Posts tagged 'UK banks'

Safe as houses, and perfectly priced

Some expansive credit-related thoughts arrive from Alberto Gallo at RBS, for a quiet May Day when Europe’s capitalists take the day off in honour of its workers.

In short, its the safe stuff that may not be safe anymore as/if/when the continent’s economy expands: Read more

How do you stop a shrinking bank?

After a day of digestion, the new RBS strategic plan still leaves a lot of questions unanswered. Indeed, the most pressing one we have heard from investors is whether the bank is an outright short or simply one to avoid, given the limited free float.

A lot of focus, also on whether the management of the bank — which soon won’t include departing chief financial officer Nathan Bostock — will be able to see through the strategic plan they have sketched out on the back of an envelope in the few months since Ross McEwan took over.

But another leaps to mind. The plan is to shrink the international, cross border, bit of the business to end up as a sort of UK-focused Lloyds Plus. But once you start letting the air out, how do you stop the balloon becoming a whoopee cushion? Read more

Caption competition! A new direction

After six years in the red (the latest an £8.2bn loss for 2013) the only way is up and this bank is on it:

Today RBS is announcing a new plan with the ambition of building a bank that earns its customers’ trust by serving them better than any other bank.

And here is Ross McEwan rallying clearly delighted staff with that message.

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RBS quotes du jour

First off – bonuses. I’ve said I’m pragmatic, I’ll pay in the market to get the best people and to hold onto them. What more do you want to know?

— Ross McEwan, ‘Ross McEwan, RBS chief executive, answers your questions,’ Guardian

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Selling StanChart… to Australia

The share price is down a fifth in 12 months. It’s cheaper than Lloyds (on price to tangible book), as a bank with Asia supposedly at its feet. The boardroom is a mess and last week’s “reorganisation” may not fend off an eventual cash call.

Still, after that excellent year for Standard Chartered — Citi’s analysts suggest it’s time for ANZ to buy it: Read more

To all potential naughty boys and girls

The Financial Conduct Authority has written to the banks, suggesting that they think long and hard before enforcing contractual terms agreed with their small business borrowers.

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UK bank leverage ratios, mind-meld du jour

Dear Mark,

I would also wish to understand the impact of the introduction of the leverage ratio on the ability of the banks to support growth in lending to UK consumers and businesses…

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The Co-op mess/meth

Whatever could it have been about the Rev Paul Flowers that pushed Len Wardle — chairman of the Co-operative Group, and who led its board in appointing the Reverend to chair the Co-operative Bank from 2010 — to resign on TuesdayRead more

Just how big is Barclays in MSBs?

That’s Money Service Businesses — bureaux de change, cheque-cashing services… money remitters.

That makes them sound small. But remittances are a big deal for unbanked economies like Somalia. (About £100m from the UK alone, says Oxfam.) Read more

The pictorial ‘RBS Capital Resolution Group’

Meet the new £38bn RBS internal bad bank same as the old Non-Core bank:

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These are the voyages of the USS Barclays, in the Exit Quadrant

‘Exit Quadrant’ Businesses identified by the Strategic Review that are unlikely to achieve sustainable returns or are operating in markets of low attractiveness. These businesses have a clear path to exit.

What we think Barclays were trying to say there is that these are rubbish assets which they would quite like to get rid of.

That’s from the 14-page glossary to the UK bank’s latest (44-page) earnings updateRead more

Underlyingitis, and other banking gibberish

What does this mean?

Seriously — what does it mean?

It’s an analyst’s take on Lloyds Banking Group’s latest profits update, whatever it was that actually constituted profits here. Beyond that you’re on your own: Read more

“This bank will remain the Co-operative Bank”

That would be Euan Sutherland, chief executive of the Co-operative Group, announcing “we have been listening carefully” to bondholders (eventually). Anyway, Sutherland has three principles for the now bondholder-dominated recapitalisation of his group’s bank (still in negotiation)… Read more

The Co-op mess, and bondholder ethics

The PRA works with the FCA and the FRC to improve the quality and usefulness of information disclosed on firms’ safety and soundness… Consistent with that, we will work with the FCA and the FRC to review the extent to which there is scope to extend bondholder influence over banks, with a view to bringing forward recommendations in due course…

Bank of England (and Prudential Regulation Authority) response to the Final Report of the Parliamentary Commission on Banking Standards

Alternatively… the PRA need look no further than the wreckage, on Monday, of the Co-operative Bank’s plan to deliver the £1.5bn recapitalisation they ordered.

Plan B (for Bondholder) has taken over. Read more

Help to Buy, the banks, and the borrowers

It’s Help to Buy 2 launch day. Or, extend mortgages and warehouse them until the UK government supplies its guarantee for a portion of the money in January, launch day.

The scheme’s complete rules are here if you missed all 66 pages. Note the lending policy questionnaire.

