Banco Santander SA (SAN)

This is fine from a dividend standpoint. Financials in general, globally, have been weak of late. When you think about the cycle for banks and financial institutions, this is really the worse possible time. We have very low interest rates throughout the developed world and there is not a clear visibility in terms of when rates are going to rise. If you are looking out a year, you are generally going to see an increase in rates in the federal reserve, at least in the next year. This would be a good, longer-term hold.

It is under pressure because of fear they may have to raise capital and cut the dividend. This might be in the cards. European banking regulators may be cracking down in a big way. He prefers others as this bank as some geographies that will put them under pressure. DB-N is a preference.

He owns this because Europe is going to get turned around. This is a big, international bank. Their UK operation is a bigger operation than Spain, and the UK economy has been one of the better ones in Europe. Have a good presence in the US and they are large in Brazil. He is going to be a bit more patient with this and see if they get that lift when the European stock markets turn. Dividend yield of 3.6%.

This company operates with most of their operations outside of Spain. Thinks a lot of the European banks have been held back because no one is sure how much they have in Greece. When European operations get going, this bank should improve. He has just recently bought more of this. Yield of 3%.

A very large Spanish based bank. Have big franchises throughout Latin America as well as a British bank. Had to do a large and unexpected capital raise this year. There had been a bit of a relief rally in the Spanish market in 2013 and this did well, but still has too many dead assets on the balance sheet.

Looked at this but decided to own ING Groep NV (ING-N) and Deutsche Bank (DB-N) instead. Both of these are selling at a much lower price to tangible book value. This one is about 1.5, probably 50% more than ING and double Deutsche Bank. However, it is only 13X earnings and he likes the whole European banking sector. There will be some dividend growth as well.

One of the biggest banks in the world. Exposed to Latin America and Europe and did into get into too much trouble during the financial crisis. He likes HSBC-N more. He has problems with Spain being a regulator that does not regulate.

(Top Pick Apr 16/14, Down 16.17%) China is going to become the largest consuming country and these guys are the box on the supplier as far as purchasers are concerned. He thinks this one could really surprise you on the upside. The price has stabilized here.

A very large, global, Latin American bank based in Spain. He would not own it because of the uncertainty in the Euro zone. He thinks the risk in European banks is still too high. He would prefer JPM-N or C-N.

Bank of America (BAC-N) or Banco Santander (SAN-N)? This has a much lower dividend yield. They cut the dividend by two thirds and did a big equity issue, which is the reason for the big slide in the price. A very well-run bank, but there was a big chunk of stock that was placed with investors, so the share price is probably going to mark time for a while. Bank of America is probably the one you should stay with.

A Spanish bank, but actually has exposure in Brazil. This is in a decent space here right now.

Headquartered in Madrid, but twice as big in Britain as it is in Spain. Considered a European bank, but is really a world class bank. Has a great yield. Never took any government money. This bank’s biggest position is in South America.

One of the global behemoths in the banking space. It survived the crash relatively well. The issue he has is its domestic market. The regulatory environment in Spain has been very poor. It got to the extent where they did so much financial engineering that they guaranteed the tax assets, so that companies could take revenue tax losses and use that to build equity. To him, that is an extreme form of financial engineering. Thinks the dividend is likely to come down a little. Longer-term you would be better off looking at some of the other markets. US big money centered banks have been thriftily recapitalized. Government is continuing to take cash off of them in terms of social litigation. UK banks are probably in the same shape.

A pretty complex bank with a host of publically listed securities. As an international investor, don’t settle for this. The good news is in the share price.

The Brazilian election will be on Oct 5^th. This is quite important as this bank has a 5^th of their revenue coming out of Brazil. The stock won’t go up or down simply because of Brazil, but it might soften the debt if the election goes poorly. Yield of 8.4% is safe.