Banks

Is Bear Stearns a Lehman, Salomon – or Drexel?

6 Aug 2007

Lehman nearly failed in 1998 due to rumours of big losses. Salomon became acquisition fodder after its Treasury manipulation debacle. And Drexel couldn't be saved. Now Bear has ousted its markets chief. But it must show it's a Lehman, or at worse a Solly and not a Drexel.

RBS and Barclays flex trading muscle

3 Aug 2007

The UK banks investment banks thrived in H1. Both look good homes for their parts of ABN Amro, the Dutch bank they are squabbling over. The trouble is the future. With markets jittery, now may not be the moment to buy a new investment bank.

IKB may not be sole victim of moral hazard

3 Aug 2007

Poor regulation and apparently easy profits lured the German bank into investments it did not understand. Now it is paying for its naiveté. If credit stays tight, others will join the hall of shame. Such stupidity should be rewarded with bankruptcy, but generally isn t.

Credit Suisse’s traders extend their winning streak

2 Aug 2007

The Swiss bank s investment banking unit flourished for a fourth consecutive quarter, and is shaking off a reputation for inconsistency. But that strength is a mixed blessing. The bank may need to beef up its other units to hold onto its rerating.

ICI should think twice about Akzo’s 650p offer

1 Aug 2007

On a standalone basis, it s hard to value the UK paint group at more than 520p. Even with big synergies, the Dutch offer looks pretty full. No wonder a big Akzo shareholder is balking at the bid. If ICI is too stubborn, its shareholders could end up losing out.

Deutsche’s exuberance may fall on deaf ears

1 Aug 2007

The German bank has defied downbeat forecasts. It raised Q2 profits by a creditable 32% and thinks it can ride out the current market storm. But given Deutsche s reliance on investment banking for growth, that may not be enough to persuade investors to close its discount to peers. The German bank has defied downbeat forecasts with a 32% increase in pretax profits. It thinks it can ride out current market storms. But given Deutsche s reliance on investment banking, investors may not be persuaded to close the shares' discount to peers.

Macquarie fails to learn from the past

1 Aug 2007

Two of the Australian bank s credit investment vehicles could suffer serious losses, despite its trumpeted expertise in risk management. Its funds have been hammered by the same hazard that caused many of the fund failures of the past 10 years liquidity risk.

German banks caught between 1960 and 2007

31 Jul 2007

WestLB and IKB have both lost their chief executives in the last week. The common theme: newstyle risks imposed on a traditional culture. IKB s story is almost poignant. It went overseas to please the ratings agencies. And it trusted the agencies judgement on subprime paper.

ABN makes better fist of auction’s second round

30 Jul 2007

In recommending neither of the revised offers, the Dutch bank is putting on a better show of giving its competing suitors equal treatment. ABN s supervisory board is using its stronger grip. But with some wriggle room left to favour Barclays, investors should be on their guard.

ICI deal looks within reach for Akzo Nobel

30 Jul 2007

The UK paint company may have rejected a raised 650p offer from its Dutch rival, valuing the group at £7.7bn. But it has agreed to talks. That seems sensible. Markets are choppy and ICI is dependent on the US housing market. The window for a big cash deal may be closing.

Geronzi’s comeback has gone too far

26 Jul 2007

Draghi, the Bank of Italy governor, and Profumo, the Unicredit boss, surely made a mistake by letting the convicted banker chair Mediobanca. They mustn't compound the error by letting Geronzi consolidate his power particularly now he has been charged in connection with Parmalat.

Fortis vote may be test of hedge fund activism

26 Jul 2007

But it s not clear hedge funds will take the opportunity. Whether they do so may show how many are really willing to make their mark. The bank's vote on a E13bn rights issue should interest the hedge funds. The ABN bid has weighed on its shares. The deal could be blocked.

Credit crisis forces banks to make Hobson’s choice

26 Jul 2007

Spare a thought for a big bank s risk manager. Credit woes have imperilled loans to CLOs and hedge funds. So he s eager to cut them back. But he s also got buyout bridge loans piling up on his books. And the primary buyers for those are you guessed it CLOs and hedge funds.

Hypo’s deal with Depfa won’t move the needle

23 Jul 2007

The German real estate bank s E5.7bn swoop on the public finance specialist will create some interesting synergies, and help Depfa. But at less than E12bn combined, the new bank will still be small. This deal looks like a sideshow ahead of more profound consolidation.

Barclays takes crafty route to raising £9bn

23 Jul 2007

The UK bank is selling a big chunk of shares at an attractive price. While its peers are paying to get into China, it is taking money out. True, the apparent premium could prove illusory, but it still looks like a good deal.

Chile’s not the growth market it seems

20 Jul 2007

Citigroup s decision to buy Banco de Chile for $2bn isn t exactly what it appears. It only requires an upfront cash outlay of $322m. But Chile isn t what it seems either. Its economy is dependent on copper prices. After two strong decades it s reverting to a Latin norm.

Barclays should hold its nerve over ABN

18 Jul 2007

The UK bank could squeeze a little more into its bid for the Dutch bank. But it can t justify matching the consortium s higher offer. So the best policy is to do nothing and hope the rival bid comes off the rails. That s not impossible.

JPMorgan sets a cautious tone

18 Jul 2007

Jamie Dimon is spending as much time saying how the bank can survive a downturn as trumpeting the latest set of good results. That s not a bad idea. Nervous investors seem to need reassurance. Despite bumper earnings, the stock fell about 2% in early trading.

Merrill unscathed so far by subprime woes

17 Jul 2007

The investment bank s secondquarter results show no ill effects from its exposure to Bear Stearns two ailing subprime hedge funds. Merrill s trading business even had a better quarter than peers. So far it has avoided big problems relating to the subprime meltdown.

Third time not the charm for Basell

17 Jul 2007

Lyondell meshes well with Basell. But the synergies probably don t justify the price especially if the economic cycle has peaked. After losing the Huntsman and GE Plastics auctions, oligarch Leonard Blavatnik s chemicals group has won Lyondell with a $12.6bn bid. After losing the Huntsman and GE Plastics auctions, billionaire Leonard Blavatnik s chemicals group has won Lyondell with a $12.6bn bid.