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netsuper

Listed below are comments made by netsuper between Thursday, 16th October 2008 and Friday, 14th November 2008.

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Banks: The new welfare dependents 10:50am on 14 Nov 2008 Look how Northern Rock is doing at moment? It's pretty good business under full government control, also the high street deposit business of Braford & Binley which acquired by Santander for nothing generating good profit for Abbey/Santaqnder. So RBS with a majority government shareholding, effectively nationalised is after all not a bad thing.

Is that a bad thing? Let me quote Credit Suisse banking analyst Jonathan Pierce in a recent analysis of British banks. He said on 6 November: "RBS remains our favourite UK bank given its valuation, relatively sizeable marks against credit portfolios, and fresh management that is likely to take a fairly objective look at what is best for shareholders."
Crunch: A new phase 09:49am on 13 Nov 2008 It's a good news for Banks in USA and UK as this will speed up the process of strengthening the balance sheet of leading USA banks so that the Libor will come down to the lowest level, this in turn will further facilitate the money market flowing of funds for interbanking lending and for customers alike. This decision is especially good for UK banks to move forward rather waiting in the wind to expect something eventually come out from US treasury bailout. For UK banks such as RBS whoes share is currently trading at 54p, which is ironically below the 58p dividends payout, will focus on its own internal resources such as nearly 5 billion sterling shares RBS held in Bank of China which will be available to dispose next month, if some of the RBS overseas assets disposed successfully then there will have a good chance for the incoming CEO Mr Hester to turn the Bank around and start to resume dividends payment to shareholders within one year's time. After all the insurance arms of RBS such as Directline and Churchill are very profitable business so as the international money transaction business.
Forced convergence of China and US 09:49am on 12 Nov 2008 I think it's inevitable that China will become the West's rescue for the sake of the world economic health and its own economic growth. China's huge foreign reserves will start to bargain hunt cheap options in Europe especially UK assets as there are so much fuss and political juggling in US for Chinese soverign fund real assets investment in the past, in the next few months Chinese sovereign fund and Chinese banks will start to take up UK and European assets, I think in the next week or two, we will know that Bank of China will have HBOS as its foot holder in the UK financial industry, then next will be UK's struggling housing builders, the likely target will be Taylor Wimpey as Chinese soveriegn fund knows quite well the limited nature of available housing development land and the huge shortage of afford housing in UK which the UK government predicted nearly 2.5 million new homes in the next decade, therefore the value of land bank stocks of Taylor Wimpey and other UK housing builders will be self-evident and will have a huge returns in 2-3 years time. Also Chinese sovereign fund investers are quite smart and quick to sense the the true values of land bank and housing properties as tangible solid assets and much reliable than pouring money into US treasury bill.
HBOS: Recession Bites 10:51am on 03 Nov 2008 RBS is expected to unveil a further writedown of at least £3 billion in the second half of the year, but RBS is sitting on a possible winfall of £5 billion worth of Bank of China shares which will be available dispose next month.
HBOS: Recession Bites 10:10am on 03 Nov 2008 Lloyds pledges to resume dividends in 2009
Very good news for lloyds hbos ordinary shareholders and comparing what barclays got from gulf sovereign fund investment, Lloyds and HBOS capital deals with HMtreasury is best for the benefits of both UK taxpayers and the Banks. considering the Fareast sharp economic slow down and the possible losses faced by HSBC and Chartered Standand, one thing is clear that HBOS and Lloyds losses can be quantified and the others are still early days and an unknown quantity.
Barclays protects its bankers' pay 3:53pm on 31 Oct 2008 It seems to me this deal only protecting the super bonus payment of the super bankers but very bad deal to the small shareholders comparing what the treasury offered. Now the Lloyds share price £2.02 is the proof that HBOS, Lloyds and RBS will be in a better position to progress, it's now better to switch to buy RBS share at 68pence that means one Barclays share at the current price can still buy 2.5 RBS shares.
Barclays protects its bankers' pay 3:18pm on 31 Oct 2008 Now it seems not only Lloyds HBOS will be a much stronger position as stated in my previouse posting, RBS is better positioned to recover much faster and come out eventually strong growth and better div for its share holders as the bailout terms will curb the excessive executive payment and unnecessary risk taking. After all the worries of treasury bailout plan, these three banks HBOS, LLoyds and RBS will be now in a bullet proof case to march on to be the next stable, profitable and reasonable high street banks of UK. The next thing will happen to Barclays is really unpredicatable.
Why Barclays prefers Abu Dhabi to GB 08:44am on 31 Oct 2008 Although Barclays secured the middleeast fund but the future is not so rosy for barclays comparing the merged super bank of HBOS & Lloyds.

Lloyds TSB and HBOS merger will create a super strong bank and have the following benefits:

First, unlike Barclays and other UK banks 2.4trillion CDs time bomb, the so-called toxic assets of HBOS is mainly average UK hard working folks mortgage, so the default of the assets will be within target range, not the unknown quantity of CDs default;

Second, as UK, USA, European and worldwide governments poured into the money markets huge amount of literally trillions of trillions cash funds, the next few weeks will see not only credit squeeze relax but will be awashed of abundant cash funds, Libor will be tumble and as HBOS mortgage assets and business model heavily depend on money market easing, this will add further strength and huge growth potential as interest rates will come down and further stimulate housing market and the economy;

3rd, unlike HSBC or other banks exposed to overseas and developing market, any further chain reaction of these economies will cause serious problem, the merged Lloyds and HBOS super bank's main business is within UK and the macro economic wounds can be cured by effective moneytary policy, so there is not so much unknown quantity line ahead;

4th, Lloyds TSB and HBOS merger could double its existing £1bn ($1.6bn) estimate of cost savings as it integrates overlapping bank branches and IT systems.
Lloyds, which is due next week to publish its prospectus to buy HBOS and for a capital raising, could also benefit from the negative goodwill involved in buying HBOS.

Sandy Chen, an analyst at Panmure Gordon, said, at current share prices, Lloyds would be buying about £20bn of shareholder equity for less than £5bn, resulting in £15bn of negative goodwill.

Under accounting rules, this would need to be recognised immediately on the newly created bank’s income statement and allow further writedowns to be taken.

So after all the gloomy predictions, the future of merged Lloyds & HBOS suddenly become a shining bright spot under a dark clouded tunnel.
Hedge funds and VW: what a pile up! 2:03pm on 29 Oct 2008 As ft reported that hedge funds caught up with vw share and lost $20 billion within days, anyone knows any positions especially short-sell of uk banking shares by hedge funds and if these are 3-months positions, most uk banks were shorted in september, so the hedge funds have to cover these short-selling positions in december, any prospect to get hedge funds caught by uk banking share.

What happens if some soverign funds or insurance funds start to take huge positions on UK banking stocks such as HBOS priced 80p and total market value 4.3 billion which is less than 10% of its height, RBS priced 63p and total market value 10.3 billion which is again less than 10% of its height. These two giant banks once the shining jewels of uk financial industry combined market value is less than £15 billion, if someone even some hedge funds start to build up huge positions for example taking 75% of all the issued shares of both banks with £10 billion cash, anyone can imagine what will happen to all those shorted positions held by the hedge funds. does this sound the alarm bell.
Spend, spend, spend? 09:19am on 16 Oct 2008 Last night's News Night Revealled that Barclays has exposed 2.4 trillion insurance liability, the world over the total liabilities are a mind boggling 58 trillion. So anyone can predict when this huge cannon ball will explore and what the consequences are...

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