Alliance & Leicester Share Discussion Threads

[zimzoot] 31/5/2008 14:40

yes...a rights issue :)

[tiger1234] 30/5/2008 16:38

Something's brewing here!!!!!

[buywell2] 30/5/2008 16:02

Moody's turns negative on UK bank sector

By Sean Farrell
Friday, 30 May 2008

Moody's has stamped a negative credit outlook on the UK banking sector, warning that it faces major challenges as the economy hits a downturn.


Britain's banks face pressures from rising bad debts, lower lending volumes and falling profitability over the next 12 to 18 months, the credit rating agency says in a report today.

A sharp slowdown in personal consumption and falling house prices will be at the heart of the problems, Moody's said.

The UK joins Spain in receiving a negative outlook. By contrast, Italy's banks are regarded as "stable".

"Certainly the UK is fairly high up in the list of systems where we think there are more stresses coming forward," said Elisabeth Rudman, the senior credit officer at Moody's.

The credit crisis is continuing to cause bit write-downs of structured credit exposures for bigger UK banks and funding strain for smaller lenders, Moody's said. The agency warned that banks with thin capital ratios were ill-prepared for the tougher times ahead.

Royal Bank of Scotland, HBOS and Bradford & Bingley have all announced rights issues to shore up their depleted capital buffers against losses.

Moody's singled out Barclays as the bank left exposed if it did not raise capital. Barclays said it could end the first half of this year with a core tier one capital ratio below 5 per cent compared with the ratios of more than 6 per cent targeted by RBS and HBOS.

"Barclays may choose for their own reasons to say that is a capital level they wish to go forward with but we think it would give them more flexibility if they had a higher capital level," Ms Rudman said.

Moody's has cut ratings on nine UK lenders, including Barclays and Alliance & Leicester. Ms Rudman said the agency could make further ratings cuts this year.

[zimzoot] 30/5/2008 15:54

going same way BB.

Shares are being dumped

target £3

[buywell2] 30/5/2008 15:43

400p

buywell2 - 15 Apr'08 - 10:41 - 2489 of 2776 edit


No need AL. share price and chart says it all

RSI now falling to previous lows I expect

Also 50ma seems to be puting a cap on rebound prospects

[andrewlewis] 30/5/2008 14:34

Where is this going?

[psps] 30/5/2008 10:08

now 435p and rising

[buywell2] 29/5/2008 16:37

buywell2 - 18 Apr'08 - 10:44 - 2557 of 2772 edit


450p

[gurv] 29/5/2008 14:55

no bids for this dog, wishfull thinking by all those who are long i would say!

[csmwssk1] 25/5/2008 23:22

ever thought maybe bob may put a bid in for rbs and get abn and rbs for a fraction of what it would have cost last year

[homeboy35] 25/5/2008 22:32

Not so much interset in A and L on Advfn, but another good short. £ 3.50 target by Golman Sachs. Ok maybe youve missed the best of it, but still a bit to go.

[dave444] 23/5/2008 13:56

BB rights 82p

[ps0u3165] 23/5/2008 12:55

Are we expecting a rights issue here, as with the other banks?

[moregas] 22/5/2008 21:24

hit and run jenny hit and run. if you have seen the interview you would understand that.

[jennyj] 22/5/2008 13:00

In March 2007, a December 2006 interview from TheStreet.com's "Wall Street Confidential" webcast stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal.[16] He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said, "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money." Cramer claimed that everything he did was legal, but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumors to drive a stock down: " ...it's important to create a new truth, to develop a fiction."[17] Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters he described as "the Pisanis of the world". "You have to use these guys," said Cramer. He also discussed getting "the bozo reporter from The Wall Street Journal" to publish a negative article.[18] Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."[19][20]

" ...it's important to create a new truth, to develop a fiction."

[scribbler101] 22/5/2008 09:57

moregas - interesting article. But NR's problems did NOT derive from asset quality. How good or bad that was remains to be seen, but 5 years after the article there is no experience yet of troubles.

