This is my rare chance to buy dirt cheap bank shares in a Stocks and Shares ISA

Have I been given a great opportunity to buy a cut price FTSE 100 bank before the Stocks and Shares ISA deadline this year? It looks like that.

The banking crisis started in the US and has spread to Europe, with Germany Deutsche Bank now in the firing line. UK banks are not immune, with Barclays, Lloyds Banking Group, NatWest and HSBC Holdings all sliding yesterday.

Crisis is also an opportunity

Barclays shares are down 18% this year, but NatWest is down just 4.21%, with Lloyds down 4.18% and HSBC up 0.07%. The sell-off is not as great as the lurid title would suggest.

No major problems have arisen with British banks. The Bank of England took on excessive risk after the financial crisis and introduced strict stress tests. So far, the effort seems to be there, but there are always dangers hidden by the nasties.

Lloyds appears to be protected from contagion by its domestic focus. As the UK’s biggest mortgage lender, it may be affected if house prices fall, but this is different. It has a solid 15.1% Common Equity Tier 1 (CET1) ratio, which measures a bank’s capital against assets.

NatWest is another carrier focused on the UK, although due to many economic problems, this cannot be guaranteed. Again, it offers protection against overseas distress, and has a strong CET1 ratio of 14.2%.

Asia-focused HSBC looks solid for a different reason. It is a huge international bank Bank of America analysts think so “built for times like these”, with $327bn cash on hand and $184bn short-dated securities. Thus the stability of stock prices in this problematic year.

HSBC’s CET1 ratio was the lowest of the three at 13.6% last August, down from 15.8% at the start of the year. Nothing to worry about.

Barclays has been hardest hit by its investment banking operations. It has also fallen foul of US regulators in a string of occasions, incurring $361m in fines for violating restrictions on complex sales of financial products as recently as September.

FTSE banking stocks are looking very good

Barclays has a strong capital base and a CET1 ratio of 13.1%. But after this year’s sell-off, it is the cheapest of the four big banks, and the most exciting opportunity, in view. It has the lowest price-to-earnings ratio (P/E) of just 4.1 and the lowest price-to-earnings ratio (P/E) of 0.3. Estimated return of 6.4% juice, covered 3.7 times by earnings.

Lloyds is only slightly pricier with a P/E of 6.3 and PTB of 0.6. The forecast yield is 6.2%. NatWest is valued at 7.35 times earnings, but has a higher PTB ratio of 0.86%. Yield 5.33%.

HSBC has a P/E of 8.7 and PTB of 0.7, while yielding 4.9%. My concern with HSBC is that it risks getting caught up in the growing rift between China and the West. Since the stock is not down this year, it also seems like there is less opportunity.

Lloyds offers better entry prices and returns than NatWest, but I’ve had them. Barclays looks like the biggest opportunity and if I still have the cash I’ll take a stake in NatWest too.

It’s a risky time to buy, no question about that, but I can’t see another chance like this any time soon.