Difficult to see how they can raise the Divi AND meet any additional capital requirements. I don't understand the requirements now to be honest. The BOE set them at the current level because they felt that was needed BUT now , they seem to be indicating they were wrong and the levels need to be increased. This doesn't inspire confidence that they know what they are doing !. I mean, how do we know that they will not increase them again in 2017 ? Indeed, who is to say that 6.5% is not enough and they should be 8% 0r 10% or even 20 % !! There comes a pint, where it should be up to the business the set it's own level and for the markets to decide whether one Banks Capital levels is more risky than others. This would obviously be reflected in the share prices of the banks concerned. IF you are not going to rescue any bank that fails , than having lower capital holding will make that bank more riskier for investors. My belief is that the BOE and the Government should stop interfering and meddling with the running of businesses, particularly Banks. I re-iterate, why would you stay in the UK if you are a Bank the size of BARC. It is becoming harder and harder to provide returns to shareholders, with no guarantee that the regulators will help the environment improve any time soon.
Granted that part of the WSJ article regarding possible divi cuts is speculative, after all the divi growth promises from previous CEO, we may assume that any cut to the current already low yield would go down most unfavourably with investors. If a few big funds also reduce or exit, it could hit the SP very hard in short-term.
Hopefully that won't be the case come next week's stress test results, but can't rule anything out. - Regards.
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Don't like the final sentence of this snippet from the article:
On top of all of this, what investors and the U.K. regulators might look toward is how the banks would perform if this year’s test was judged against next year’s pass marks. The difference in 2016 is that the tests start taking account of additional capital that banks must carry if they are systemically important, or for regulatory concerns about operational risks.
That change will lift the minimum post-test capital ratio for U.K. banks from 4.5% in the 2015 tests to between 6.2% and 8.1% in next year’s examination, according to Citigroup. Barclays’s 2016 pass mark will be as high as HSBC’s even though the latter has a bigger systemic capital buffer.
The good news for investors is Barclays can soothe most strains with more junior bonds rather than raising equity. However, investors could also find Barclays and other U.K. banks can afford less in dividend payouts next year than they currently expect.
sector perform” rating reaffirmed by RBC Capital in a report released on Friday, AnalystRatingsNetwork.com reports. They presently have a GBX 290 ($4.39) price objective on the financial services provider’s stock. RBC Capital’s price target points to a potential upside of 28.77% from the company’s current price.
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