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Non-Tech : Banks--- Betting on the recovery -- Ignore unavailable to you. Want to Upgrade?

To: Jimmy08 who wrote (116)	2/25/2009 5:09:41 PM
From: tejek	Respond to of 1428

Good article. What Canadian banks do you like? And are you Canadian?

To: Jimmy08 who wrote (116)	2/26/2009 9:59:22 AM
From: tejek	Respond to of 1428

The UK is another place to look for some good banks. The UK looks to be ahead of the US in terms of dealing with its bad banks. RBS loses $34 billion, agrees deal to insure assets Sweeping restructuring planned; will raise further capital to pay for insurance By Simon Kennedy, MarketWatch Last update: 6:24 a.m. EST Feb. 26, 2009Comments: 28LONDON (MarketWatch) -- Royal Bank of Scotland Group said Thursday that the U.K. government has agreed to insure 325 billion pounds ($462 billion) of its assets as the bank unveiled a 2008 net loss of 24.1 billion pounds -- the biggest ever by a British company. The bank also announced sweeping restructuring plans and said it could issue as much as 25.5 billion pounds in additional preference shares to pay for the insurance and strengthen its capital. Shares of RBS surged in London. See London Markets for more. The 2008 loss follows a net profit of 7.3 billion pounds for 2007, but it was still significantly less than the 28 billion pounds that RBS had warned in January it could end up losing for the year. The red ink also was smaller than the consensus loss forecast, pegged at 25.6 billion pounds. RBS said it will pay the government 6.5 billion pounds in the form of preference shares for the asset-insurance scheme, spread over the next several years, and has agreed not to claim certain tax benefits. It will separately raise an additional 13 billion pounds of capital from the U.K. Treasury in preference shares and has an option to top that figure up by a further 6 billion pounds. Terms of the government deal call for RBS to be responsible for the first 19.5 billion pounds of losses on the 325 billion pounds of assets, with the government then covering 90% of any further losses. The deal will allow RBS to increase its lending to homeowners and businesses by about 25 billion pounds in the next year. Davy Stockbrokers analyst Stephen Lyons said that the terms appear to be better than expected. He noted the 6.5 billion pound fee is 2% of the total assets, while markets had been expecting a fee of some 3%. Stephen Hester, chief executive of RBS, told analysts on a conference call that the agreement on taxes with the government could effectively double the price in the long term, though the details are still to be worked out. Investors welcomed the size and terms of the deal along with the narrower-than-expected 2008 loss. RBS shares are down more than 95% from a high in early 2007 and lost around two-thirds of their value in a single day earlier this year when management announced its expected loss. Meanwhile, shares of Lloyds Banking Group set to announce its participation in the guaranty program alongside its financial results on Friday, had a rally of their own in London, and Barclays which may also participate, saw its shares on the rise as well. Corner really turned? Nomura analyst Raul Sinha was more bearish on RBS and said Thursday's rise in the shares should be taken as a selling opportunity. "In our view, the asset-protection scheme, along with the further capital injection, lead to very significant dilution of ordinary equity shareholders, while there are still downside risks," Sinha said. The government has agreed not to take its voting stake in RBS above 75%, but Sinha noted the further capital injection would give it an economic interest of about 85%. As part of its restructuring plans, RBS will shift 240 billion pounds of assets into a new non-core division, where they will then be sold off or run down over the next three to five years. It's also planning to slash 2.5 billion pounds from the group's annual cost base and restructure its global banking and markets unit, reducing the amount of capital employed at the division by nearly half. There was no mention of likely job cuts, though on a conference call with journalists CEO Hester didn't rule out reports that the bank would cut around 20,000 of its 177,000 workers. RBS, which will soon be 70% owned by the government, has suffered from its acquisition of the investment-banking business of ABN Amro, which sharply increased its risk exposures just as the credit crisis was beginning to emerge. On a pro-forma basis, the bank said it took a write-down on goodwill and other intangibles of 16.2 billion pounds as it slashed the value of the ABN Amro assets that it had acquired. Hester said it would be "hazardous" to make any detailed forecast for 2009. But he added that underlying income will come under further pressure as low interest rates squeeze savings margins and credit costs rise. Hester replaced Fred Goodwin as chief executive in October, when the bank said it would raise 20 billion pounds from the U.K. government. Chancellor of the Exchequer Alistair Darling said Thursday that the Treasury has been in contact with Goodwin over possibly returning some of his pension pot, which will pay Goodwin around 650,000 pounds a year for life, according to press reports. Darling also said the move to limit banks' losses from toxic assets will provide certainty that they keep lending. Simon Kennedy is the City correspondent for MarketWatch in London marketwatch.com