Citi joins UBS with Q3 blow-up 1 Oct 2007 But unlike his Swiss rival, the US megabank s boss Chuck Prince isn t proposing a shakeup in the wake of $3.3bn of credit losses. This can only reinforce investor concerns about the Citigroup model, and its management.
New UBS boss throws in kitchen sink 1 Oct 2007 Rohner has taken a $4bn writedown, mainly on subprime mortgages, and fired the head of investment banking and the CFO. As a new boss, he can disassociate himself from the mess. But by taking charge of the investment bank, Rohner now needs to show a clear way forward.
UBS pays price for abandoning conservatism 1 Oct 2007 The Swiss bank used to be a byword for caution, until greedy investment bankers bamboozled the board into embracing greater risktaking. Those risks were badly handled. Shareholders are at least lucky the crunch hit before UBS s big push into leveraged loans yielded results.
ABN battle damages victor more than loser 30 Sep 2007 RBS s likely success in the auction for its Dutch rival will come at a high cost. It s paying a huge price just as times are getting tough for investment banks. Barclays, by contrast, will suffer a reputational hit. But if it can show a clear strategy, that should be repairable.
Kazakh banks suffer from credit crunch 30 Sep 2007 A helterskelter property boom has been financed by foreign currency borrowing. With global wholesale markets shut, the big banks have had to resort to central bank funding. Fortunately, the oil price has made Kazakhstan so rich that it won t have trouble paying for a bailout if one is needed.
Is First Data credit’s dead-cat bounce? 28 Sep 2007 Banks placed over $9bn of KKR s loan package. That appears to bode well for coming deals. But it also mopped up a lot of demand. New leveraged loan investors are popping up. But unless the CLO market revives, demand for buyout megadeals will remain iffy.
Spanish superman flies to Rock’s rescue 27 Sep 2007 But that s not a big comfort to the struggling UK bank. Jose Maria RuizMateos may like the superhero s outfit but lacks his super powers. He doesn t appear to have the expertise or the funds to solve Northern Rock s problems. His approach may be just another publicity stunt.
Bank of England auction attracts only embarrassment 26 Sep 2007 Attracting no bids at all after a public Uturn last week to supply the market with liquidity is another slap in the face for the Bank. Fear of exposure probably deterred financial institutions from turning to the Old Lady. Again King looks out of touch with the market.
Goldman appointed too late to Northern Rock dossier 25 Sep 2007 Getting financial advice on the Northern Rock crisis is a splendid idea. It s a pity the Treasury and FSA didn t do that weeks ago. If the authorities had had proper advice they might have come up with a constructive marketbased solution instead of a chaotic bailout.
Northern Rock should dump its dividend 24 Sep 2007 A week ago, the UK mortgage lender was so short of liquidity it needed a bailout. Yet it is still planning to pay out cash to shareholders. The bank is not legally obliged to pay the dividend and nor should it. Government funding should not be used to reward a failed business.
Fortis spreads net to get E13bn rights issue away 21 Sep 2007 The BelgoDutch bank isn t relying on investors word alone for its mega capital raising. It has signed up 13 external banks to help it. That looks sensible, given sticky markets and slightly lower expectations for the ABN Amro purchase for which Fortis is raising the cash.
Has Wall Street become immune to meltdown? 20 Sep 2007 Market conditions in the summer were said to be the worst in two decades. Yet as a group Wall Street s earnings were better than last year. True, Goldman s bumper quarter did the heavy lifting. But past crises often left brokerages near insolvency or facing losses.
Bear Stearns eats humble pie 20 Sep 2007 It turns out the Wall St firm s third quarter was even worse than expected. The debacle highlights Bear s lack of scale and US debt focus. Boss Jimmy Cayne may have to cut back on golf and bridge to salvage the firm s reputation and build a credible global franchise.
Buy Goldman’s shares, not its hedge funds 20 Sep 2007 That s one lesson to draw from the investment bank s amazing thirdquarter results. Returns at is Global Alpha fund have been horrendous. But Goldman s prop traders felt no pain. Whether in equities, commodities, currencies, and even mortgages, they had another bumper quarter.
Flowers not obvious solution to Northern Rock 20 Sep 2007 The entrepreneur s record of turning around failing banks was built on restructuring bad loans. That s not the problem with Northern Rock. What Rock needs is cheap money. Flowers may need more than deft handling of bondholders to get that on tap.
UK Treasury guarantee to the Rock not all it seems 20 Sep 2007 The government guarantee extends to old accounts and the stricken bank s unsecured borrowing, but not assetbacked financing or capital. That should be enough to keep the lender limping along, but no more. The shares dropped another 25% as investors contemplate the endgame.
Bank shares bounce just in time for Fortis deal 19 Sep 2007 The BelgoDutch bank is making a huge E13bn rights issue, to pay for its share of ABN. A postFed cut rally will help get the shares away. That s particularly good news for Fortis s underwriters. The RBS consortium look ever closer to winning ABN with its pricey E70bn bid.
Morgan vs Lehman: whose LBO indigestion is worse? 19 Sep 2007 Both firms jumped into financing private equity deals late, and both are now hurting. On the face of it, Lehman looks to be in less pain. But that could be misleading. Throw in the hedges and other items Lehman used to calculate its hit, and rival Morgan seems better off.
Credit Agricole pays E250m for poor oversight 19 Sep 2007 A rogue trader has wiped out twothirds of the French bank s investment arm's quarterly earnings. It s time to tighten up procedures. But the big loss raises a bigger question whether Agricole waited too long before it decided to shake Calyon up last summer.
Lehman Q3 fails to live down to market fears 18 Sep 2007 The investment bank took a beating from its mortgage book and its heady support for LBO deals. But overall, results were hardly disastrous. Investors can thank reduced expectations, Lehman s diversification into other businesses and a markedly lower tax rate.