Barclays and Lloyds Under StockCall's Microscope: Foreign Banks Look Past Legal Troubles

Feb 15, 2013, 07:30 ET from

LONDON, February 15, 2013 /PRNewswire/ --

Foreign bank stocks provide an excellent opportunity to diversify an investment portfolio since these stocks are mainly influenced by the macroeconomic factors prevalent in their home country. However, this attractive feature turns into a liability as well, as it is not an easy task to keep tab on swiftly changing scenario in foreign countries. The point in case are the British banks which are currently in troubled waters as most of them are entangled in regulatory and legal hassles in their home country. Barclays Plc (NYSE: BCS) was slapped with $450 million fine for its rate manipulation tactics. The result was visible on its financial numbers. Lloyds Banking Group Plc (NYSE: LYG) plans to cut jobs to reduce its costs and ensure its viability. StockCall has released full comprehensive research on Barclays and Lloyds Banking Group and these free technical analyses can be downloaded by signing up at

Barclays Plc Increases Provisions

Barclays PLC reported $1.3 billion in net loss for its fiscal fourth quarter of the year, down from net profit earned for the corresponding quarter of last year. For the entire year, the bank suffered 1 billion GBP in net loss. The bank sustained fourth quarter losses mainly due to its increased provisioning for the claims arising out of enquiries against it. Free technical analysis on Barclays PLC available by signing up at  

In order to sustain its viability, the bank plans to undertake steep cost-cutting measures. One such measure is to reduce its workforce by 3,700. The move will help the bank in bringing about efficiencies in its operations and will also reduce operating expenses.

Barclays PLC is facing its fair share of regulatory hassles as well. The banking company's quarterly results were negatively impacted by its massive statutory losses. Barclays Plc announced setting up $1.6 billion to meet new compensation demands arising out of various legal enquiries initiated against the banking company. With this new provision, the company now has 2.6 billion GBP set aside for PPI scandal. The company has taken a wise step by boosting its contingency funds. However, it would put strain on its finances and the stock prices in short-run.

Lloyds Banking Group Plc Stock Up

Lloyds Banking Group Plc is also struggling with mounting costs and compensation expenses. The banking company is also going to take the layoff route to contain its costs. In continuation to its previous announcement to cut 15,000 jobs, the banking company is now slashing 940 insurance and wealth positions. Despite this, the bank seems to be recovering from its worst period faced in 2011.  It is still embroiled in Payment Protection Insurance scandal and its associated costs are consistently increasing. The provisioning for these losses will have definitive negative impact on the company's bottom-line. Register today and access the free research on Lloyds Banking Group plc at  

Despite rather bleak scenario, Lloyds Banking Group stock grew 60 percent in the past 52 weeks and as it continues to improve its standing, the stock is likely to retain this momentum. The company has not paid any dividend in the recent past, which was mainly due to regulatory curbs placed on it. However, management may resume dividend payment in 2014. Overall, despite shaky scenario in foreign bank's sector, Lloyds Banking Group offers a good investment opportunity.

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