Category Archives: banking

Northern Rock: Nationalized

Posted on February 17, 2008 by Felix

Northern Rock will be nationalized, and the FT says that There Will Be Grumbling: The government believes nationalisation is now the best option, even though it is likely to spark a political storm, an angry reaction from some shareholders and … Continue reading →

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Don’t Bank on Loan Deals

Posted on February 15, 2008 by Felix

Front-page stories in the WSJ and FT: two great tastes which go great together! First there’s David Enrich in the WSJ, talking about a Citigroup hedge fund named CSO Partners, which contracted to buy a bunch of loans and then … Continue reading →

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IKB: The Unnecessary Bailout

Posted on February 14, 2008 by Felix

Why is the German government bailing out IKB? It’s small, it’s not systemically important (although it is politically important, which is probably the key here), and there’s all sorts of moral hazard involved in keeping this insolvent bank afloat. Willem … Continue reading →

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Credit Suisse: Not a Team Player, but Profitable

Posted on February 12, 2008 by Felix

Credit Suisse reported reasonably good results, by bank standards and especially by UBS standards, this morning. But its reputation in the loan markets is taking a beating in the wake of the behavior detailed by Heidi Moore yesterday. Every time … Continue reading →

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Banking: Words To Live By

Posted on February 11, 2008 by Felix

A Credit Suisse banker explains how his bank avoided monster losses: "All of us [banks] are really in the moving, not the storage, business." Maybe Chuck Prince and Stan O’Neal never got the memo.

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Credit Card Datapoint of the Day

Posted on February 8, 2008 by Felix

Jonathan Stempel reports: Discover Financial Services said on Thursday it agreed to sell its Goldfish credit card unit in Britain to Barclays Plc for $70 million, abandoning a money-losing business it bought two years ago for $1.68 billion, as consumer … Continue reading →

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Why Non-Borrowed Reserves Don’t Matter

Posted on February 8, 2008 by Felix

Caroline Baum does everybody a favor today and explains why you shouldn’t be remotely worried about a deservedly-obscure indicator known as non-borrowed reserves. She talks about the "hysterical emails" she’s been getting on the subject but is too polite to … Continue reading →

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Monoline Tsunami Aimed at European Banks

Posted on February 8, 2008 by Felix

If you skim over headlines in your RSS reader, it’s easy to miss this one: "Ackermann warns of monoline ‘tsunami’". Ackman is bearish on monolines? Wake me up when you have something new to – oh. It’s not Bill Ackman … Continue reading →

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Waiting for Wall Street’s Headcount to Fall

Posted on February 6, 2008 by Felix

One of the main reasons I so easily won my Wall Street bonus bet with Jesse Eisinger was that Wall Street’s headcount rose so dramatically over the course of 2007. But surely that reversed course in the second half of … Continue reading →

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Skewed Incentives in Banking and Loans

Posted on February 6, 2008 by Felix

I’m blogging today from the Money:Tech conference at the Waldorf, which means that news blogging is likely to be light today. But I would like to point you to a couple of news stories I did see this morning. First … Continue reading →

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Goldman Gets Downgraded

Posted on February 5, 2008 by Felix

Has Goldman Sachs run out of special sauce? According to Meredith Whitney of Oppenheimer, yes:. In 2008, she says, "Goldman Sachs will probably deliver results that will not be substantially better than its peers," and as a result she’s downgraded … Continue reading →

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Is M&A Decoupling From Lending?

