Which banks have fared best since the collapse of Lehman Brothers?

Two years ago we woke up to discover that the US authorities had decided that investment bank Lehman Brothers should be allowed to go the wall.  

What many were saying then has proved largely true; provisions against bad loans and investments soared, the governments threatened more regulation and many banks had to go cap in hand to shareholders, overseas investors or governments.

Some didn't make it through the crisis as the government stepped in and took them over, sold of some of their customers and allowing - or persuading - Lloyds to take over HBOS.

There have also been a series of mergers among the increasingly besieged building societies sector with Nationwide buying Scotland's Dunfermline and the Yorkshire and Chelsea building societies choosing to merge.

But for those that made it through things are looking good, and while many of their then shareholders are still sitting on massive losses many others have made good profits from backing the sector recovery.

Increasingly fund managers are seeing the attractions of the sector as the world's governments and regulators have watered down their proposals to harness the banks and most UK banks seem to have more than enough cash set aside to meet new rules and to begin to hand cash back to shareholders.

Standard Chartered

Standard Chartered shares are swapping hands at £19.12, up from £12.16 on 15 September and well above lows of 630p in March 2009. The group survived the crisis largely intact despite a surge in bad loans and even reported a jump in profits in the 2008/2009 financial year.

Chief executive Peter Sands remained positive that the group's exposure to Asia would help the group navigate the crisis and played a key role in drawing up the government's response to the crisis.

The group has plenty of cash and for many remains the top pick of the Asia focused banks thanks to its superior growth prospects.

Robert Law at Nomura said: ‘Given the group’s Far Eastern exposure and a resumption of top line and pre-impairment growth, despite the valuation premium; we view any setback as a buying opportunity.'

HSBC

HSBC’s shares are currently trading at 675p, down from 744.6p immediately before Lehmans' collapse, having hit a low of 294p in March of last year.

The business was also able to weather the crisis well. It refused government cash at the peak of the crisis and benefited from its exposure to the growing Asian markets. However, its decision to expand into the US subprime market a few years ahead of the crisis cost it dear as it had to write off more than $10 billion of debts and to close its Household business in North America.