Barclays

Exposure to CDOS, US sub-prime and US Alt-A £14.5 billion

Market capitalisation £29.6 billion

Barclays was the world’s second-largest underwriter of mortgage-backed securities last year, the asset class that was hit the hardest by the worldwide credit crunch.

Of Britain’s high street banks, it has the biggest exposure to sub-prime mortgages in the United States. The bank was also a big lender of leveraged finance to private equity firms. Nevertheless, it is bullish about the market’s chances of recovery. Barclays is considered moderately risky by analysts.

Share price down yesterday 9.3 per cent at 392½p

RBS

Exposure £5 billion

Market cap £34.2 billion Royal Bank of Scotland was the world’s largest underwriter of mortgage-backed securities last year, although analysts believe that it concentrated on the safer types of mortgages.

The bank was also the second biggest lender of leveraged finance among the UK’s high street banks. It has plenty of assets to sell and has dismissed any suggestions of a rights issue. Considered moderately risky by analysts.

Share price down 8.7 per cent to 304¾p

Lloyds TSB

Exposure £3 billion

Market cap £24.2 billion Lloyds TSB is exposed to CDOs and has investments in near-prime US mortgages but does not hold sub-prime. Nor does it have any leveraged finance business. It is the most popular deposit bank in the UK. Considered low risk by analysts.

Share price down 5.6 per cent at 397¾p

HBOS

Exposure £13.7 billion

Market cap £21 billion HBOS is Britain’s biggest mortgage lender but is more dependent on getting funding from the wholesale market than some of its competitors. But HBOS has only a small investment in sub-prime and is not a big leveraged financier. The bank uses its treasury operations as a revenue stream, which analysts think could make its performance more susceptible to the credit market downturn. Considered moderately risky by analysts.

Share price down 12.8% to 460½p

Alliance & Leicester

Exposure £298 million

Market cap £2.2 billion Although A&L’s exposure to the credit markets is small, it is larger in comparison to the bank’s size than many of its competitors. The bank is more heavily dependent on wholesale funding than the rest of the market and has said that its profits will be hit this year by higher borrowing costs. Sandy Chen, a Panmure Gordon analyst, has moved A&L from “hold” to “sell” because he expects the bank to be hit by more bad loans and lower margins this year. Considered moderately risky by analysts.

Share price down 7.2 per cent at 475½p

HSBC

Exposure £1.8 billion

Market cap £92.2 billion HSBC’s exposure to the American mortgage market is relatively low. It is a large lender of leveraged finance in comparison with its peers but this figure is still small compared with the bank’s size. HSBC’s global business model, with emphasis on Asia, means that it is better diversified than some of its UK counterparts and it is not heavily reliant on wholesale borrowing. Considered a moderate to low risk by analysts.

Share price down 2.2 per cent to 746p

Source: exposure figures from Alex Potter of Collins Stewart

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