According to a report by Bloomberg.com, as American dominance in the financial markets fade, some UK and European banks will gladly take over as strong leaders in banking.
The report goes on to say, “Once the chaos of the last few weeks eases and everyone gets a chance to sort through the rubble, one thing will be clear: The dominant members of the financial system that emerges will be British retail banks such as Barclays Plc, HSBC Holdings Plc and Lloyds TSB Group Plc.”
Ironically, most would say that the UK economy is vulnerable to fallout from the credit crunch with a major slump in the property market, runs on UK banks like Northern Rock and recently HBOS, personal debt levels out of control, and so on.
If that weren’t enough, unemployment is on the rise, daily news programmes seem to have frown-browed commentators bearing more bad news, and a recession appears inevitable. Bloomberg goes on to say that the three main banks will need to raise close to £40 billion between them to ride out this economic downturn.
Here’s a quick rundown of how UK banks are capitalising on the collapse of US banks.
- Barclays – Just purchased the North American business of Lehman Brothers for $1.75 billion establishing Barclays as a major force in US capital makets. Although a certain element of risk is involved, Barclays Bank could end up winning big by purchasing Lehman’s assets so cheaply.
- Lloyds TSB – After their recent merger, Lloyds and HBOS will have a 28% share of British Mortgages. At the moment, with UK property prices dropping, they may “suffer” but when it regains momentum, they should bring in huge profits
- HSBC – HSBC has “sailed through the credit crunch largely unscathed”. As their competitors sink or teeter on collapse, HSBC Bank seems to be getting stronger.
British banks seem to be in the best position to take advantage of US banking “firesales”, which could see them become the strongest banks in the world.
Thu, Sep 25, 2008
0 Comments