British Bank ADRs !!!

UK is home to some of the big banks in this world such as Barclays, Standard Chartered Bank, HSBC Bank, etc.They have high dividend yields and are stable long-term investments.While these banks have gone down a lot in recent months due to the sub-prime mess in the US, they may pick up steam and perform well in the future. This year may not be great for these banks but they are still a good addition to any portfolio since they give high dividends.

Most British investors have these banks as part of their portfolio and it is highly unlikely that any of these banks will go bankrupt anytime. Another reason to invest in British banks is that the industry is highly consolidated with only a few dominant players in the market. Similar to Canada, a handful of banks control the major financial activities of the whole country.

List of the large banks in UK (in the order of Assets held):

  1. HSBC Holdings plc
  2. Royal Bank of Scotland
  3. Barclays Bank
  4. HBOS plc
  5. Lloyds TSB
  6. Standard Chartered Bank
  7. Alliance & Leicester Bank

Out these 7 banks, only five are available to US investors via ADRs. The following are their tickers:

  1. HSBC Holdings plc – HBC
  2. The Royal Bank of Scotland Group plc – RBS
  3. Barclays Bank – BCS
  4. HBOS plc –
  5. Lloyds TSB Group plc – LYG

StanChart (popular name for Standard Chartered) and A&L; (small name) are not listed in the US. RBS started trading in November,2007 at NYSE.

In the section below, you will see a brief description of each bank and a few critical financial measures to evaluate the stock.

1.HSBC Holdings plc – HBC

HSBC means “Honkong & Shanghai Banking Corporation”. Founded in 1865 to finance the growing trade between Europe, India and China, this bank grown to be the largest bank in UK and also one of the large banks of the world. Today the banks serves over 125 Million customers and has over 312,000 employees in over 80 countries.

HSBC is a “money center” bank with peers such as Bank of America of US, Banco Santandar of Spain and ABN Amro of Holland. HSBC acquired the sub-prime lender Household International a few years in the US and this been a drag on the bank.

Mkt Cap – $178 B
Shares out – 2.4 B
Yield – 4.52%
S&P; Rating = 3 Star

HBC is set to report earnings on March 3rd.

2.The Royal Bank of Scotland Group plc – RBS

Founded in 1727 and is one of the oldest banks in UK.Today the bank operates in more than 50 countries. RBS, Fortis and Banco Santander have formed a consortium last year to acquire ABN Amro. This a complex and huge M&A; deal in Europe.

Mkt Cap – $72 B
Yield – 12.05%
S&P; Rating = 4 Star

Next Dividend : Dividend of $0.46 with an Ex-Div. Date of March 5th.

3.Barclays plc – BCS

Started by goldsmith bankers in 1690s, Barclays is the 3rd largest bank in UK.Today serves over 25 Million customers in more than 60 countries. In 2007 the group generated a profit of £7.1bn (or about $15B).

Mkt Cap – $61 B
Dividend Yield – 4.94%
S&P; Rating = 4 Star

Next Dividend : Dividend of $1.75 with an Ex-Div. Date of March 5th.

The stock is down some 35% in the past 52 weeks since BCS tried to acquire ABN Amro and also due to the sub-prime mess.Barclays is the largest provider of ETFs in the world thru its brand name ishares. Many of the innovative ETFs come from ishares.

4.HBOS plc – HBOOY

HBOS has over 72K employees and has the biggest private shareholder base in the UK. Was formed by the merger of Halifax and Bank of Scotland.

Shares out – 3.8 B
Dividend Yield – 5.77%

The ADR for HBOS plc trades in the OTC market as HBOOY. The stock has been down more than 50% in the past few months due to the sub-prime scare in the UK housing market. But the UK housing market is totally different the US.So HBOS should do well once the crisis is over sometime this year.

5. Lloyds TSB Group plc- LYG

The history of Llyods bank dates back to 1765. Today the bank operates over 2000 branches and is a household name in the UK. Llyods has one of the most beautiful logos for a bank as seen in the left.

Mkt Cap – $51 B
Dividend Yield – 5.09%
S&P; Rating = 5 Star

Next Dividend : Dividend of $1.95 with an Ex-Div. Date of March 5th.

Some articles discussing the above mentioned stocks are:

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