Thursday 21 July 2011
Pre-Tax Profit Table
A quick look at this year's Pre-Tax Profit Table makes for uncomfortable reading. Of the 151 banks, 51 - an astonishing 1 in 3 - are loss-making. With an average profit of around £53,000,000, if one were to take out the top two banks, Barclays and HSBC who together made over £10 billion, the average profit would be (consolidations aside) - a loss!
The Fab Four
Of the 153 UK incorporated banks there are only four that have seen an increase in pre-tax profits - year on year - over the past 4 years.
They are:
Santander UK Plc
Smith & Williamson Investment Management Ltd
Standard Chartered Bank
Abbey National Treasury Services Plc
They are:
Santander UK Plc
Smith & Williamson Investment Management Ltd
Standard Chartered Bank
Abbey National Treasury Services Plc
Are the well capitalised banks the biggest banks?
When it comes to lending there are good banks, there are reckless banks and then there are all those in the middle. As a shareholder one wants to see a good return on one's investment but in pushing a bank too far into unsuitable lending in the search for ever better returns one wants / needs a good capital base to weather the storms that crop up from time to time. The alternative is to plump for a bank that is well capitalised and prudent in its lending.
Interestingly, the 11 best capitalised banks (capital / assets) are all in the bottom 50 in terms of total assets, suggesting that biggest isn't always best.
The eleven are:
1. China Construction Bank (London) Ltd
2. Melli Bank Plc
3. Bank of the Philippine Islands (Europe) Plc
4. Metro Bank Plc
5. European Islamic Investment Bank Plc
6. C I T Bank Ltd
7. Allied Bank Philippines (UK) Plc
8. Bank Saderat Plc
9. Macquarie Bank International Ltd
10. Gatehouse Bank Plc
11. A N Z Bank (Europe) Ltd
Interestingly, the 11 best capitalised banks (capital / assets) are all in the bottom 50 in terms of total assets, suggesting that biggest isn't always best.
The eleven are:
1. China Construction Bank (London) Ltd
2. Melli Bank Plc
3. Bank of the Philippine Islands (Europe) Plc
4. Metro Bank Plc
5. European Islamic Investment Bank Plc
6. C I T Bank Ltd
7. Allied Bank Philippines (UK) Plc
8. Bank Saderat Plc
9. Macquarie Bank International Ltd
10. Gatehouse Bank Plc
11. A N Z Bank (Europe) Ltd
OneSavings Bank Plc
OneSavings Bank Plc is the new kid on the block in the new 2011/12 edition of Bank League Tables. One Savings Bank used to be Kent Reliance Building Society and now trades as Kent Reliance. We have lost Liverpool Victoria Banking Services Ltd and Capital One Bank (Europe) Plc. The Hardware Federation Finance Co Ltd has changed its name to BIRA Finance Ltd, and Kleinworth Benson Private Bank Ltd has dropped the "Private".
Friday 17 June 2011
Southsea Mortgage & Investment Company Ltd
So there you have it. Big banks = Bailed out. Small banks = Not bailed out.
"Southsea" was the smallest capitalised bank of all the UK incorporated banks at just £2.5 million as at 31st March 2009. However its capital / assets ratio (22.10%) put it in the top 40 of the UK's 154 banks, likewise its gearing (3.52:1).
What are the lessons for the future? If you have more than £85,000 on deposit, split it up between the 154 banks. And if you have more than £13 million (154 x £85,000)? Buy some gold.
Bank League Tables 2011 / 12 will be out at the end of the month.
"Southsea" was the smallest capitalised bank of all the UK incorporated banks at just £2.5 million as at 31st March 2009. However its capital / assets ratio (22.10%) put it in the top 40 of the UK's 154 banks, likewise its gearing (3.52:1).
What are the lessons for the future? If you have more than £85,000 on deposit, split it up between the 154 banks. And if you have more than £13 million (154 x £85,000)? Buy some gold.
Bank League Tables 2011 / 12 will be out at the end of the month.
Southsea Mortgage & Investment Company Ltd
Press release from Bank of England. 16th June2011.
Following a decision by the Financial Services Authority (FSA) to initiate the special resolution regime (SRR), and a subsequent application to court by the Bank of England, Southsea Mortgage and Investment Company Limited (Southsea) has been placed into the Bank Insolvency Procedure and BDO LLP (BDO) has been appointed bank liquidator. As of today, Southsea has therefore ceased trading.
