Still M&A bankers can always look to Germany, where the long-awaited consolidation now seems imminent. However, those who were speculating on a Citi/Deutsche deal obviously were not listening to Citi CEO Chuck Prince, who had already said that the bank was more likely to do fill-in deals (witness the Washington Mutual deal) than transformational ones.
HSBC is advising Rosbank on its retail strategy and AT Kearney, which seems an unlikely choice, is advising HSBC on its investment banking model. The project reports to Mark Ramsey, acting head of global equities. Like every bank, HSBC has to figure out how to cover the high costs of research by means of paltry broking commissions, especially since research working with corporate finance is now a no-no. The answer is simply to cut the crap.
The JW Marriott Hotel in Jakarta may not be the obvious place to stage a roadshow: only weeks before, a car bomb exploded nearby, killing 14 people, injuring 150 and destroying the lobby. But that was the location chosen by Bank Rakyat Indonesia to spread the message about its recent IPO when 40.5% of the state-owned bank was floated on theJakarta Stock Exchange.
Investors calling their investment banks to place an equities’ order should not be surprised if the call is not returned. After Spitzer, the equities’ brokerage business is looking patently lacklustre. The great research engines that the banks built just cannot be kept firing on meagre broking commissions. Without the allure of corporate finance, they are looking distinctly expensivepropositions.
European bond investors are on the attack. They have not so far manned the barricades but they are distinctly edgy, maintaining that they are suffering from mushroom syndrome: people keep them in the dark and feed them bullshit. So they are fighting back. Their main bone of contention is that a company can be restructured with a negative impact on existing bonds and with little in the way of financial disclosure.
The European pension fund crisis could be partly resolved by persuading companies to manage their working capital better and release funds. One estimate is that European companies have about E600bn trapped in inefficient cash flow management. Release it and they can top up their ailing pension funds and a lot more besides – new acquisitions, new growth, things that could bring moribund European economies back to life.
Where are they now? Michael Philipp, former head of global asset management at Deutsche Bank, hands me a business card that reads: “Vision Fuel Services, Peachtree Street, Atlanta”, a company of which he is “principal”. Is it an opticians or a fuel supplier? “It’s my son’s business,” he says, none too helpfully.