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No. of Recommendations: 2
Anurag

While I agree that banks shouldn't be shunned, I think your point about examining management and how they treat shareholders is the big question when looking at European banks.

As Nathan pointed out, most (all?) will have to raise capital at some point in order to clean their books from this mess and the longer they wait the more painful for existing shareholders. I'd be happy to get in on a bank that is going to eventually return to strength, but I'd prefer to do it after the dilution is done (did you see the terms on UniCredit's capital raise - attrocious for existing shareholders).

I am interested in Lloyds because I think once they sell off their troubled assets and close down their investment banking their market position in the UK will make them similar to USB and WFC (although the CEO is a bit of a mystery right now - it isn't clear he has the physical strength to see the transformation through). Their shares have been rising lately as the fears of Europe have been subsiding, but there is still a ways to go before they cleanse themselves of the mess they are in and further dilution isn't out of the question.

I also like the banks like HSBC and Standard Chartered that don't have as much exposure to Europe and instead are focusing on growing markets in Asia and Africa. I also like, as in the case of Standard, management teams that raised capital when the getting was good and are now sitting on solid balance sheets as their European peers are retreating to take care of the home fires.
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