DealZone

BoNY refocuses on Europe

As head of the world’s largest custodian of financial assets, Robert Kelly is paid to be alert to buying opportunities. So it’s interesting to hear Kelly, chairman and chief executive of Bank of New York Mellon, tell reporters in Beijing that financial assets in Europe are more attractive than those in Asia and that, as a consequence, the bank is refocusing its businesses.

European financial institutions were hit harder by the global economic crisis than their global peers, and U.S. banks are in a better position to mount takeovers in Europe after going through a government-led process of consolidation and capital-raising, he said. “What you will see in coming quarters is that U.S. financial markets and banks are stronger than the European banks now,” he said.

If some European banks were to sell businesses to raise capital, BoNY would be interested in buying, he said. If timing counts for anything, Kelly’s interest has probably been piqued by Dutch bancassurer ING, which said on Monday it would split in two, transforming itself into a smaller European lender.

KBW analysts see asset manager deals

Asset managers are in for some deal-making as the sector tries to deal with the chinks exposed by the financial crisis, KBW analysts predict.”Stressed capital markets have depressed profitability at most asset managers and brought to the fore many of the challenges that have been confronting the industry but were obscured by the bull market,” the analysts write in a report.Some of the deal activity has already been playing out as divestitures by financial services companies, with negotiations ongoing for such units as AIG’s business and Bank of America’s Columbia.KBW’s analysts predict most acquisitions are likely to be smaller transactions.Possible buyers? Invesco, BlackRock, Bank of New York Mellon, Franklin Resources, Legg Mason, Affiliated Managers Group, Federated Investors, Blackstone, Fortress, GLG Partners and others have expressed a continued interest in acquisitions, they said.Those hungry for larger deals could include Franklin and Bank of New York Mellon, the analysts said, adding that they see little likelihood of deals between publicly traded asset managers.

“Go Shop” clause pays off for Barclays

Barclays‘ seemingly never-ending effort to get top dollar for its Barclays Global Investors unit appears to be enticing some Middle East money behind the current best bid from U.S. fund manager BlackRock, which is believed to be in the neighborhood of $12 billion.

Barclays said it had received proposals for BGI and iShares from a number of parties, including BlackRock, and was continuing talks. BlackRock confirmed the talks, but both sides said issues remained that could derail a deal. San Francisco-based BGI is the world’s biggest fund manager, with $1.5 trillion in assets under management and would more than double the size of BlackRock.

With Bank of New York Mellon also in the hunt, sources say Barclays may keep a hand in the game after a sale, possibly taking a stake of up to 20 percent in the enlarged asset manager. Media reports say BlackRock may get funding from Middle East investors, possibly including some Barclays shareholders. The Qatar Investment Authority and Adia, the government investment arm of Abu Dhabi, are in talks alongside Kuwait’s KIO to inject $3 billion into BlackRock for a 12 percent stake, the UK’s Sunday Telegraph newspaper said.

Wall Street bankers — so humble, so frugal!!!

BERNANKE/It is amazing how the prospects of a grilling in Washington can make Wall Street’s CEOs behave. Until a little while ago, these were the masters of the masters of the universe. An elite group of highly paid stars who rarely showed signs of vulnerability, who rarely seemed to doubt their place at the top of the heap. But take a look at the testimonies they have prepared for today’s hearing at the House Committee on Financial Services and it looks like they have begun to embrace the new era, the new religion.

You would be forgiven in thinking they had all also hired the same speechwriter. They mostly stress they are prudent, frugal, humble, though not quite yet apologetic — it will be interesting if that changes once the grilling begins. Here are some of the themes:

Public anger towards Wall Street is justifiable:
“It is abundantly clear that we are here amidst broad public anger at our industry. In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public. Many people believe — and, in many cases, justifiably so — that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system’s stability.” — Lloyd Blankfein, CEO of Goldman Sachs Group.