[moregas] 21/5/2008 21:39

eg

Northern Rocky
(Filed: 26/01/2003)


The mortgage bank has enjoyed spectacular growth but has it been built on solid foundations? Grant Ringshaw examines fears that it could be undermined as consumer lending turns sour

Northern Rock is a City favourite. To its fans, Britain's ninth-largest bank is a lean money-making machine, admired for its low costs and aggressive tactics, which have allowed it to steal an ever-growing slice of the mortgage market.

This week, Adam Applegarth, the bank's youthful chief executive, is once again expected to impress the market with record profits and yet more evidence that it is punching above its weight in mortgages.


Click to enlarge
The track record certainly looks stunning. Northern Rock's share of the net new mortgage lending market surged to 8.5 per cent in the first half of 2002 against just 4.1 per cent in 1999.

Pre-tax profits rocketed from £157m in 1999 to £295m in 2001 and are expected to hit £325m for 2002.

Meanwhile total assets under management - largely its stock of mortgages - almost doubled between 1998 (£18.2bn) and the first half of last year to hit £36bn. Applegarth, who was paid £528,000 in salary and bonuses in 2001, has become a City darling.

But what are the risks of Northern Rock's explosive growth? And why has the bank, which has been seen predominantly as a mortgage lender, acquired billions of pounds in riskier unsecured loans?

The spectacular rise is the corollary of a consumer borrowing frenzy, which is causing widespread concern among economic policy-makers and regulators.

Last week, the Financial Services Authority estimated that 6.1m families (about one fifth of the population) are having difficulties making debt repayments. The FSA warned that a correction to the rate of new borrowing could be "rapid and disorderly" and tip the economy into a sharp slowdown.

Bank of England figures released two weeks ago disclosed that homeowners have been cashing in on rising house prices to load up on debt. Homeowners borrowed a record £12bn against the value of their properties between July and September last year.

Meanwhile, there are increasing fears that house price growth will slow dramatically, especially in the South East and London, where prices have already dived by 10 per cent in some areas.

The threat is that if house prices were to collapse, some homeowners could suddenly find their homes were worth less than their mortgages. And if unemployment were to rise, the cost of servicing debts could suddenly seem excessive.

So now more than ever, the quality of a lender's loan book is crucial. It is therefore important to stress that Northern Rock has consistently rejected suggestions that it is a high-risk lender.

Last July, reporting interim results, Applegarth highlighted the fact that only 0.54 per cent of mortgage accounts were in arrears of three or more months - less than half the average in the UK at the end of 2001.

But what about the value of its loans compared with the average value of the properties of its borrowers, which is a sign of its potential exposure to a falling housing market?

Again Northern Rock's statistics give some grounds for comfort. In 2000, 62 per cent of its new mortgages were worth 90 per cent or less than the value of the relevant homes (so a chunky 38 per cent were for more than 90 per cent). But this ratio improved to 73 per cent in 2001 and again to 75.8 per cent in the first half of 2002.

That may be reassuring. But to put this in context, a less aggressive lender, Alliance & Leicester, made 89 per cent of its mortgages in 2001 at a ratio of loan to home value of 90 per cent or less.

Tony Armstrong, Northern Rock's director of corporate relations, says: "If you look at our appetite for risk over the past 12 to 18 months, it has decreased. We do not think we are pushing so hard towards greater risk."

However, these figures do not take account of the fact that Northern Rock has seen an explosive increase in potentially risky unsecured lending.

While the City has focused on market share and net new mortgage lending, little attention has been paid to unsecured lending. But the two are inextricably interlinked. This is because at the heart of Northern Rock's recent growth has been "Together", a mortgage product which also packages an unsecured loan or even a credit card.

Together works by offering a maximum mortgage of 95 per cent of the value of the property. And it also offers an unsecured loan on top, allowing borrowers to take a loan of up to a whopping 125 per cent of the value of their home.

The product has been incredibly successful. In 1999, the year it was launched, Together accounted for 14 per cent of new mortgages, but by 2001 this had rocketed to 41 per cent.

In the first half of 2002 the figure had fallen back to around one third, described by Applegarth as the "natural level". Together-based products now account for 20 per cent of Northern Rock's total mortgage book.

