Shares in banks.....

gadgetmind

I hold a tiny amount of LLOY directly, but now also hold some fairly big slugs of preferences shares such as LLPC and NWBD. These were *well* below par a few months ago but have now picked up nicely. NWBD is still paying (but is now above par) while LLPC (and the rest of the series) are still below but divis resumption is being funded via new issues of ordinaries.

Based on my buy price, I have double digit returns until they decide to make a sensible tender or I decide to sell.

There are always opportunities and even private investors should be looking beyond common stock IMO.

gadgetmind

Forgot to say, HSBC is IMHO a reasonable income play, and LLOY is a recovery play, but the SP of the later will be held down until divis resume, while will be a wee while yet due to the blocker clauses on the prefs. When this will all unwind will become clear over the next few month, but early 2013 for *modest* divis on the ords is likely.

DYOR.

Thrugelmir

lvader wrote: »

The main problem that I have with some of the banks is that they look very cheap compared to 4 years ago but when you start to look in more detail at the number of shares in issue then you start to understand that they really aren't the bargain that they seem to be.

Hester has shrunk RBS's balance sheet by £700 billion pounds ( or twice the size of the entire Greek economy) in the past 3 years. That's a lot less assets potentially making a profit.

The banks need to deliver stable annual profits without millions of exceptional items clouding the bottom line. Lloyds retail UK is highly profitable, its overseas arms are not.

Reaper

Personally I think bank shares are a poor long term play. I don't think they will ever go back to their glory days raking in profits and I don't think the European crisis is over yet.

For those reasons I won't touch bank ordinary shares though I have some RBS inflation linked bonds and have been wondering about Lloyds ECNs. Both carry risks though, particularly the latter.

lvader

Barclays still seems to be able to make big profits, their profits in 2009 were as much as what they made in 2006 and 2007 combined.

gadgetmind

Reaper wrote: »

have been wondering about Lloyds ECNs.

ISTR that most holders of those are in the "pushed rather than jumped" camp. Which issue(s) are you eyeing?

TMF forum peeps are "well expert" on FI whereas I am less than beginner.

markwilkinson

Thank you for taking the time to respond to my question all!

I'm undecided but still interested.

Thrugelmir

lvader wrote: »

Barclays still seems to be able to make big profits, their profits in 2009 were as much as what they made in 2006 and 2007 combined.

Buying Lehmans investment arm at a knock down price from the receiver boosted the results.

lvader

Thrugelmir wrote: »

Buying Lehmans investment arm at a knock down price from the receiver boosted the results.

Indeed, whos to say there won't be more oportunities around the corner? In the meantime Barc contines to rake in good profits every year. Easy money for well run banks.

Thrugelmir

lvader wrote: »

Indeed, whos to say there won't be more oportunities around the corner?

At the rate investment banking is shrinking very few. Considering around 50% of trade was inter bank at the peak. An era has passed.

Recently UBS announced they are reducing capital exposure by £100bn.