Thanks Charly. That answers the savings question. The po offers savings products to its customers and deposits it with bank of ireland uk. In the region of 17 billion deposits at the time of the press release as opposed to 3.5 billion lending. Its a real positive for ratios and looks like a massive deal for bkir. Where else could a bank find branches and staff for free in every corner of the uk and share in 50% of the profits. I don't think the potential here is actually reflected enough in the new boi.
I agree with this more intuitive thinking and I've always asked myself what's a reasonable guide target for market cap as a driver for my original acquisition of BOI and of my HUM strategy ("Hold Until Mulligans").
I bought when BOI's market cap was 3.7bn which I thought was utterly undervalued and my target is to reach 70% of its peak value (18bn) by 2017/19 plus dividend payments. ie: 13bn. That equates to 40c plus dividends. Otherwise 50c without (16bn).
Apart from getting non-performing loans back to steady-state, phasing out trackers, keeping costs down and grabbing market share in a fast-recovering Irish market they will need to seek further profitable market expansion beyond the recovered Ireland saturation point and the UK is the only realistic target.
Your last line is the only thing in your post that would concern me. The whole partnership is otherwise very positive for boi. Do boi take in any savings from UK customers at all ? If not who provides the capital for boi to finance the mortgage and small loan lending. Does some or any at all come from the P.O or does it come from boi here?
I'm no banking expert, and I know a lot of the capital banks have is borrowed from the ecb these days but surely there is a ratio of lending to savings banks must stick to. can the uk lending be sustainable without some savings as well?
The Post Office has been working with BoI (UK), a subsidiary of the Bank of Ireland Group, since 2004 and has already extended the relationship once to 2023.
The nature of the relationship is that the Post Office is responsible for marketing and sales, but the financial services, the mortgages, current accounts, cheque books, debit cards, ATM access etc., are all provide by, and are of necessity provided by, BoI and this is clearly indicated on all their financial products. I say ‘of necessity’ because these financial services are not, and could not, be provided by the Post Office because the Post Office is not a bank – it does not have, for example, the clearing facilities necessary to handle cheques from other banks nor the ability to issue cheques in its own right which would be accepted by other banks. But Bank of Ireland does. Thus currently the Post Office is entirely dependent on BoI for its ability to market financial products.
What would happen if it did not renew this relationship in 2023? Either the Post Office would have to become a bank or it would need to enter into a new relationship with an existing bank in order to continue offering financial products. But all existing accounts and the loan book would belong to BoI because the Post Office did not issue them and does not own them, though there may well be a consideration (payment of some sort) written into their contractual relationship to cover such an eventuality. As far as I can see it would make no sense for the Post Office to refuse to extend its relationship with BoI, I cannot see what would be gained by this. My concern is that some big bank would attempt a take-over bid of BoI.
Incidentally, the Post Office Travel Money Card is provided by the Clydesdale Bank, its utility bill payment service is provided by Santander and of course its saving products are all provided by NS&I, the UK government. PatMc
As a quick reference, I use the Market Cap to mark the Resistance Levels. It is how people talk about it, so why would it not match up to the resistance levels... People like nice round numbers... they say "How much do you think BoI is worth?".... "Oh, I say 8 Billion, maybe 8.5. Someone else might say 9 Billion, Someone else says 10 Billion.
Well, what is the SP when we hit those number? .250 SP = 8.0 B Cap .265 SP = 8.5 B Cap .280 SP = 9.0 B Cap .295 SP = 9.5 B Cap <--- we did not stay here long on the way up or down so this is not a strong level. .310 SP = 10.0 B Cap
very few know all the technical indicators. i only asked because i was interested if there was some other indicator a contributor found useful to watch in the context of bkir. I myself cant see anything special about 0.29/30 at the moment but you have got to be prepared to learn everyday in this game. i was surprised how quickly the sp just went through the 200 on the way up so maybe shouldnt be surprised that it woke up and pulled it back as it was all a bit too easy. generally i feel more comfortable when they are beaten after putting up a good fight
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