An opposition politician has described the UK government’s bail-out plan as consisting of “stunts and wheezes”. This may be unfair but it highlights a tendency among governments battling with defective banks to be over-complex and to play politics rather than focus on simple financial solutions.
Institutional investors are up in arms again; this time at Deutsche Bank’s decision not to call its 2009-14 subordinated bond. “We are disappointed and concerned at this action taken by Deutsche Bank, a leading global capital markets operator with no capital or liquidity issues,” fulminates the Association of British Insurers.
As world leaders meet to discuss the future of capitalism, banks need to find new ways of financing trade.It is a moot point whether the leaders of the Global 20 (G20) industrialised nations achieved anything tangible, beyond increasing their carbon footprint, in Washington last month.
Even before the dust has settled after the biggest banking blow up in 80 years, the first signs of what a post-crisis world will look like are starting to emerge. The winners in banking will be those that recognise the changes first and work out to how to position themselves correctly.
If history ended on November 9, 1989, when the Berlin Wall fell, it returned with a vengeance on the week starting September 14, 2008, when Lehman Brothers filed for bankruptcy, Merrill Lynch rushed into the arms of Bank of America and one of the world’s largest insurers, AIG, was effectively nationalised by the US government.
Understanding UK bank strategies can be difficult. The past year has seen not only Royal Bank of Scotland’s joint acquisition of the Netherlands’ giant ABN AMRO but also the disastrous run on Northern Rock, record 2007 profits at HSBC Holdings and, last month, RBS’s first half-year loss in 40 years, following $11.4bn in writedowns.
Banca Monte dei Paschi di Siena’s audacious €9bn purchase of Banca Antonveneta last November required some serious work to raise the necessary financing. Edward Russell-Walling reports on how the group’s efforts ended up breaking the Italian record for capital raised.