Lloyds Banking Group Just May Be Able to Exit Bank Bailout
by: Research Recap September 24, 2009

The prospect for Lloyds Banking Group (LYG) escaping the UK Goverments bank bailout scheme have gotten a boost from a new research report on the UK banking sector from Execution analyst Joseph Dickerson.

The Independent reports that Dickerson issued a buy recommendation on Lloyds, arguing that the bank would be better off without the asset protection scheme (APS), which he said was a sub-optimal way to recapitalise the sector and should be reconsidered.

He hopes that the group opts for a rights issue instead, suggesting that banks with substantial government ownership have a higher cost of capital than those that do not. Reduced funding costs would benefit the net interest margin, which in turn would boost earnings, Mr Dickerson explained.

Lloyds has an opportunity to change this by not participating at all, he said. 15bn of net (we forecast 16bn including a 1bn termination fee to [the Treasury]) non-Government capital is likely to reduce Lloydss cost of funding substantially.

For those worried about whether Lloyds could raise the amount required, he added that a 16bn capital raise is not a big ask because, if [the Treasury] takes up its rights, the amount of capital needed from the market is [around] 9bn.

FT Alphaville offers further analysis, adding that based on Dickersons calculations Lloyds would emerge with a fortress balance sheet and a leverage multiple in-line with the major US banks.

The FTs Lex was skeptical on Sep 18 about LLoyds chances of pulling off such a deal:

Lloyds is thought to need at least 15bn-20bn to avoid the APS altogether, maybe more. But that is a tall order. Even if it raised 6bn by selling Scottish Widows and Clerical Medical, that would leave a shortfall of 14bn more than HSBCs record rights issue. A small cash call might be feasible. Yet it is fanciful to believe that Lloyds could raise any equity without the APS, let alone any of the other alternatives Mr Daniels seems so keen to pursue.

The Scotsman reported that most analysts think Lloyds will have to raise money to reduce the amount of assets in the APS, and hence the governments stake in the bank, but not exit it altogether.

The idea of Lloyds exiting the APS is unlikely primarily because raising 15bn to 20bn isnt a viable option, said Exane BNP Paribas analyst Ian Gordon.

Also bullish on Lloyds is UBS, which reiterated its buy rating on Sep 8. Analyst John-Paul Crutchley argues that the bank is fundamentally an undervalued company.

On the basis of normalised earnings, around two years out, we see Lloyds as worth around 180p-200p/share, making the company worth around 80bn. In our view, the debate around the APS comes down to how this value is carved up between the UK Government and private shareholders.

West LBs Neil Smith see the bank as a valuable UK franchise, if not spoiled by state aid disposals, but maintains a Neutral rating pending resolution of the APS issue.

INGs Andreas Mavrikakis also is taking a wait-and-see approach, maintaining a Hold status. On normalised EPS we see up to 100% upside in the long term and more limited downside. However, we believe LLOY will underperform short term especially if the plan works, despite managements signal that impairments peaked in 1H09.

CreditSights on Sep 18 said we felt the most likely alternatives for Lloyds would be a renegotiation of the terms of GAPS and/or a reduction in the assets to be covered by GAPS, in conjunction with a capital raising exercise, rather than a full withdrawal from the scheme.

What a change of posting from "marni"

When the silly cow was holding a couple of LLOY shares....

marni - 27 May 2009 11:51 - 147 of 759
same here........i make more from master than that idiot hyleo.

marni - 01 Jun 2009 09:33 - 179 of 759
oh no.....sp up today.....that means no posts from hyleo


after selling at about 66 /67p, She bought at 60p and wanted a 10% profit .....

marni - 24 Jul 2009 13:03 - 449 of 759
i dont have these master.
oh and try not to be so insulting cos someone thinks lloy is crap......and it is!!

Balerboy - 06 Aug 2009 14:23 - 524 of 759
ooooooooohhhhhhhhh, remember your talking to a lady............lol with hairy legs!!

re - arselicker.

Funny to say, you were MY arselicker at a time and I never ask for it...


marni - 27 May 2009 11:51 - 147 of 759
same here........i make more from master than that idiot hyleo.

