NEW YORK ( TheStreet) -- According to several analysts, market fears leading up to the Irish banking crisis and the spector of other European bailouts have led to some surprising buying opportunities for investors.

Two of Ireland's largest banks that trade on the New York Stock Exchange are Bank of Ireland ( IRE), whose American depositary receipts (ADR) have dropped 41% over the past month and 83% over the past year, closing at $1.75 Wednesday, and Allied Irish Bank ( AIB), with ADRs closing at 92 cents Wednesday, having declined 8% over the past month and 80% from a year earlier.

The European Union's Irish Support Plan requires Bank of Ireland to raise ¿2.2 billion in capital, which the bank plans to do on its own, through a combination of "internal capital management initiatives, support from existing shareholders and other capital markets sources." According to Jason Napier of Deutsche Bank, if Bank of Ireland were to raise the entire ¿2.2 billion through the EU's support facility, "government ownership would increase to 75% from 36%." Napier has a neutral investment rating for Bank of Ireland.

Omar Keenan of Societe Generale Cross Asset Research has a hold rating for Allied Irish Bank, estimating that the bank will need to raise an additional ¿2.1 billion, "over and above the ¿6.6bn already announced."

Tony Cherin, the Professor Emeritus of Finance at the University of San Diego told TheStreet that European banks face risks from the Irish meltdown not only from problem loan exposure but because "they invest heavily in the securities of the home government." After the EU to bailout of Ireland's government with backing from the International Monetary Fund (and, of course, the United States), Cherin believes banks will still be forced to write-down their investment in Irish government securities, because "because they are only as good as the government that is backing them."

Angelo Graci, the managing director of Chapdelaine Credit Partners, which is the fixed-income division of Chapdelaine & Co. was less concerned about write-downs of Irish government paper, since European banks' investments in sovereign debt aren't subject to mark-to-market accounting rules. "Barring restructuring or default, you probably won't see significant losses on government holding," he said.

Of course, an ugly political situation is on tap for Ireland, along with other potential bailout recipients like Portugal and Spain, since participation in the euro means that these countries cannot take the customary route of monetizing their debt through currency devaluation. What happens next in Ireland will "depends a great deal on IMF's demands to make that kind of loan," according to Cherin, who added that "there will be a quid pro quo, which will be pretty severe economic sanctions in terms of government spending, raising taxes."

As Cherin also pointed out when asked about the inevitable resentment of some Americans over the coming European bailout, many of the problems faced by the Irish banks that were backed by the Irish government were caused by investments in mortgage-backed securities issued by U.S. investment banks.

With the Irish banks obviously in flux, here are five other European bank stocks actively traded on the NYSE that appear undervalued based on the ratings and median price targets of U.S. analysts. Graci said that "these are all strong, well-run banks."

5. HSBC Holdings

Company Profile

ADRs of HSBC Holdings PLC ( HBC) of London closed at $50.56, declining 12% over the past year.

The company has said that "there is no market of greater strategic importance to HSBC than Greater China, and that continue to protect and build on our position as the leading international bank in mainland China."

On Wednesday, the management of HSBC Private Equity (Asia) announced it had completed a buyout of 80.01% the unit, which would be renamed Headland Capital Partners. The former parent company retained a 19.9% stake and was also one of the largest investors in funds managed by Headland, according to a Wall Street Journal report.

Income Statement

In its interim management statement for the third quarter, HSBC said that the consolidated company's "pre-tax profits for the year to date remained well ahead of 2009" and that pre-tax profits for the third quarter were also "well ahead of Q3 2009, although the run rate achieved was lower than in the first half of 2010."

For the first half of 2010, the group's profit attributable to shareholders was $6.7 billion, rising from $3.3 billion a year earlier. The return on average equity (ROE) for the first half of 2010 was 10.4%, compared to 6.4% during the first half of 2009. The return on average assets (ROA) rose to 0.62% from 0.31%.

