The big UK banks could probably pay cash if they wanted it....

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Jausty1919

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10/03/24

17:26

Post #: 72832920
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Originally posted by Just_a_guy: ↑

maybe I was too quick to dismiss the possibility.

NatWest is at a p/b of 0.6 which is similar to vmuk, and Lloyds which is like the CBA equivalent is at .7 so I can’t see the local banks wanting to use scrip to buy virgin at a p/b >0.6.

As you know the uk and European bank shareholders have been waiting a long time for shareholder returns, really since the gfc with regulators requiring ever more capital to avoid the same, as well as European private sector deleveraging, and the ecb/boe going to zero/negative interest rates making wiping out any value of deposits at banks. The banks (vuk less than some others) are still paying for this having swapped out their zero rate deposits for low long term finances (<1% for multi years) and so the nim remains under pressure until these roll off.

Then you throw in the technology transformation costs, as well as legacy infringements like ppi scandal and you get to the current place where finally there is some money available for shareholders but the equity values haven’t yet really reflected the at reality.

so I can’t see the european banks wanting to use their precious newfound cash either, for m&a just yet, but I didn’t really think outside the box with respect to other foreign banks (us? Asian?).

I think the carcasses/government interventions (I’ve recently been looking at aibg which is still selling down the Irish government stake!) remain too fresh for animal spirits imv

how do you see the likelihood/possible predators?

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The big UK banks could probably pay cash if they wanted it. Natwest for example laid out £2.4bn buying back its own stock last year (and £2bn the prior year) compared to current VUK offer of £2.9bn. No idea how probable a competing bid would be though.

VUK Price at posting: $4.08 Sentiment: None Disclosure: Held
2 Upvote

0 Great analysis

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