This time last year, Bear Stearns was trading at a hundred and seventy something dollars per share. Today, it closed at seventy something dollars per share, well below its book value of $84. That’s all you need to know to understand why Jimmy Cayne is stepping down as CEO.
Cayne will stay on as chairman, thanks to his large shareholding and friendly board, which means that it will be Cayne, rather than new CEO Alan Schwartz, who still gets to make the final decision on whether Bear is sold. But as Dennis Berman notes, it’s not at all clear who would want to buy the bank:
There’s still an opportunity for the best hedge funds and rival investment banks to pick off Bear’s talent. Why would a bank such as Barclays or Bank of America wish to pay for goodwill and overhead in a full-company purchase, when they can lure groups of traders and bankers on their own?
This is even more of an issue now that Schwartz, a banker, has been put in charge of Bear’s headstrong traders. He’s going to have to find ways of making them happy without spending money he doesn’t have – and that won’t be easy.
So far it’s unclear when exactly Cayne will leave, but expect it to be sooner rather than later. One of the few ways in which Bear has distinguished itself of late is that it has a clear and well-thought-through CEO succession process. I trust that if Schwartz finds himself overseeing the second loss in the company’s 84-year history, at least he will bother to attend the quarterly conference call.