Balance Sheet

The combined group had $2.4 trillion in total assets as of June 30, with a core Tier 1 capital ratio of 9.9% and a Tier 1 ratio of 11.5%. The total capital ratio was 14.4%.

In the third-quarter interim statement, HSBC said that quarterly loan impairment charges had reached "their lowest level since early 2007," and that "charges were lower in all regions and customer groups compared with Q3 2009."

For the first half of 2010, loan impairment charges were 1.70% of average gross customer advances, improving from 3.08% a year earlier.

Stock Ratios

The ADRs trade for an estimated 20.4 times earnings, according to Bloomberg.

Analyst Ratings

According to Thomson Reuters, six out of eight U.S. analysts covering HSBC Holdings PLC rate the ADRs a buy, while the other two analysts recommend investors hold the ADRs.

4. UBS

Company Profile

Shares of UBS AG ( UBS - Get Report) of Zurich, Switzerland, closed at $15.07 Wednesday, declining 4% over the previous year.

The company focuses on wealth management, asset management and investment services.

UBS is among a group of banks in discussions with the Securities and Exchange Commission to resolve the regulator's investigation into sales of collateralized debt obligations, or CDOs.

Income Statement

UBS announced a third-quarter net profit of CHF $1.7 billion and a year-to-date net profit of CHF 5.9 billion, or an ROE of 17.6%. CEO Oswald Grübel said that the third quarter was "unusual in that there were very low levels of client activity as well as a strengthening of the Swiss franc against most major currencies."

Following the earnings announcement, Derek De Vries of Bank of America Merrill Lynch maintained his neutral rating on the shares, but said his firm saw "value in UBS shares - with roughly 20% potential upside."

Balance Sheet

UBS reported a Tier 1 capital ratio of 16.7% and a core Tier 1 capital ratio of 14.2% as of September 30.

Stock Ratios

Bloomberg estimates that the shares trade for 8.5 times earnings.

Analyst Ratings

UBS has the weakest analyst sentiment among the five European banks featured here, with three out of six U.S. analysts recommending analyst sell the shares, possibly reflecting what De Vries termed "some evidence of franchise destruction as UBS has lost more than a quarter of its private bankers and continues to suffer net new money outflows."

One analyst rates the shares a buy and two (including De Vries) recommend investors hold the shares.

3. Barclays

Company Profile

ADRs of Barclays PLC ( BCS) of London closed at $16.4 Wednesday, down 17% over the previous year.

The Wall Street Journal reported on Thursday that along with Lehman Brothers Holdings, Barclays was being countersued by JPMorgan Chase ( JPM - Get Report), saying that that JPMorgan was mislead into thinking its loans would be paid in full when Barclays purchased the bankrupt Lehman.

Income Statement

For the first three quarters of 2010, Barclays reported a profit to equity holders of the parent of £2.48 billion, declining slightly from £2.49 billion a year earlier.

Year-to-date impairment charges totaled £321 million, declining from £2.2 billion during the first three quarters of 2009. Total impairment charges and other credit provisions for the first three quarters of 2010 were £4.3 billion, improving from £6.2 billion during the first three quarters of 2009.

Following the interim earnings announcement, Jason Napier maintained his buy rating and price target of £395 for the shares, which would be a 48% return from Wednesday's closing price of £266.55 on the London Stock Exchange, trading under the symbol BARC.

Balance Sheet

Barclays reported a core Tier 1 capital ratio of 10.0% as of September 30, and Napier said that the group's "view that it can mitigate a third of the Basel 3 RWA risk-weighted assets increase means a core Tier 1 of 11.5% by end 2013 which should allay fears around a near term raise" of capital.

Stock Ratios

Bloomberg's estimated P/E is 9.9.

Analyst Ratings

Out of six U.S. analysts covering Barclays PLC, three have buy ratings on the ADRs, while the other three recommend investors hold.

2. Banco Santander

Company Profile

ADRs of Banco Santander SA ( STD) of Madrid closed at $9.62 Wednesday, down 42% over the previous year.

