Summit Notebook
Exclusive outtakes from industry leaders
Skeletons in the closet, sprawling ownership stymie Gulf bank consolidation
Anyone waiting for Gulf banks to consolidate — a long talked about prospect — can forget about it for now.
With debt markets shut, leaving only pricey equity financing, budding suitors are standing frozen, unable to make a commitment.
But the lack of reasonable financing for mergers is not the only obstacle, according to Frederick Stonehouse, head of strategic mergers and acquisitions at Bahrain’s Unicorn Investment Bank .
Valuing the assets of privately-owned banks, the best candidates for consolidation, is no easy task.
Independent in appearance
Japan is edging towards the introduction of independent directors and auditors for publicly listed companies, but so far even the idea of having someone from outside at the top of a company remains a foreign concept.
The tradition is for someone to join a Japanese company at age 22 with the ultimate goal of serving on the company board, says Takeyuki Ishida, the head of Japan Research at RiskMetrics Group, which advises institutional investors on how to vote their shares.
Investing Japan, as Japan invests offshore
Even in the best of times, Japan has never been a cakewalk for foreign investors. But in the wake of the global credit crisis, the world’s second-largest economy can be downright baffling.
The recession has wiped out overseas demand for electronics and automobiles and sent a rush of mid-sized firms into bankruptcy.
US corporate governance less than perfect
While Japan can do more to improve corporate governance, Tokyo Stock Exchange President Atsushi Saito said comparisons to the United States need a little context. Saito said the Federal Reserve’s decision to sell Bear Stearns off to JP Morgan Chase for a mere $2 a share in a weekend firesale was not exactly in the interest of Bear’s shareholders. “Is that respecting shareholders? You have to think about that,” Saito told the Reuters Japan Investment Summit in Tokyo. One persistent criticism of Japanese companies do not have enough outside directors on their boards. But Saito also noted that a majority of the board members at Enron – the poster-child of the U.S. corporate scandals in 2002-2003, along with WorldCom – were from outside the company. And Saito said it was a little worrying how the US Congress has been itching to take action against China with the variety of laws introduced that threaten sanctions and limits on investment. “Everything is not going according to logic.”
