THEY could not have timed it any better – or should that be any worse? Some of the biggest names in banking came together in London yesterday as industry shares fell over fears politicians are failing to tackle the Eurozone crisis.
Bob Diamond, chief executive of Barclays, told the Bank of America Merrill Lynch conference that shares in the British lender are undervalued and vowed it would meet targets for return on equity.
“I recognise that our stock trades at a significant discount to our tangible equity. I do not believe that that is justified.”
He said Barclays will hit its target of a 13 per cent return on equity by 2013 despite new regulation and “slowing” economic growth.
Diamond also told the audience, which included the chief executives of Deutsche Bank, Société Générale, Royal Bank of Scotland and Lloyds Banking Group, that Barclays was in a good position to withstand the risks posed by the Eurozone debt crisis, with £44bn of its exposure, the majority in retail banking and much of that in first homes with low loan-to-value ratios in Spain, Italy and Portugal.
António Horta-Osório, chief executive of Lloyds, indicated the bank would improve its capital and funding positions as he contrasted the “credit and banking crisis” of 2008 with the current “sovereign and political crisis” in the Eurozone.
In a presentation he said Lloyds, which is 41 per cent taxpayer-owned, would “continue to strengthen our balance sheet and liquidity position”.
RBS chief executive Stephen Hester said the bank was reviewing its investor return targets amid the Eurozone crisis. One of the slides in his presentation stated “return target under review in light of challenges”.
RBS also said it is likely to raise its targeted core Tier 1 capital ratio due to the impact of Basel III rules and the ICB report.