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Highlights:
- The UK's largest lenders are no longer 'too big to fail', the Bank of England has said after an assessment to review their preparedness to deal with a financial crisis.
- The banks will continue to provide essential services to the customer in the event of a winddown, the BoE said.
Following an exercise to ensure that UK banks are prepared to deal with a global financial crisis, the Bank of England has said the country's largest lenders are no longer 'too big to fail'. The central bank also said that banks would be able to provide essential services to the customers if they were to collapse due to the crisis.
Instead of taxpayers footing the bill to bail them out, as seen during the 2007-09 global financial crisis, investors and shareholders would be the first in line to cover the losses, the BoE noted.
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The assessment included eight major lenders in the UK, including Barclays, Lloyds, HSBC, Standard Chartered, NatWest, Nationwide, Santander UK, and Virgin Money UK. However, it found that there were shortcomings with three lenders - HSBC, Lloyds and Standard Chartered - that need to be addressed. The central bank added that these three banks failed to produce adequate financial resources to ensure they could handle the losses in case of a winddown.
The next such assessment is scheduled to take place in 2024, and the lenders have till then to address the shortcomings.
In wake of this news, let us check out some financial stocks listed on the London Stock Exchange and see how they have been performing.
Banco Santander S.A. (LON:BNC)
Banco Santander S.A. is a Spanish banking behemoth doing business as Santander Group. It offers financial services to individuals and businesses across the globe. At present, the company has a market capitalisation of £43,137.34 million, and its share value has depreciated by over 17% over the past one year.
Shares of the company were trading 4.04% lower at GBX 237.25 as of 12:11 pm GMT+1 on 10 June.
Virgin Money UK (LON: VMUK)
Virgin Money offers banking and related financial services to individuals and businesses. The FTSE 250 constituent operates through Virgin Money, Clydesdale Bank, Yorkshire Bank, and B Brands. For the six months to 31 March 2022, the company posted an underlying net interest income (NII) of £782 million, a 16% increase over the same period in the previous year. The total underlying operating income climbed up to £865 million.
With a market cap of £2,032.31 million, Virgin Money's shares were trading at GBX 137.80, down 2.17% as of 12:21 pm GMT+1 on 10 June 2022. The share value has plummeted by 32.69% over the past one year and the year-to-date return stands at -22.47%.
Nationwide Building Society (LON: NBS)
The British mutual financial institution provides retail financial services in the country. With over 15 million members, it is the world's seventh-largest cooperative financial institution. For the year ended 4 April 2022, Nationwide reported an underlying profit of £1,604 million, more than double the £790 million it reported during the previous year. The net interest income climbed to £3,562 million.
Nationwide's last close was GBP 163.50 on 9 June 2022. It currently holds a market cap of £1,725.82 million, and its share price has depreciated by 11.53% over the last one year. The YTD returns currently stand at -13%.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
