Ken Lewis: more savvy than market saviour 7 Sep 2007 The Bank of America chief is being lauded for halting a market meltdown by investing $2bn in Countrywide. That s a bit of a stretch. But it is a canny deal. Even the price at which BoA switches into stock seems up for renegotiation if the mortgage lender s woes worsen.
ECB tries to walk delicate line 6 Sep 2007 The eurozone central bank is responding well to credit market turmoil. It didn t increase rates and will provide threemonth funding. But the bank s main watch is the real, not the financial, economy. After recent excesses, some financial pain is good for economic health.
Russia’s IMF pick chips away at Western club 6 Sep 2007 The nomination of Josef Tosovsky, a former Czech prime minister, as IMF head won t be successful, but it makes an important point. Russia, China, India and other developing countries are playing a growing role in the world economy and want a place in its institutions.
Goldman may profit from hung LBO debt 6 Sep 2007 The bank may set up investment vehicles to buy the debt it committed to underwrite but can t sell now without steep discounts. It got the idea from clients seeking to buy the debt. The approach may actually turn a profit or make a further shakeout more painful.
KKR should hold banks to their debt commitments 5 Sep 2007 The buyout firm s bankers are trying to renegotiate the terms of aggressive debt deals like First Data. KKR shouldn t cut them any slack. Banks reaped billions issuing debt for buyouts when markets were easy. Now they should be held to their commitments.
RBS can’t easily escape pricey ABN bid 4 Sep 2007 The premium the UK bank and its partners are offering for the Dutch bank has ballooned to 65%. That might tempt them to seek better terms. But wriggling out of their current bid looks tricky unless markets get worse or ABN blows up. RBS might have to swallow an expensive deal.
WestLB’s fate hinges on politics, not finance 3 Sep 2007 The German bank s owners have bailed it out before. Now, after a E604m trading loss, they have the chance to put it out of its misery. The state government has three options, all compromised by political considerations.
HSBC stops waiting for a Korean bargain 3 Sep 2007 The global bank s $6.3bn Korea Exchange Bank deal fills an important gap. But the price is higher than it hoped to pay. At 1.8 times book, HSBC is paying the same multiple it could have paid for a whole bank two years ago. This time it only gets a 51% stake.
Worried about markets? 1998 offers some comfort 30 Aug 2007 Disaster beckoned, with a Russian default and stocks tumbling. But it was over in a few months, without even a broker rating downgrade. If history repeats itself, investment banks should still manage a 21% profit margin, says S&P. But it could be worse this time.
Ken Lewis: more savvy than market saviour 29 Aug 2007 The Bank of America chief is being lauded for halting a market meltdown by investing $2bn in Countrywide. That s a bit of a stretch. But it is a canny deal. Even the price at which BoA switches into stock seems up for renegotiation if the mortgage lender s woes worsen.
German state banks are moral hazard central 27 Aug 2007 SachsenLB was set up in 1992 to finance Saxony. However only 16% of its risk assets were based in the former East German state. State sponsored banks are useful only in their core businesses. Outside those, their guarantees make them moral hazard incarnate.
Even lawyers can’t help buyout firms wiggle out of deals 24 Aug 2007 Sure, they can bicker endlessly about the details. But material adverse change clauses may only force renegotiations, not break deals. Only the most drastic situations allow buyers to walk away legally. And if they disagree, both parties prefer to negotiate out of court.
Who’s got Bear Stearns on its radar screen? 23 Aug 2007 Plenty could snap up the battered broker, but only a handful might try. Spanish, Italian and Chinese banks could be surprise bidders. But Bank of America, Wachovia and Barclays seem likelier suitors. Even so, that doesn t mean a deal is around the corner.
Lehman makes subprime exit look easy 22 Aug 2007 That's because the Wall Street firm got into the mortgage business cheaply and early. So it s not costing too much to throw in the towel. But others like Merrill Lynch and Cerberus shelled out a fair whack for their lending platforms. Scaling back would be much more painful.
Bernanke brings in the big guns 22 Aug 2007 Four big US banks borrowing from the discount window lends credibility to the Fed s strategy for injecting liquidity into markets. The Fed chairman s desire to avoid bailing out excessive risktakers with a Fed funds rate cut seems to be working, so far.
HSBC Korea bank bid looks politically savvy 20 Aug 2007 Korea Exchange Bank currently trades at just 1.5 times book. That probably reflects its troubled ownership picture under Lone Star Funds. After December s Korean election, KEB s ownership troubles could dissipate. That would cause its sale price to soar.
Second shoe drops in German credit upset 20 Aug 2007 The good news is that other banks look less exposed. Even so, detoxifying smaller positions may tie up valuable capital. The rescue of Sachsen Landesbank bears strong similarities to IKB. Both bet large on arm slength funds investing in commercial paper.
Beleaguered Bear buoyed by banter 17 Aug 2007 An analyst at an obscure Florida brokerage claimed the Chinese could take a stake in Bear Stearns. The bank s stock jumped 13%. But the report was based on unfounded speculation, as the writer admitted. It looks like frightened investors will grab at anything.
Will troubled markets thwart Akzo-ICI deal? 17 Aug 2007 The Dutch chemicals group s shares have fallen on fears that financing issues at partner Henkel may block its £8bn bid for its UK rival. Those doubts seem unfounded. But in troubled markets, shareholders might not be keen on a high multiple deal in a cyclical sector.
Europe’s mortgage minnows may become easier bait 16 Aug 2007 It was easy for small lenders to flourish when money was cheap. But reduced liquidity has exposed the benefits of size and diversity. Many mortgage banks may be able to brave the storm. But if it rages too long, they might be driven into the arms of bigger rivals.