Lloyds TSB Group PLC (LYG)

Focuses in high street banking. It is repairing its balance sheet. It has been bouncing around the same level about a year. It is a solid bank. British government is divesting this holding.

Nothing wrong with this and he thinks it is going to do okay, but some of these banks haven’t turned the corner yet on profitability and are still trudging through bad loans. Wouldn’t be in a hurry to buy this, but if you own it continue to Hold.

Lloyd’s Bank (LYG-N) or Bank of Ireland (IRE-N)? UK government has been selling down its stake quite successfully because the bank has been turned around by the CEO. The major point for this is that it is headquartered in Scotland, which may leave the UK and it will have to re-domicile, making it fairly uncertain as to the immediate future. Bank of Ireland is the one that he would go for.

When you look at the pattern of many of these international banks, there is not a huge rush to be there yet. Let them turn up and show you some strength before you Buy. They are still working out difficulties in Europe. On the Russian-Ukrainian problem, a lot of banks are too levered into that, so it is not clear yet whether you want to be there.

There was such a huge run-up last year for the European banks, on expectations they were going to do exactly what the US banks had done. However, there is a timing difference. The US went into the abyss earlier and its banks were re-capitalized earlier. Next was the UK. Feels the European trade got a little ahead of itself. The fundamental driver is going to be higher interest rates. As we start to see higher interest rates, there will be a catalyst for the whole banking sector. It will start in the US and then we transition to the UK. When that happens, the banks will start to move substantially higher. This bank needs to introduce a dividend that will give it some foundation.

National Bank of Greece SA (NBG-N) or Lloyds TSB Group PLC (LYG-N)? Likes both banks. Both are on his watchlist. If he were going to buy one, it would probably be the National Bank of Greece, but it is far riskier than Lloyds. Both have tremendous upside, but they both have an awful lot of shares, which will inhibit the upside somewhat.

8% bond maturing June 15/20. (Top Pick Aug 13/13, Up 13.00%) It no longer qualified as capital under new rules. They exchanged this bond for qualifying capital. It is essentially the same credit. He still likes the bank.

Effectively a play on the domestic UK economy. Last year, US banks were a little bit further recovered and a lot of money rushed into the UK and continental banks and they all ran up. Thinks the UK is a little more advanced than Continental Europe in coming out of the hole. Any recovery in the UK economy is going to work for the stock. Thinks there is some good upside here. Can be volatile.

Has quite a bit of momentum and they are reporting good numbers. The British government is gradually selling off their pieces. Wouldn’t surprise him to see this in double digits. Have a lot of shares outstanding. They are talking about paying a dividend again. Once they do this, it could give the stock a boost.

Doesn’t own any British banks right now. Amongst the analysts, this is probably the favourite because they are getting so much respect for the path they are pursuing, post the forced merger with Halifax. After the run the stock has had in the past year, he would argue that it is discounting future levels of profitability from 2016-2017 and beyond and totally ignoring some of the risks that exist within the company, specifically on the regulatory front. This is probably the safest and most straightforward but you want a price that is a little bit lower than it is right now.

Feels the global banking sector is healing itself. This one may be a little ahead of itself but certainly a company that has got a better balance sheet. Highly levered to the UK. They’ve become a retail and commercial bank in the UK. Government has sold off some of their position and will continue. Well-capitalized. Good opportunity to own a premier UK bank. Buy on a pull back.

Got into trouble in the financial crisis but have sorted that out. They have decided to go back to basics again. Worth holding here. The whole sector of European banks looks good.

Tried to buy a year ago when it was under $3. Tried again this December when it was under $5. Thinks it could go up 4 or 5 times from here. Tremendous potential and thinks it has a lot of upside.

8% bond maturing June 15/20. (Top Pick August 13/13, Up 5.00%) Positions that were large were getting sold indiscriminately. He felt confident in the bond being called in 2020.

Has done a great job in restructuring. It has run up a lot and the British government has sold part of their shares. The man running their operations has done a very good job. They are making this into a retail and commercial bank in the UK. UK economy is slowly recovering, which will help both. Sold off some non-core assets in Australia and Spain. He would look to Buy on a pull back. (See Top Picks.)