More significantly, the result of this success has been an astonishing rise in Northern Rock's unsecured loan book.

According to the bank's annual reports the total unsecured loan book was just £317m at the end of 1999, out of total loans to customers of £16bn.

In 2000, while the bank's total outstanding loans to customers grew by 12 per cent to £18.01bn, unsecured loans jumped by a massive 221 per cent to £1.02bn.

The picture is almost as striking the following year, as unsecured loans jumped by 101 per cent to £2.05bn, against a modest rise of 15 per cent in overall lending to consumers. At the half year unsecured loans had risen to £2.5bn.

The net result is that unsecured loans have risen from 1.9 per cent of Northern Rock's total loan book to near 10 per cent.

So there has been a striking change in the risk profile of the group. Unsecured loans are more risky - they have no security comparable to mortgages, which are secured against a property.

Anyway, it would be useful to know the value of the total debt of Together customers as a percentage of the value of their homes. Sadly, this is a figure Northern Rock refuses to divulge.

On the other hand, it is clear that Together has accounted for a huge amount of the unsecured loan growth - 54.9 per cent in 2001 and a stunning 60.9 per cent in the first half of last year.

Meanwhile, Northern Rock has admitted that the risks are increasing. It increased bad debt provisions by 104 per cent to £34.5m in 2001 and by 80 per cent to £20.9m in the first half of 2002.

This boosted provisions for bad debts to 0.2 per cent of advances to customers. Though the figure may appear tiny, it was up on 0.18 per cent in 2001 and has doubled in 18 months.

However, it is far lower than rivals' figures. HBOS, Britain's largest mortgage lender, had a provision for bad debts on its mortgage book of 0.32 per cent in 2001 - a figure which was actually being driven down - and 5.93 per cent for its unsecured loan provisions.

Alliance & Leicester has screwed down its bad debt provision on unsecured loans, cutting the charge by £4.5m in the first half of 2002.

So how prudent is Northern Rock's provisioning? Armstrong insists that the provisions reflect the growth of unsecured lending, but that they are also "offset by low arrears and positive house price inflation".

And the bank argues that Together customers taking on extra loans could be simply transferring existing debts. It also points out that the average loan is 3.8 times the borrower's average salary - below rivals' aggressive levels of at least four. It also says that almost 75 per cent of customers have a good repayment track record.

At the half year, 0.64 per cent of Together unsecured loans were in arrears of three months or more, better than the bank's traditional unsecured loans. "We are not over-committing people by pushing high income multiples. We are absolutely not overstretching ourselves. We know what we are doing," says Armstrong.

But what is the view of mortgage brokers, the independent advisers that Northern Rock relies on for a large chunk of its sales? Patrick Bunton, managing director of London & Country, one of Britain's leading mortgage brokers, is cautious.

He says: "They have a unique type of product. It is based on affordability [of debt repayments] remaining good and house price inflation. But if the market slows they could be the first to be hit. You have to ask if they are sailing into deep water

[moregas] 21/5/2008 21:26

no no no. for many many years nrk was well known to be a taker of more riskier bets. honest guv.

[ps0u3165] 21/5/2008 18:12

Bigface

How much was BB rights price?

[bigface] 21/5/2008 14:29

If BB's balance sheet is stuffed full of buy to let mortgages then as house prices fall more and more of the small time buytolet folk will have to sell for fear of losing there capital. This will then add to the downward spiral for a while which wont help BB.

The board know this which is why they have had to do a rights issue at low prices.

When i started investing in 1984 I bought a little book about money and one chapters titles stuck in my mind. It was entitled "A right worth having"

Sometimes the share price falls below the rights price which is why some say why not wait for in case that happens? If everyone waits, of course, the rights fails and the price falls anyway so teh failed rights issue argument is self fulfills.

Its all a bit of a game. In the end you have to understand the banks balance sheet figures and the competance of those chosen to run the company and make a judgement. What is BB's real net asset value per share I wonder??

[ps0u3165] 21/5/2008 09:21

I'm waiting until its sub 400p to invest.

[jono2000] 21/5/2008 08:48

historically anything under 430 has yielded a pretty immediate profit. (for me anyway...)