Conclusion

Keep you MOUTH SHUT if you are a bad lier

source - Bloombeg

U.K. Banks Face Cuts as Support Ends, Moodys Says (Update1)


By Jon Menon

Sept. 24 (Bloomberg) -- British banks may face very notable credit rating cuts once newly written living wills herald the end of government support for the system, according to Moodys Investors Service.

Plans to introduce living wills, whereby banks are forced to simplify the corporate structure to allow an orderly break up should they get into difficulty, would remove the necessity for government support, said Moodys in a report.

Given that most ratings in the U.K. currently incorporate a very high degree of extraordinary support, the phasing out of this support could result in very notable rating downgrades unless banks have substantially strengthened their intrinsic credit profile by then, said Moodys. The political willingness and financial flexibility to further support banks is limited.

Britain has provided 1.4 trillion pounds ($2.3 billion) of support to the banking system, funding lenders including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc. The introduction of living wills would confirm that the U.K. is a low support country where most banks receive limited support in normal times, said Moodys.

The Banking Act, overhauled this year, provides the government with legal tools to deal with failing banks, said Moodys. Living wills would reduce the systemic effect and complexity of bank failure, the report added.

Barclays Plc, the U.K.s second-largest bank, will find it very difficult to write a living will because it is severely complicated, Finance Director Chris Lucas said at a conference on Sept.4.

The Financial Times reported the Moodys comments earlier today.

I cant understand the mentality of people who actually enjoy watching others lose money-what goes around comes around imho!


Master RSI, Keep it up mate and dont take any crap off those who dont appreciate your good work, I have made lots of money with your sugestions I must say. You have confounded your critics once again and finally I love your cartoons and cant stop laughing.

Cheerio and good nite

Good morning all>

dealerdear - 24 Sep 2009 19:35 - 757 of 762
shut it tobacco or I'll stick you in my mouth and set light to you ...
---------------------------
Oh dear oh dear oh dear.you silly boy many people have tried and failed my old sunshinebut of course you are free to write what you wish on these sitesyou view is registeredfeel free to hang on sparkys every wordI wont stand in your waystick your mortgage on lloy.

Cielo..
762
I cant understand the mentality of people who actually enjoy watching others lose money
-----------------
I can assure you I do not want anyone to lose moneyincluding sparkyit is just the way his spiel comes outhe tells the World he has a dead certlisten I am an ex. Bookmakermade my living from the assistance of people like sparkyvery dangerous people to followI do not have a short positionand have no interest in the SP.cieloI dont know you but I wish you every success in lloy and your other trades

the new chairman is all ready dead when is the funeral . the board of lloys need to go the bank is run by losers they have destoyed a great bank daniels is useless idiot

Cielo.

Likewise. Made money many times on Master's technical know-how and his cartoons also make me laugh. It is good to read posts from someone who actually knows what he is talking about rather than those who think they know what they are talking about such as tobacco above.

My post that started this debate with Halifaxand Sparkys reaction.I thought I was polite and to the pointSparky jumped in like the Messiah he wants to portrayI understood Halifaxs positionend of story.Sparky wanted to heavy hand.?the rest is history>

skinny - 21 Sep 2009 16:29 - 668 of 764
Lloyds Bank faces allegations of tax evasion
halifax - 21 Sep 2009 16:34 - 669 of 764
skinny "storm in a tea cup" tax avoidance is quite acceptable it is not tax evasion.


tabasco - 21 Sep 2009 17:30 - 673 of 764
HalifaxI love your quotetax avoidance is quite acceptableit is when it suits youwe are not talking about a VAT drinkif it is acceptablelets all do itI have a feeling you would get a vote of no confidence in Parliamentbut to balance the argument poor old Sir Philip Green might give you his approval

tabasco - 22 Sep 2009 10:51 - 681 of 764
Lloyds are prepared to raise a huge amount to withdraw from the APSthe FSA has trumped themwould you want to hold in a stock that is prepared to see its sp plummet through such capital raisingI am a gambler but I wouldnt back a horse to win with a bookmaker that owned it.seems a bit obviousbut then I am a lucky thicko

Master RSI 2009 12:41 - 685 of 764
tabasco

re - i wish you well..

