Royal Bank of Scotland Group plc (ADR) (RBS), Bank of America Corp (BAC): New Owners of U.K. Banks and Automakers

In the United States, American banks have managed to repay their debts and emerge from partial government ownership. But the situation across the pond isn’t the same. Some U.K. based banks are still partially in government hands rendering their futures less certain than their foreign counterparts. However, the banks aren’t the only ones under new ownership. Two of the most famous British automakers are now owned by a foreign company. Here we will look at both the selection of investments in U.K. based banks and see what has become of these British automakers.

Government owners

During the worst of the financial crisis, the U.S. government injected capital into financial institutions including Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C), and the poster child of Wall Street excess, American International Group Inc (NYSE:AIG) better known as AIG. While these institutions are now privately owned, U.K. based Lloyds Banking Group PLC (ADR) (NYSE:LYG) and Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) are still partly owned by the U.K. government.

For Lloyds the government holds a minority stake of 40%. The bank appears to be headed in the right direction as it hopes to lower the government stake over the next few years and possibly resume a dividend. Leaving government hands could provide a boost to Lloyds’ share price after the shares are completely divested by the government.

By contrast, Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) is 82% owned by the U.K. government. Followers of the financial crisis in the U.S. may notice that this is a similar ownership percentage as the American government took in American International Group Inc (NYSE:AIG). But in the U.S., having any part of AIG in federal hands was a political hot potato and divestment of the shares was a top priority. For Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) the situation is more difficult. The bank needed continued capital injections and with the stake still at 82% the future of RBS remains uncertain. While many continue to call for an eventual re-privatization of the bank, some in the government have proposed a nationalization of RBS.

With Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) among the riskiest of the U.K. banks, there are still other banks in the country that offer more stability. Lloyds Banking Group PLC (ADR) (NYSE:LYG) could begin paying a dividend again and HSBC is already paying a dividend currently yielding just over 4%.

Foreign owners

There was a time when British automakers Jaguar and Land Rover represented British class in the automotive marketplace. But while the vehicles went to those in sound financial shape, the companies themselves were giving up their British ownership. Ford took control of both companies and formed its Premier Automotive Group that also included Volvo and fellow British automaker Aston Martin. When Ford was looking to raise funds in 2007 it began a sale of the brands in its Premier Automotive Group. In the end, Ford found buyers for all four brands selling them off to various groups around the world.

Volvo was sold to China’s Geely, Aston Martin to a consortium of investors, and the remaining two to Indian automaker Tata Motors (NYSE:TTM). The nation ruled by Britain less than a century ago is now home to the company that owns some of the jewels of the British automotive crown. As an emerging market automaker, Tata’s best known model is its ultra-cheap Tata Nano designed to appeal to the growing percentage of the population in the market for a car on a tight budget.