TAKE A LOOK AT EUROPEAN BANKS & MARKET UPDATE

Name March 2009 share price June 2014 share price June 2015 share price % loss/profit in last year
LLOYDS 18p 80p 87p +8.7%
RBS 197p 320p 362p +13%
HSBC 350p 590p 600p +1.6%
STAN CHART 627p 1192p 1067p -2.1%
BARCLAYS 54p 225p 274.60 +22.2%
BNP €20.40 €49.40 €56.67 +14.7%
SOCIETE GEN €17.40 €39.00 €43.70 +12.1%
DEUTSCHE €16.50 €26.10 €27.82 +6.6%
SKANDINAVISKA SKR30.00 SKR80.00 SKR109.30 +36.6%
COMMERZBANK €12.72 €11.62 €11.95 +2.8%
ING €2.35 €10.40 €15.29 +50.1%
INTESA €1.47 €2.27 €3.37 +48.4%
UNICREDIT €3.84 €6.30 €6.36 +0.9%
CREDIT AGRICOLE €6.00 €10.61 €13.98 +31.8%
SABADELL €2.17 €2.30 €2.28 -0.9%
BBVA €8.80 €9.39 €9.28 -1.1%
SANTANDER €4.60 €7.75 €6.70 -13.5%
DEN DANSKE DK40.71 DK153.60 DK200.30 +30.4%
         

 

 

When QE was introduced in March 2009 bank shares rose like the proverbial grilse until about 2012 – see above. Since then, with the exception of Italian, Scandinavian and to a lesser degree, French banks, the sector has not been a particularly attractive hunting ground – certainly in comparison to the US, where gains have varied from the sector by between 60% and 100% in the last 5 years, thanks to liberal help from the FED. In the UK with the exception of Barclays, the other main banks have been disappointing, though in fairness Lloyds and RBS have made some measurable gains, BUT from a seriously trashed base point. The fines and repayments imposed on HSBC, LLOYDS, RBS and BARCLAYS and a lesser degree STANDARD CHARTERED for LIBOR, PPI, FX and MONEY LAUNDERING total way in excess of £35 billion, have curtailed profits. Who would bet against this figure going up, particularly PPI, when calculations have finished on ‘interest on interest and credit cards – the mind boggles?

 

There is no doubt that the Chancellor is right to sell shares in Lloyds, RBS and W&G back to the public asap, even if the first tranches of RBS go at a loss. Time will hopefully be a big healer, but I will not be holding my breath waiting for egregious profits. It could to be an uphill struggle. Regulation is going to be very painful and expensive. Today’s news that bonuses could be called back from as far back as 10 years ago could discourage overseas operators from expanding their business in London. Messrs Carney and Bailey seem hell-bent on having their pound of flesh. I invite them not to throw the baby out with the bath water.

 

Let’s hope in the Budget on 8th July the Chancellor trims the bank levy due annually from HSBC and Standard Chartered to the business they do in London. In the case of HSBC, it only conducts 20% of its business here in London. It would send out a very bad message to the world if HSBC were seen to pack its bags and head east, however unattractive the idea of returning to HK or Singapore might be. I think HSBC is bluffing, but if the Chancellor plays fair on the levy it will not be a problem. Morgan Stanley has done well easing Lloyds stock out with the taxpayer now only owning 16.87%. RBS may prove quite a challenge to Goldman and Rothschild. £45 billion is a gargantuan amount and there could be some indigestion from the sale of too many bank shares.

 

Despite the prospect of a Greek settlement, trading conditions in London have been sepulchral. The FTSE 100 at 3.30pm is up 24 points at 6860. Mining stocks are up between 1.5% and 2%, oils by between 1 and 2%. Ladbrokes gave back 1% and punters acknowledged that Carnival’s figures were good – up 3%.

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