So, reflecting on some HTB bits and pieces floating around on Tuesday… Read more

Help to market-clear?

It’s “a reasonably sensible policy with some likelihood of success.”

What recent government initiative might Neville Hill and Steven Bryce, Credit Suisse UK economists, be referring to?

Why Help to Buy 2 of courseRead more

The Great British 95% LTV

In contrast I am an optimist. I believe in free markets.

–George Osborne, Conservative party conference 2013

Details TBC, of course. But UK banks will be lending mortgages with a five per cent deposit in the very near future, under the rushed-forward Help to Buy 2 scheme.

And that means the UK government will be guaranteeing themnot the borrower — the next 15 per cent of mortgage value. Hence the fee paid by lenders for the guarantee (90bps for a 95 per cent loan to value, less for lower LTVs, apparently). Read more

Co-op Bank: Plan B

Monday — The Co-operative Bank takes flak from yet another group of its bondholders for refusing to consider any sort of Plan B in getting them to share the burden of recapitalisation.

Friday — It starts considering Plan B. Read more

The Co-op Bank: dial B for bondholder

For the Co-operative Group, there is only one plan for fixing its bank’s embarrassing £1.5bn capital shortfall. Plan A.

Plan A is an exchange offer to holders of Co-op Bank’s subordinated bonds for more senior debt, plus shares in a public listing, alongside a stake taken by the Group. Bondholders said they need more detail about the haircut involved. But they’ve already been told to take it or leave it.

Well, increasingly — and therefore interestingly for the bail-in era — they’re doing neither, and preparing their own Plan Bs… Read more

Name that price, Lloyds stake sell-off edition

Intention to dispose of approximately 6% of Lloyds Banking Group plc

UKFI announces its intention to sell part of HM Treasury’s shareholding in Lloyds Banking Group plc (the “Company”). The disposal of these shares (the “Placing Shares”) will be by way of a placing to institutional investors (the “Placing”). Read more

Cash or credit-fuelled?, UK house price edition

If you laugh at this, then maybe a lot of macroprudential regulation is comical.

What to make of this startling call from UK’s Royal Institute of Chartered Surveyors, to the Bank of England’s Financial Policy Committee?: Read more

Warning Co-op Bank bondholders, redux

In particular, the recapitalisation plan is subject to finalisation and its implementation is subject to a number of inherent risks. Risks include a failure by bondholders to participate in the Exchange Offer, a legal challenge by affected Bank bondholders to the Exchange Offer and a failure by, or inability of, The Co-operative Group to make its proposed contribution…

Failure to implement the recapitalisation plan may result in regulatory intervention that could reduce or eliminate the value of the equity and modify, reduce or eliminate debt payment obligations.

— ‘Cautionary Statements’, The Co-operative Bank plc Interim financial report 2013

That’s the official version of the Co-op Bank warning to subordinated bondholders to swallow conversion of their debt into equity, in order to ensure its £1.5bn capital rescue. The unofficial version, from the mutual whose model was once lauded by politicians? “There is no plan B”.

Well, the bondholders are starting to think of Plan C. Read more

Statement from Capital Taliban

Not a relaxation of capital requirements by the Prudential Regulation Authority on Wednesday — it’s a relaxation of the amount of liquid assets which banks have to hold (falling by some £90bn, apparently) so long as they do meet strictures on capital.

From the release: Read more

Industrial quantities of risk-weighting, HSBC edition

HSBC’s interim report 2013:

– Pages: 295
– Words: loads
– Risk-weighted assets: $1,105bn Read more

Warning bondholders, Co-op edition

How’s this for a bank bondholder disclosure? Bear in mind — it’s over 20 years old.

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A mere £141bn

From the UK National Audit Office’s look at the Treasury’s accounts:

Much more here. It’s largely because of the withdrawal of the biggest crisis-era sovereign guarantees for banks: Read more

Dear Mr Bailey…

The Commission encourages bondholders, where they are sufficiently concerned, to raise such issues publicly where practical. The PRA should examine the scope for extending bondholder influence of this type…

‘Changing Banking for Good’, Parliamentary Commission on Banking Standards

It’s actually well worth reading the full letter from Mark Taber to Andrew Bailey of the Prudential Regulation Authority, the latest protest against the £500m bail-in of subordinated bondholders that’s emerged from the Co-op Bank mess.

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Some UK bank shortfalls

Click to enlarge for the Prudential Regulation Authority’s table on UK bank capital shortfalls…

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Bad-banking RBS, a PCBS side-track


If the Government simply purchased assets for the bad bank, it would have to issue a significant volume of gilts which if done quickly could have undesirable consequences for gilt markets and the price of Government borrowing.

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Vacancy for fig leaf

If you are the “politically astute” person to run UK Financial Investments — then hurry!

The application deadline ends on June 21: Read more