Goldman’s traders earn their discount 14 Jun 2007 It s tough enough understanding the investment bank s trading ops at the best of times. That s why investors ascribe no value to them. But this quarter s 20% revenue drop has them spooked. Goldman s other businesses just aren t big enough to make up the difference.
Has Bear Stearns been unfairly treated? 14 Jun 2007 Fears about mortgages and burps in prime brokerage have decimated the investment bank s shares, which trade at 1.5 times book. These worries look overdone. Bear is cheap, has more lowhanging fruit to pick than rivals and has appeal as a takeover target.
More cash may not win ABN for Barclays 13 Jun 2007 A lower reserve ratio would allow the UK bank to add E10bn cash to its bid. But a more generous offer risks angering its own shareholders. On the other hand, just increasing the cash portion of the mix wouldn t make the Barclays bid better than that of rival RBS.
Goldman learns lesson over UK conflicts 13 Jun 2007 The investment bank went out of its way to show BC Partners that it wasn t competing against it in the auction for New Look, the retailer. How different it is from early last year, when Goldman s UK advisory franchise was under threat after a series of clumsy attempted deals.
Lehman’s Q2 bodes well for rivals 12 Jun 2007 True, the mortgage heavyweight s credit trading revenue fell, but not by too much. Meanwhile, the rest of the firm had a bumper quarter. That should give a boost to Morgan and Goldman shareholders with less exposure to mortgages, these two should perform even better.
Finance company creditors may applaud rate rise 12 Jun 2007 Lenders typically hate interest rate increases. The recent spike in Treasury yields has many licking their wounds. But finance company bondholders, battered since the Sallie Mae buyout made them look vulnerable to LBOs, may actually benefit.
Should Texas Pacific be bidding for a Turkish bank? 11 Jun 2007 Buyout firms don t usually bid for banks. Nor do they typically dabble in emerging markets. TPG proposes to do both with its mooted Oyak bid At $2bn, Oyak isn t cheap. If TPG does pay 25 times earnings, it needs to radically transform the army bank to get its expected return.
Italian derivative woes offer cautionary tale 11 Jun 2007 A small Italian leasing bank has found itself in hot water after selling complex interest rate derivatives to its clients. It shows how complex instruments can make a bad situation worse and how hedges don t always provide protection.
Schwarzman minds his succession planning 11 Jun 2007 It was widely believed that the Blackstone boss owned 40% of the LBO house. But the prospectus reveals that he owns a little over 25%. This suggests he s been smart about cutting his successors into the pie. Other buyout barons could learn a thing or two.
Loan market’s winning streak could stretch on 5 Jun 2007 Credit bears are looking malnourished. They ve gone six months without a meal. That s how long it has been since a loan defaulted. Cashstuffed lenders offering attractive terms are the main reason. But buyout shops are riding to tottering companies rescue too.
Investors get more bank for their buck in India 5 Jun 2007 ICICI Bank and China Citic are of similar size and have similar premium share ratings. However, in India you get the market leader and don t get a bad debt problem.
Macquarie has a credibility problem 4 Jun 2007 The Australian bank s stock fell by 10% after its valuation models were criticised by shortseller Jim Chanos. These models justify high acquisition prices and debtfunded dividends. To dispel criticism, Macquarie should publish its models.
ABN levels the playing field 30 May 2007 That should help the tattered reputation of the supervisory board. And it might help investors get the best deal. Groenink, the Dutch bank s boss, favoured a merger with Barclays. But the supervisory board will now take more control of the situation.
China’s bubble policy beats India’s 30 May 2007 While India celebrates its stock market hitting $1tr in capitalisation, China is trying to rein in its own frothy bourse. China s approach is unconventional, but it may end up being much better for the health of its citizens finances.
Novel risks lurk in US municipal CDOs 29 May 2007 Investors allergic to taxes and credit risk like municipal debt. Wall Street s now adding some octane to this $2.3tr market. It s offering leveraged returns on debt backed by pools of munis. But these deals are inflexible and riskier than they look.
Xinhua IPO debacle looks bad for underwriters 24 May 2007 UBS and JPMorgan floated the Chinese media firm two months ago. Its stock has plummeted 50% since. Investors relied on the firms to vet Xinhua s prospects and governance. Yet several unflattering facts about its CFO weren t disclosed.
Wall Street edges toward a hiring freeze 24 May 2007 It s not just rumour. Goldman Sachs executives are calling for a recruitment pause that goes beyond a seasonal slowdown. With markets buoyant this may seem odd. But given estimates for a decline in earnings from next year, it s sensible.
Costamagna shows value in a full Rolodex 23 May 2007 The banker s contacts gave him the lone mandate to advise Capitalia on its E22bn takeover, while the big investment banks got the scraps. He s likely to have earned a fortune for a few days work. But that doesn t mean it s so easy for others to follow suit.
Lloyds TSB settles for less in share registrar sale 22 May 2007 The UK bank got about 10% less than the asking price for this mature business. But the £550m price tag was still a juicy 17 times earnings. There may be some limit to the price private equity will pay for dull assets. But Advent still outbid trade buyers.
Draghi beats Fazio in keeping Italy’s banks Italian 22 May 2007 The Bank of Italy boss has outdone his predecessor in deterring foreigners. The CapitaliaUnicredit deal has kept another stray at home. And he s done it without breaking the rules. By giving free market forces free rein, he s encouraged Italy s banks to huddle together.