Risks relative to other banks

Extracts from Telegraph, 18/03/08 - Philip Aldrick:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/18/cnukbanks118.xml

UK lenders' share prices plunge on investors' fears of contagion - despite their relative safety.

The writedowns, of less than £2bn each, that have been taken by even the UK's most aggressive lenders, Barclays and Royal Bank of Scotland, have been tiny compared with the multi-billion dollar writedowns made at Merrill Lynch, Citigroup, Morgan Stanley and UBS

[The chart in the article shows that the percentage of toxic debt to tangible equity is highest for Barclays at 80% compared to, say RBS at 29% and HSBC at 7%. I do not know how reliable these figures are.]

[A table showing coreTier 1 equity ratios shows Barclays ratio at 5.6% compared to RBS 4.5% and HSBC at 7.8%.]

Barclays has an even larger credit market exposure to its tangible book value, but it specialised in selling such assets through its Barclays Capital operation and so is thought to have more sophisticated risk management.

The vulnerabilities of both Barclays and RBS leave them exposed to further sub-prime writedowns - looking increasingly likely given the constant deterioration in the value of money market assets.

Dividend cut 15 years ago

Interesting to see what happened in the past. From International Herald Tribune of 5 March 1993:

Peter Wood, its finance director, said the decision to lop 6 pence off the interim dividend of 12 pence a share was "a difficult decision felt to be in the best long-run interests of the group."
http://www.iht.com/articles/1993/03/05/zbar.php

According to Sharescope, the dividend for 1992 was 3.79p (probably adjusted for rights, etc) compared to 34p for 2007 - a growth rate of over 15%. Together with the capital appreciation (even at today's depressed prices), anyone brave enough to have invested shortly after the gloom following the dividend cut would have been well rewarded for the risk.

Barclays poised to pounce in US

From Telegraph of 16/3/08 - Philip Aldrick
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/15/cnbarclays115.xml

Barclays president Bob Diamond is to spend half his time in New York as the bank seeks to capitalise on problems at its Wall Street rivals and beef up its US operation.

Mr Diamond ... made his ambition clear last month when saying "the biggest opportunity in investment banking is in the US". He added: "I can't look back in two-to-three years… and say I flinched. I won't say that."

Barclays believes the problems at several of Wall Street's bulge bracket banks give it an unprecedented opportunity to out-muscle the competition.

To support Mr Diamond's plans, which will involve a significant increase in headcount, Barclays is expected to divert a large amount of resource to the US investment bank. Jerry del Missier, Mr Diamond's apparent successor and president of BarCap, has already moved to the US.