The failure of Southsea, a small bank with just over 250 depositors, follows a deterioration in its financial position as a result of management decisions and the firm’s specific business model. At failure, the firm had retail deposits of £7.4 million.
The Financial Services Compensation Scheme (FSCS) is in place to protect eligible deposits up to the insured limit of £85,000. As a result of Southsea entering the SRR, the FSCS will pay compensation to each eligible depositor up to the limit of £85,000. In order to minimise disruption and to provide access to funds, the FSCS intends to make its payout as quickly as possible. Retail depositors do not need to contact the FSCS to receive a payout as the FSCS will be contacting them. Further details about the payout, including information about whether deposits are eligible, can be found at www.fscs.org.uk or by calling the FSCS on 0800 678 1100 or 020 7741 4100. Eligible depositors with amounts in excess of the insured limit of £85,000 may be entitled to receive a share of their savings above this limit, as part of the insolvency process.
Depositors who are not covered by the FSCS will, like other creditors of Southsea, be able to claim in the insolvency. Such creditors should contact the bank liquidator, BDO, to register their claim on 020 7486 5888.
Anyone with mortgages or loans from Southsea should continue to make repayments and service their debts in the normal way. If they have any queries, they should contact BDO using the telephone number above.
In making this decision, the FSA have determined that the conditions for initiating the SRR under the Banking Act 2009 were met: ie that Southsea no longer satisfied the FSA’s threshold conditions for operating as a deposit-taker, and that it was not reasonably likely (ignoring any action which could be taken under the Banking Act) that action would be taken by, or in respect of, Southsea that would enable it once again to satisfy the threshold conditions. In applying to the court, the Bank of England has acted under the powers conferred on it by the Banking Act 2009, having regard to the Code of Practice issued by HM Treasury. The decision followed discussion with the FSA and HM Treasury and an evaluation of the possible resolution options against the SRR’s objectives laid down in the Banking Act.
Following a decision by the Financial Services Authority (FSA) to initiate the special resolution regime (SRR), and a subsequent application to court by the Bank of England, Southsea Mortgage and Investment Company Limited (Southsea) has been placed into the Bank Insolvency Procedure and BDO LLP (BDO) has been appointed bank liquidator. As of today, Southsea has therefore ceased trading.
The failure of Southsea, a small bank with just over 250 depositors, follows a deterioration in its financial position as a result of management decisions and the firm’s specific business model. At failure, the firm had retail deposits of £7.4 million.
The Financial Services Compensation Scheme (FSCS) is in place to protect eligible deposits up to the insured limit of £85,000. As a result of Southsea entering the SRR, the FSCS will pay compensation to each eligible depositor up to the limit of £85,000. In order to minimise disruption and to provide access to funds, the FSCS intends to make its payout as quickly as possible. Retail depositors do not need to contact the FSCS to receive a payout as the FSCS will be contacting them. Further details about the payout, including information about whether deposits are eligible, can be found at www.fscs.org.uk or by calling the FSCS on 0800 678 1100 or 020 7741 4100. Eligible depositors with amounts in excess of the insured limit of £85,000 may be entitled to receive a share of their savings above this limit, as part of the insolvency process.
Depositors who are not covered by the FSCS will, like other creditors of Southsea, be able to claim in the insolvency. Such creditors should contact the bank liquidator, BDO, to register their claim on 020 7486 5888.
Anyone with mortgages or loans from Southsea should continue to make repayments and service their debts in the normal way. If they have any queries, they should contact BDO using the telephone number above.
In making this decision, the FSA have determined that the conditions for initiating the SRR under the Banking Act 2009 were met: ie that Southsea no longer satisfied the FSA’s threshold conditions for operating as a deposit-taker, and that it was not reasonably likely (ignoring any action which could be taken under the Banking Act) that action would be taken by, or in respect of, Southsea that would enable it once again to satisfy the threshold conditions. In applying to the court, the Bank of England has acted under the powers conferred on it by the Banking Act 2009, having regard to the Code of Practice issued by HM Treasury. The decision followed discussion with the FSA and HM Treasury and an evaluation of the possible resolution options against the SRR’s objectives laid down in the Banking Act.
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