Salz Review - Wall Street Journal

223
Salz Review
An Independent Review of Barclays’ Business Practices
UK banks’ leverage (assets / equity) evolution, 2000 – 2012
50
40
30
Maximum
Average
Minimum
Barclays
20
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012
Note: Banks in sample are HSBC, Lloyds, Standard Chartered, RBS and Barclays
Source: Annual reports
UK and international banks’ leverage (assets / equity) evolution, 2000 – 2012
70
60
50
Maximum
Average
Minimum
Barclays
40
30
20
10
0
2000 2001 2002 2003 2004
2005
2006
2007
2008
2009
2010
2011
2012
Note: Banks in sample are Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, RBS, Credit Suisse, Deutsche Bank,
HSBC, Lloyds, Standard Chartered, UBS and Barclays. Care must be taken when comparing leverage ratios between
financial institutions in different jurisdictions, as rules for netting assets and liabilities may differ
Source: Annual reports
Price to Book Ratio
For banks, the ratio of market share price divided by the book value per share is often used
as a measure of the value shareholders ascribe to the bank compared to the value of the net
assets of the bank in its accounts. If the ratio is below one, then there is a discount being
applied. Major financial institutions’ price to book ratio dropped significantly between 2000
and 2008. Barclays’ ratio has been below the vast majority of its peers’ and has been less
than 1 since 2008. At the end of 2012, Barclays’ price to book ratio was 0.51, lower than all
other major financial institutions considered.