Broker snap: Barclays and HSBC get the nod from KBW

15th May 2009 09:14

Barclays, already fielding bids for its iShares business, was buoyed Friday morning by rumours of a sale of the whole of its asset management arm.US group Blackrock is rumoured to be interested in buying the unit and may be prepared to pay up to $10bn.Little wonder, then, that Keefe, Bruyette & Woods (KBW) has selected Barclays as its preferred play among the UK-focused banks.KBW has raised its price target on Barclays from 170p to 270p after being impressed by the performance of Barclays Cap (BarCap), the investment banking arm of Barclays.‘Barclays remains our favoured UK domestic. BarCap performed well in the first quarter of 2009 and more than offset rising credit costs. We think it can trade profitably over the next few years and capital should build, but monoline exposure will remain a debating point,’ the broker said.The broker is less enamoured of the part-nationalised banks, Lloyds Banking Group and Royal Bank of Scotland, both of which are set to under perform the market, KBW believes.Looking more globally, HSBC is its top choice in the sector an while Standard Chartered’s first quarter update ‘provided additional reassurance that the group is moving in the right direction,’ the broker believes the shares are fairly priced at present.