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When BloggingStocks contributor Georges Yared recently took a look at lenders that could rise up out of the recent subprime-related credit mess, he focused on Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and US Bancorp (NYSE: USB) as strong contenders.
Well, the European markets have been struggling with many of the same credit concerns as in the U.S. Morningstar (NASDAQ: MORN) has gone looking for investment opportunities in European markets, and found such contenders as Alcatel-Lucent (NYSE: ALU), France Telecom (NYSE: FTE), and Cadbury Schweppes (NYSE: CSG). However, like Mr. Yared, Morningstar analysts found themselves focusing on a pair of wide-moat lenders that had been unfairly punished by reactions to the current problems.
The first of these lenders is Allied Irish Banks (NYSE: AIB), recognized for its conservative stance on loan underwriting. "Allied Irish is a plain-vanilla bank that takes deposits, makes loans, and earns a moderate interest spread," said a Morningstar analyst.
The other is Credit Suisse (NYSE: CS), known to have lent freely and on generous terms to private equity, resulting in record profits. Though the private equity situation is now changing, another Morningstar analyst recommends CS for long-term growth. "The investment banking business is due for a downturn after several years of record profits, but we believe these moves will help Credit Suisse comfortably earn its cost of capital at the cycle bottom."
However, now comes news that Credit Suisse paid a lobbyist $120,000 to influence Senate legislation on foreign investment. The share price has slipped marginally in the past day or so, but it remains to be seen what the lasting impact of this news might be.
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