Are Foreign Banks in a Sweet Spot Now?

The soon-to-be passed bailout plan in the US has a provision that will be favorable to foreign banks. Basically foreign banks that have US operations will be able to offload their worthless toxic assets to the rescue fund to be set up as per the bailout plan.

The New York Times piece “Foreign Banks Hope Bailout Will Be Global” states that foreign banks successfully lobbied to have this provision included.

The original text provided access to the $700 billion bailout for any financial institution based in the United States.

As the day wore on, some raised their concerns with the Treasury Department, arguing that foreign institutions were both big employers and major players in the American capital markets. By Saturday evening, the language had been changed to allow any financial institution “having significant operations” in the United States.” (emphasis added)

So now its a neat idea to look at which foreign banks will benefit from this. Here are eight foreign banks that have significant operations in the US:

1. Bank of Montreal – BMO
Dividend Yield: 5.98%

2.Toronto-Dominion Bank – TD
Dividend Yield: 3.84%

3. ING Groep NV – ING
The Netherlands
Dividend Yield: 8.46%

4.Deutsche Bank AG – DB
Dividend Yield: 7.96%

5. Credit Suisse Group – CS
Dividend Yield: 4.59%

6.HSBC Holdings plc – HBC
Dividend Yield: 4.42 %

7.Barclays Bank plc – BCS
Dividend Yield: 5.72%

8.Societe Generale- SCGLY
Dividend Yield: 1.48%

To answer my title question.Yes. Foreign banks are in a better position now due to this bailout/rescue plan. They can easily offload the toxic assets and move on with a clean balance sheet. Obviously this is not a good news for US tax payers as they have to pay for these losses.

In summary, if you looking to pickup some foreign financials the above banks are a good starting point.

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