I am well alright, and certainly do not need you help, I speak my mind maybe once to often, but at the same time I am right once too often also, about the grumpy lot, most likley your included.

I am doubling my profits on LLOY, maybe I am a better investor than some of you, and just now I am on TOP of the world, I have sold SKR for a 47.60% profit, bought on 9th September, yes less than 10 days ago, so I close the bargain on a T +6, because I bought the stock on a T+15 days, meaning I didd not have to pay for the stock.

Just cheking PXS now, on a large profit, but till one sells, it can not be counted, just like LLOY at the moment.

The timing of the buying is what makes one succesfull on the share business, naturally the timing of selling is once again the point, that some of you missed to put a stop loss at the right time, and now have become as I said earlier "Sour Grapes"

I will celebrate the ocasion with some large Whisky later instead of "tabasco"

-------------------------------
Sparkyserious questionI asked if you were Chineseno answerare you related to Tokyo Joe.he also was a legendry punter/tipster.????????? http://management.silicon.com/government/0,39024677,11014955,00.htm
Ring any bells?

cielo is Mrs i

Confucius Says:

War does not Determine who is right war determine who is Left.

Banks under presure starting in ASIA ...............

Asian stocks fall on stimulus exit talk

HONG KONG (Reuters) - Asian stocks fell and the U.S. dollar extended gains on Friday after central banks said they were winding down extraordinary stimulus measures, raising fears the days of fast flowing liquidity were numbered.

Japan's Nikkei share average led declining equity markets in Asia, falling 2.9 percent.

Bank shares dropped after Nomura Holdings said it would raise in an equity offering up to $5.6 billion (3.5 billion pounds), what one broker pointed out was 24 times its average daily turnover.

The first inflows to money market funds in eight weeks, pronouncements from the Chinese that the world needs to begin preparing stimulus exit strategies and comments from a Federal Reserve official that rates may need to rise have contributed to profit taking in equities and bets against the dollar.

While the overall level of liquidity in most economies is abundant, the prospect of reduced stimulus sent some dealers to lock in profits ahead of the outcome of a G20 meeting in Pittsburgh, in which rebalancing the global economy was a focus.

"Markets are fragile at the moment and there was a visible announcement effect -- markets afraid that as liquidity is mopped up, then some risk appetite may go with it," said Adam Carr, senior economist at ICAP Australia.

australia, lol......thickos....just like the yanks like daniels at lloy......this donkey or horse shiut is falling again today.

why not pick a winner with prospects.....i've given you some answers already but u seem to like crap and stuck in it now.....if u have profit then i suggest u hurry and exit

SparkyConfucius Says: Man who talks like Hell bound to get thereyou been trumped today?

Confucius Says: Sparky eat many Prunesbut gets good run for his money.

still think good chance of nationalisation of this next year

cielo

re - Master RSI, Keep it up mate and dont take any crap off those who dont appreciate your good work,

thanks, is nice sometimes to have somebody that at least appreciates my posting, if is at least the effort I put.

Glad you have managed to make some money on my selection of shares, that in the past I said were ready to move forward. Some of them have more than double on the last 4 month since I started posting here.

Do not depend on others, you must make you own research, but maybe learn from what other say if you think it make sence, that is why I give the reason for my choosing of the stock and why will move foward or retrace, maybe after all I am one of a few that I been around the market long enough to know the ins an outs of shares.

You are a darling if only on the pick below

Master RSI.best part of a post you have ever written.a changed man?I doubt iti would have liked the word honesty in there somewhere

Do not depend on others, you must make you own research, but maybe learn from what other say if you think it make sence, that is why I give the reason for my choosing of the stock and why will move foward or retrace, maybe after all I am one of a few that I been around the market long enough to know the ins an outs of shares.

Master RSI.are you Argentinean?

dont mention the falklands.....haha......or the oil shares there, ssshhh