Income Statement

For the first three quarters of 2010, the group reported a consolidated profit of ¿6.8 billion, declining from ¿6.7 billion a year earlier, as net loan loss provisions increased to ¿7.9 billion from ¿7.2 billion.

Balance Sheet

Total assets were ¿1.2 trillion as of September 30. The ratio of nonperforming loans to total loans was 3.42%, rising from 3.03% a year earlier. The Tier 1 capital ratio was 9.7%, rising from 9.2% in September 2009 and the core capital ratio was 8.5%, rising from 7.7% a year earlier.

Stock Ratios

The estimated price-to-earnings ratio is 8.7, according to Bloomberg. Banco Santander reported that its shares were trading for 1.1 times book value as of September 30.

Analyst Ratings

Out of three U.S. analysts covering Banco Santander, one rates the ADRs a buy, while the other two recommend investors hold.

Following a meeting with Banco Santander's CFO Antonio Alvarez, Carlos Peixoto of Banco Português de Investimento S.A. reiterated his buy rating for the shares and price target of ¿12.05, which would be a 54% return from Wednesday's closing price of ¿7.83 on the Bolsa de Madrid, trading under the symbol SAN. While saying his positive stance on the shares was reinforced by the "sound outlook outlined for LatAm operations," with exposure in Brazil that "should ensure future growth prospects" and "a 31% discount to the market NAV of its main business areas," Peixoto said his firm continues to prefer Banco Bilbao Vizcaya Argentaria, SA ( BBVA) over Banco Santander "on higher core capital ratios which allow the bank to face head on the requirements that may be imposed to the systematically important banks; cheaper multiples and higher fundamental upside. "

1. Lloyds Banking Group

Company Profile

ADRs of Lloyds Banking Group PLC ( LYG) of London closed at $3.78 Wednesday, declining 30% over the previous year.

Based on the median price target of $7.06 among U.S. analysts polled by Thomson Reuters, the ADRs have upside potential of 87%.

Angelo Graci told TheStreet that although Lloyds "has required more state assistance than the other four banks listed here," his firm believes "the bank is on a strong, improving trend," and that the "best value in fixed income is probably in Lloyds."

According to Lloyds Banking Group's announcement of interim results for the first half of 2010, the British government held 40.6% of ordinary share capital.

In September, Lloyds announced that CEO Eric Daniels would retire once the group's board of directors completed a search for his successor.

Michael Helsby of Bank of America Merrill Lynch said in a report published November 11 that his firm estimated that Lloyds would have to write-off 44% of the Group's Irish loan book of £27 billion (or 4% of total loans), for a loss of £12 billion. Despite predicting such a large loss, Helsby sees the decline in Lloyd's ADR price as "excessive" and rates Lloyds a buy with a target of $7.06, matching the consensus price target.

Income Statement

In its third-quarter interim statement, Lloyds said it was continuing to shrink its balance sheet and that impairments were continuing to decline and net interest margins were continuing to improve..

For its combined businesses, Lloyds Banking Group returned to profitability during the first half of 2010, with a profit before tax to equity shareholders of £596 million, compared to £7.1 billion a year earlier, when the Group recorded a gain of £11.2 billion on the acquisition of HBOS, the holding company for Bank of Scotland PLC.

Impairments during the first half declined to £5.4 billion from £8.1 billion a year earlier.

Balance Sheet

Total assets were £1 trillion as of June 30. The Group's Tier 1 capital ratio was 10.3% as of June 30, improving from 9.6% a year earlier, and its core Tier 1 ratio was 9.0%, increasing from 8.1% in June 2009. The total capital ratio was 13.4%, up from 12.4% a year earlier.

Stock Ratios

Bloomberg estimates that the ADRs trade for 20.1 times earnings.

Analyst Ratings

All three U.S. analysts covering Lloyds Banking Group PLC recommend investors buy the ADRs.


-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.