Opinion

The Great Debate

Germany risks zombie banks

Margaret Doyle– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

Germany’s politicians seem to have rescued their bad bank. Pushing back the valuation date for toxic assets to before the Lehman collapse has made it more likely that banks will consign their dud investments to the voluntary scheme.

It had looked as if the banks might simply boycott it. However, while the government has scored a political goal, it is no closer to its aim of boosting lending to a credit-starved German economy.
The essence of the scheme is that banks will be able to transfer some 250 billion euros of toxic assets into “eine Bad Bank”. In exchange they receive government-backed paper that they can count towards regulatory capital.

In principle this will raise their lending capacity. However, because the Germans do not want to reward reckless banks, the banks will pay an annual fee to participate, and will be liable for any shortfall at the end of the scheme. In other words, there is no fundamental risk transfer from the banks and the uncertainty about their eventual liability remains.

The breakthrough this week is that the government has pushed the valuation back to before the collapse of Lehman last autumn — when valuations were much higher.

Why banks should sell their fund managers

Margaret Doyle– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

Barclays’ proposed sale of BGI may be an eye-catching deal thanks to its size, but it is unlikely to be the last bank that gets out of the fund management business.

Banks have debated whether they need to control their asset management arms for years. In the United States, Citigroup and Merrill Lynch were early sellers of their divisions in 2005 and 2006.

Barclays monoline insurance ploy pays off

Margaret Doyle– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

By Margaret Doyle

Barclays has avoided the dead hand of state shareholding and, on Thursday’s evidence, it looks as though it will escape completely.

Barclays Capital has enjoyed a storming first quarter — so good it is hard to see it being sustained — which has allowed the bank to make more big write-downs and still report a 15 percent increase in pre-tax profit.

Ukraine too far east for western banks

– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

Margaret DoyleIt’s tough on Ukraine, but European banks should pull out. It may not be the only Eastern European economy giving its western bankers a headache but that country’s political chaos and weak corporate governance outweigh the prospects of a return to growth.

Hungarians and Romanians, the bulk of whose loans are in foreign currencies, have seen their debts rise as their own currencies fall. And Sweden’s SEB and Swedbank have taken a pasting in their neighbouring Baltic states.

The future is smaller for private equity

Margaret Doyle– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

Investors’ faith in banks may be reviving, but 2009 is shaping up as a year of reckoning for private equity. Two of Europe’s most prominent listed buyout funds — Candover Investments and SVG Capital — are considering their options, with sale or dismemberment a serious prospect.

How the mighty are fallen! For more than a decade, the listed PE funds outperformed the market, and the managers earned rich fees nicknamed “2 and 20″ — 2 percent of funds under management and 20 percent of performance above a certain benchmark. But that outperformance has disappeared in little more than a year with many funds languishing in the “90 percent club” of shares that trade for less than 10 percent of their peak. Funds are blaming a killer combination of lousy returns, a debt drought and an investors’ strike.

Divorce marked to market

MARKETS-GLOBAL /– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

The Myerson divorce case in Britain makes compelling reading, as all rich bust-ups do. Regardless of whether the judges make Ingrid Myerson hand back 3.2 million pounds of her 11.1 million pound payout to compensate for the decline in her ex-husband’s shares, she is a lucky woman.

Thanks to her divorce last year from fund manager Bryan who, as one half of Active Value Advisers, was the scourge of corporate UK, she is independently wealthy. Had the marriage survived, she would probably be — like him — worthless.

  •