SocGen should come forward with its write-offs 22 Jan 2008 The French bank has about E5bn worth of exposure to CDOs. It has only marked that down by E230m so far, and hasn t said more. If it follows the US pattern, the total loss could be ten times higher. Some idea of what is coming would calm investors nerves.
Hedge fund code no guarantee of self-preservation 22 Jan 2008 The UK hedge fund voluntary code is a sensible attempt to address some of the big issues that have got the industry in trouble in the past. But hedge funds today face very different challenges against which these rules may prove a chocolate fireguard.
Regulators should bar bond insurers from structured finance 22 Jan 2008 Forcing them to focus on muni bond business is better than bailing them out. It would make underwriters and ratings agencies take more blame for their loss estimates on structured products. And it would allow investors to get a better handle on the insurers true prospects.
UK football goes the way of Wall St 22 Jan 2008 It s a classic tale of football, leverage and sovereign funds. Liverpool s US owners have fallen out with fans and are struggling with refinancing. Dubai International Capital would like to buy a trophy and is offering Hicks and Gillett an easy get out card they should take it.
Ping An attempts to buck global trend 21 Jan 2008 Western markets are faltering, but China s secondlargest insurer plans to raise a $20bn warchest. The company s shareholders may not be happy, but there is an opportunity. Cashrich companies from the East can swoop like sovereign funds on weakened Western targets.
Buyout firms won’t hold back pink slips in a downturn 18 Jan 2008 Private equity lobbyists funded a study that says companies bought by buyout firms between 2002 and 2005 have created jobs faster than US businesses overall. That sounds nice. But the comparisons and the timeframe are questionable. It could be a different story in a downturn.
Banker bonuses border on obscene 18 Jan 2008 Paying themselves bonanzas in a year when the financial system suffered a heart attack and Wall Street had to be rescued by rapid central bank rate cuts undermines the legitimacy of capitalism. If this provokes an envious backlash, financiers have only themselves to blame.
Looking for a safe haven? Try Doha 16 Jan 2008 The collapse in global equities has left investors with few remaining safe havens. But Middle Eastern markets have bucked the trend. With cheap valuations and low correlation to the rest of the world, these markets look to be an unlikely oasis.
Bond insurers face a grim future 16 Jan 2008 Ambac s huge loss has further eroded the sector s credibility, just when it needs investors to pony up more capital. The bond insurance business is besieged on many fronts. If it survives, it will be a shadow of its former self.
Who cares about inflation? Not the Fed 16 Jan 2008 US consumer prices rose by 4.1% in 2007, twice the level targeted by the ECB. But the market is probably right to expect more cuts in US overnight rates. The Fed worries about economic imbalances, but it isn t willing to prescribe the medicine that would cure them.
KKR’s investment in Legg Mason looks sensible 15 Jan 2008 The buyout giant is investing $1.25bn in the traditional asset manager. Legg will use some of the proceeds to buy back preferred stock from cashstrapped Citigroup. But whatever the backstory, the deal ticks important boxes for KKR.
Ospel should quit UBS 14 Jan 2008 He has presided over $14bn of writeoffs, tarnishing the bank s brand and forcing it to tap foreigners for cash. Unlike the bosses of Citi and Merrill, Ospel has kept his job. There are still a few things he can do for UBS. But he, too, should set a timetable for his departure.
Alternative asset managers’ moves are signs of ambition 11 Jan 2008 Recent strategic moves by Fortress and Blackstone suggest altasset managers want to compete on Wall Street s turf. Blackstone s incremental approach might work best. But a bigger deal could be one option for likeminded firms such as Citadel that aren't yet publicly traded.
Blackstone wisely uses rich stock to buy GSO 10 Jan 2008 It s paying $930m, well below the valuation Blackstone fetches of some 20% of assets under management. With the credit bubble popped, it looks like Blackstone is the best exit opportunity for smaller altasset managers. Pity poor Merrill s illtimed investment in GSO.
Is Countrywide worth a third of book value? 10 Jan 2008 That s what investors seem to believe Bank of America could pay for the beleaguered lender. While that may sound like a bargain, it wouldn t be all that hard for Countrywide to see more than $8bn wiped off of its book value, leaving BofA nursing a loss.
Is Capital One the canary in the consumer credit mine? 10 Jan 2008 The credit card and car loans giant has slashed its 2007 profits estimate by 20% because of rising loan defaults. Its business model should protect it from becoming the next Countrywide. But it still bodes ill for the US economy.
How risky is Riskmetrics? 10 Jan 2008 The US financial analytics and proxy advisory firm is going public at a time when Wall Street s implosion could make a play on independent risk measurement pretty attractive. And most of its big competitors are either private or carry unattractive baggage.
Bank of England holds fast on unbalanced UK 10 Jan 2008 The Bank of England did not cut rates on Thursday. It s a delay, but procrastination has its merits. The UK patient needs to feel some pain in order to rebalance. But if growth plummets, the Bank will up its pain relief. Rising inflation would be a troublesome complication.
NYSE’s Niederauer takes his baby steps 9 Jan 2008 He s apparently in talks to buy the American Stock Exchange. At some $350m that would hardly rival predecessor John Thain s hefty deal making. But it would bag the Big Board a couple of handy businesses. And cost synergies should be enough to cover any premium.
MBIA’s biggest challenge is credibility, not capital 9 Jan 2008 Investors savaged the bond insurer s stock after it unveiled a plan to shore up its capital. The fact that regulators are now eyeballing its disclosures didn t help. MBIA has to rebuild its credibility before it can compete effectively with cleanerthanclean Berkshire Hathaway.