco today. "There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing."

Morgan Stanley, led by chief executive John Mack, reported its first loss as a public company in December after $9.4bn of writedowns on mortgage-related investments. Mr Mack last month announced plans last month to reduce its headcount by as much as 5pc on top of the 3,000 jobs eliminated since October.

"We're expecting continued weakness across all their business units," William Fitzpatrick, an equity analyst at Optique Capital Management Inc. in Racine, Wisconsin, which manages $1.6bn. "It's going to take some time for these markets to really improve."

I have copied an extract from an article in the USA below by David Dreman who runs a very successful fund called Kemper Dreman High Return Fund. He made alot of money in the bank sector in the early 1990s by buying in near the bottom. It has to be remembered that he if focused in the USA banks which are ahead of the UK sector cycle, and we are yet to feel the full effects of a housing slow down.

I have read one of his books, and by his own admission he was a few month's early buying bank share in 91/92 but it still paid off very well.

see below............

David Dreman, Chairman of Dreman Value Management, recommended three banks in his recent Forbes column.

"The good news is that the worst of the liquidity crisis seems to be over," he wrote. "After a slow start, the Federal Reserve Board under Ben S. Bernanke has done an outstanding job containing the panic in the financial system and dispelling the fear of a total meltdown."

Dreman, an expert on the psychology of investing, is a self-styled contrarian. He believes that by controlling your emotions and buying these banks while others are selling, opportunity abounds. These shares of banks are in distress and oversold.

To be sure, long-term investors who understand the intrinsic value in this sector will buy and profit handsomely.

HBOS outlook revised to negative; 'AA-/A-1+' ratings affirmed - S&P




MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services said it
lowered its outlook on U.K. financial services group HBOS Plc. to negative from
stable as it affirmed its 'AA-/A-1+' long- and short-term counterparty credit
ratings.
HBOS derives 85 percent of its core earnings from the U.K., where the
slowing economy is likely to pressure its revenues and impairment losses for the
foreseeable future, S&P said.
The outlook cut follows the completion of S&P's review of the ratings on
U.K. banks and building societies.
The affirmation of the ratings reflects HBOS' strong domestic franchise and
our expectation that it will maintain solid earnings and capital ratios through
the economic downturn.
TFN.newsdesk@thomson.com

Re HBOS from ft.com today, very surprised to see the extent of BTL and self certified loans 26% of total mortgages, I fear for scotinvewstors blood pressure should he read this!! :

Trading continues to be satisfactory and remains in line with the Groups expectations.

The quality of our Treasury portfolio remains strong, comprising predominantly AAA rated securities. Since the Interim Management Statement on 29 April 2008, covering the period to 31 March 2008, the negative fair value adjustments in respect of securities held in the Treasury Trading Book taken through the Income Statement have increased by 58m to 1,028m. The post-tax negative fair value adjustments in relation to the Treasury Banking Book taken through equity have reduced by 49m to 1,825m.

The bad:

The UK housing market remains subdued, with transactions likely to be 45% lower in 2008 than in the previous year

The decline in house prices i now forecast to be up to 9% in 2008, which will have an adverse impact on secured impairment charges

Specialist includes BTL where arrears cases, excluding repossessions, were 1.23% of total BTL mortgages at the end of the May 2008 (0.94% Dec 2007) and 1.59% of value of debt on BTL mortgages (1.28% Dec 2007). Self Certified arrears cases, excluding repossessions, were 3.11% of total Self Certified mortgages at the end of May 2008 (2.51% Dec 2007) and 3.95% of value of debt on Self Certified mortgages (3.18% Dec 2007)
And the ugly:

We expect the UK economy to slow further in 2008, with a modest rise in unemployment and low interest rates, accepting that inflationary pressures will restrict the MPCs ability to reduce base rates below current levels.
HBOS becomes the first UK bank to talk unemployment, note analysts at Pali - though the bank is still (just) plumping for a single-digit decline in house prices this year. Theres also a hint at rising corporate impairment charges as a result of corporate difficulty limited to specific (but non-specified) sectors.The Treasury writedowns (with additional detail disclosed) look reassuring.

But the impairment figures may cause some alarm. Bradford & Bingley may get flak for their niche lending, but HBOS, the UKs leading mortgage lender, has about 26 per cent of its mortgage book split between self cert and buy-to-let, in which arrears have risen to 3.09 per cent at the end of May.
Cazenove crunches the numbers. Buy-to-let arrears have grown by 41 per cent, by value in the first five months of the year. Self cert arrears are up 22 per cent, while mainstream arrears are up only 7 per cent.