Posted on February 4, 2008 by Felix

Would that this sort of thing happened much more often: Vale, the world’s second-largest mining group, has fired Merrill Lynch as one of its two lead advisers after the investment bank decided not to help finance a potential $90bn takeover … Continue reading →

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Goldman Gets its Yahoo-Microsoft Mandate

Posted on February 4, 2008 by Felix

Goldman Sachs didn’t lose any time getting itself a mandate in the Yahoo-Microsoft merger. Goldman advised Microsoft in its attempt to buy Yahoo last year, but wasn’t hired by the Redmond giant this time around. Not to worry: Goldman has … Continue reading →

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The Unusual Suspects

Posted on February 1, 2008 by Felix

It’s like something out of a movie: a bunch of misfits with nothing much in common are thrown together in an attempt to pull off a massive heist – or acquisition of a monoline insurance company, at least. According to … Continue reading →

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Goldman Loses Microsoft Mandate

Posted on February 1, 2008 by Felix

Which banks did Microsoft mandate to put together its monster $44 billion bid for Yahoo? Morgan Stanley – and Blackstone! This is a huge loss for Goldman Sachs, which advised Microsoft in its failed attempt to buy Yahoo last year. … Continue reading →

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Bruce Wasserstein is Overpaid

Posted on January 30, 2008 by Felix

Now that’s what I call a bonus. Lazard reported 2007 profits of $122.6 million today, and gave CEO Bruce Wasserstein a bonus of $36.2 million for the year – on top of a restricted-stock grant of $96.3 million. How did … Continue reading →

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Cigarette Smokers For Daniel Bouton

Posted on January 30, 2008 by Felix

Last week, SocGen CEO Daniel Bouton offered his resignation to the board (chairman: D. Bouton) but it was not accepted. Today, SocGen chairman Daniel Bouton, along with the rest of the board, announced the unanimous support of CEO Daniel Bouton, … Continue reading →

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Boris Nurdbongleur Dodges the Credit Crunch

Posted on January 29, 2008 by Felix

Tim Price: Speaking on condition of anonymity, Marti Peeps, a spokesman for the bank, admitted that he was gloomy on prospects for the sector, notwithstanding Societe Bancaire de Neasden’s surprise results. “This has come in the wake of other debacles … Continue reading →

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How Gene Ludwig Forced the Countrywide Sale

Posted on January 29, 2008 by Felix

Why did Countrywide sell out to Bank of America? Because it had to. That’s the message of a very good WSJ piece today, which explains that Countrywide, before its takeover by the Charlotte giant, was essentially throwing itself upon the … Continue reading →

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Jerome Kerviel, Prop Trader

Posted on January 28, 2008 by Felix

It seems to be emerging today that Jerome Kerviel’s job was not nearly as clerical and low-risk as SocGen first made out: his lawyers now claim that his trading was in profit to the tune of €1.5 billion at the … Continue reading →

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How Memes Get Started

Posted on January 27, 2008 by Felix

Friday morning, right here at Market Movers: If I had to guess, I’d say that when Kerviel’s position was discovered, he was maybe 1.5 billion or so euros underwater; the rest of SocGen’s losses are just as much the bank’s … Continue reading →

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SocGen’s Big Mistakes

Posted on January 25, 2008 by Felix

Did Jerome Kerviel and Societe Generale cause Monday’s market meltdown? I asked the question yesterday, and today it’s looking increasingly as though the answer might be yes. His positions are being reported at between 40 billion and 50 billion euros, … Continue reading →

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Equity Derivatives House of the Year

Posted on January 24, 2008 by Felix

An as-yet-unnamed trader at SocGen has somehow contrived to lose more than $7 billion by making bad directional bets on equity indices. Bloomberg’s Gregory Viscusi is on irony watch: "At first this seemed like a joke," said Nicolas Rutsaert, an … Continue reading →

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Ken Lewis’s Call Option on Countrywide

Posted on January 18, 2008 by Felix

The most recent deal not going according to the merger-arb playbook is Bank of America’s acquisition of Countrywide. The takeover takeunder is valued at $6.47 per share, but Countrywide is trading at only $5.11. How come? Well, have a look … Continue reading →

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The Bonus Bet

Posted on January 17, 2008 by Felix

Some loyal readers may recall that back in October I entered into a wager with Jesse Eisinger, who had written in Portfolio that "bonus season this year will make Montgomery Burns look generous". If aggregate Wall Street bonuses fell by … Continue reading →

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