Barclays announced plan to raise more capital:
This got me thinking to look at the equity in Banks.
Look at the balance sheet of our large banks, something that jumps out, is the difference in low levels of equity compared to level of debt (liabilities). It is totally unique to banks.
Take HSBC, the annual report [http://www.hsbc.com/investor-relations/financial-results] page 374. Total shareholder equity= £183,129 million = £183 Billion
Total liabilities = £2,509,409 million = £2509 Billion
HSBC Equity:Liabilities Ratio = 0.07
Take Barclays the annual report [http://group.barclays.com/about-barclays/investor-relations/annual-reports] page 233
Total shareholder equity= £62,957 million = £62 Billion
Total liabilities = £1,427,364 million = £1427 Billion
Barclays Equity:Liabilities Ratio = 0.04
Then look at other industries: Telecoms.
Vodafone, the annual report [http://www.vodafone.com/content/index/investors/investor_information/annual_report.html] page 95
Total shareholder equity = £78,202 million = £78 Billion
Total liabilities = £61,374 million = £61 Billion
Vodafone Equity:Liabilities Ratio = 1.27
Then look at other industries: Retail
Tesco, the annual report [http://www.tescoplc.com/index.asp?pageid=548] page 74
Total equity = 16,661 Million = £16.6 Billion
Total liabilities = 14,483 Million = £14.48 Billion
Tesco Equity:Liabilities Ratio = 1.14.
Our banks have Too Little Equity compared to other industries.