HBOS says its expecting a resilient performance this year. The share price is proving anything but - down 6.6 per cent on Thursday to 298p.


pericles. access to ft.com is free btw

hi peri

yes, i read it today.....hornby sounds like a politician rather than a banker.
the telegraph did a great page on him last week where even in 6 month period, hornby changes his views totally on actual figures.....maybe he will be next chancellor if he keeps this up.

hornby is in the wrong profession.
i was at local cricket club last week and hornby name seems to be getting talked about a lot up here.....and it aint good!!

finally, i went to hbos this week in local branch......the branch was empty when i was in for the few minutes i was there.....however, i counted amount of staff and all of them doing nothing.....10 of them......yes, ten people doing nothing!!!!

most are just wee girls at counter who obviously know nothing about banking either.......the banks need to streamline in times like this and get rid of 2 or 3 at least......also, several staff were talking/giggling away to each other......they are there to work and do banking....ITS NOT A SOCIAL CLUB. i also think they need to bring back the old days and pay staff what they could live on.....and i propose for anyone up to age of 30 anyway a salary of about 10,000 a year......12 maximum.

hbos need to get back to old fashioned banking.....and not the sales shop that halifax has turned it into

Hot news..................
General Electrics sub prime lending divisions in the UK have just announced they are withdrawing all products.
These may well be replaced, but there has not yet been an announcement about this, and the unusual point is that they normally give notice of withdrawal and that a new product line up will be available immediately after. This time they have given no such notice or undertaking.
As I say it may be they have merely changed the way they announce, but I am not confident. This is just about the last of the 90%+ sub prime lenders.
Hoping it is just a rate change or tweak of criteria, but I am not at all confident. That could be a big blow to the lending and housing markets because those using these lenders will now have nowhere left to go, whereas when a large volume high street lender changes, people can just go elsewhere.
Will update when I know their next move, which will probably be tomorrow.

This is turning into a bloodbath.

One possible bright spot over the weekend is that some mega rich bloke is looking at buying whats left of London Scottish.
London Scottish were a balance sheet sub prime lender, rather than the leveraged type. If this guy is seriously looking, then in effect he is looking to lend his own money in the subprime mortgage arena, and he didn't get mega rich by throwing his money away on dead ducks.......................

I have been trying to calculate at what stage we are at in this banking crisis (not a easy task) I know the values for the American banks before and after the Bank crisies of the early nineties, I haven't the data for UK banks for the 90s but would guess they could have been alike. You will see below I have compared the figures with RBS, BARC and LLOY.

US Banks 50% cheaper 9 months into crises (1991/2)
RBS,BARC & LLOY 55% cheaper 11 months into crises

US Banks from PE of 4.1% to 8.8%
RBS,BARC & LLOY from PE of 5.6% to 11.1%

US Banks from P/BV of 1.6 to 0.9
RBS,BARC & LLOY from P/BV of 2.28 to 1.01* = My best guess?

I think the comparisons are interesting, because the UK banks have now fallen further than the US banks in the early 90s crisis. This time I feel the crisis is more serious, but I'm sure we will look back at some great opportunities.

IF banks sp are that good then seize the day!

seize the day, in small instalments at least.

Like everyone else I have no idea where the bottom is, but I will average down slowly from now.

Uncomfirmed......

The reason for General Electric pulling all products from sale today and not announcing anything about replacements is that (according to an acquiantance) GE money and GE Home Lending are about to be taken over by Banco Santander (ie Abbey).

If I can get any confirmation (or anyone else can corroborate this) I will post on here.

damn spanish dagos.......the spanish....like the germans over last decade.....are buying more of british companies.......BAA, scottish power, abbey all being bought over by spanish dagos.
i used to work with english guy who didnt like germans....yet he worked for a german company and drove german car and german bike.

is anything british these days?

answers on a postcard pls to:

mr. g. (prudence) (Stalin) brown
10 downing street
london

Wow,amazing charts for a particular sector when linked like that,why has HSBC appeared to buck the trend? Sorry,don't follow the banks but will do in future,good thread.

i imagine cos HSBC ALTHOUGH in uk, are also mainly in asia etc.

a lot of banks are mainly uk based although some like barclays have a big base in usa.

you need to do some research on heads of bank right now banjo as 1 or 2 of banks are run by numpties with no banking experience.......yes, NO BANKING EXPERIENCE. i actually doubt whether they would be decent businessmen but certainly 1 or 2 are in the wrong profession.

My prediction on the 8 th March have been correct.

Been seeking confirmation of the GE Money news.
1) The Banco Santander link appears true, but only for the car loan / credit card part of GE
2) The 2 secured lending divisions of GE are coming back with new rates, however my source was vary veiled with reerence to criteria changes
3) He thinks the link is co-incidental to the deal pulling, but is not totally sure.

The only thing certain is that they will continue with sub prime secured lending, which is a relief, as long as criteria does not change too much. If it does, that really does signal huge problems for the housing market and, by extension, the wider economy, though Banco Santander must have some faith to chase the car loan and credit card parts of the business.

Phew............
Panic over. GE are back in and the rate changes are minute, and the criteria remains the same.