Comments on: Morgan Stanley, Dresdner, May Own £4 Billion Bank Underwriting Gone Sour

By: mxq

mxq — Thu, 17 Jul 2008 02:43:00 +0000

Looks like this will be the biggest failure ever of a rights issue. Maybe the value guys are all tapped out...

By: Anonymous

Anonymous — Thu, 12 Jun 2008 12:11:00 +0000

Yves, the troubled HBOS rights issue could have negative implications for Barclays. With a Tier 1 ratio just under 5% and risks that Barclays has not disclosed its conduit and CDO exposures nor marked them down wnough, a rights issue for Barclays could be at a real discount to the current share price – which has fallen more than 30% since RBS announced its offering. At this point, I think we start to zero premium mergers – two drunks standing back to back to prop each other up!

By: Anonymous

Anonymous — Thu, 12 Jun 2008 09:26:00 +0000

http://www.bis.org/publ/bcbs_wp13.pdf
from the BIS website:
"The Japanese Financial Crisis during the 1990s

Summary
Up to March 2002, 180 deposit-taking institutions were dissolved under the deposit insurance
system in Japan. The total amount spent dealing with the problem of non-performing loans
(NPLs) from April 1992 to September 2001 was Y102 trillion (20% of GDP). This section
describes the financial crisis management in the 1990’s, dividing the period into five broad
stages."

and

"Causes of the financial crisis in 1990’s
One of the unusual aspects of Japan’s banking crisis is the length of time it took to address
the problems. While there were various problems that jointly caused the crisis, this section
focuses on the problems of non-performing loans (NPLs) and banks’ capital positions, two
primary sources of the crisis, and explores reasons why it has taken so long to contain the
crisis."

Reasons (redacted)
1-Problem on non-performing loans
2-Negative impact on the economy
3-Insufficient provisioning
4-Inadequate market discipline
5-Deterioration in banks’ capital positions

Look familiar? And remember how we used to look at them from afar and say, "Oh that would never happen to us! We'd slash NPLs and raise capital instantly...."

By: Richard Kline

Richard Kline — Thu, 12 Jun 2008 07:44:00 +0000

They break it; you bought it: Does this snap-back owwie suggest that _no one in their right mind_ will underwrite further major equity issuance for top tier financials in present conditions? But, but, those Top Tierians need to raise as much capital and more _still_ as they have aleady, which means . . . .

The continuinng sale of capital in Big Financials over the last eleven months has been your basic suckers’ rally. These firms have had life-threatening losses locked into their inboxes from last July on. Everyone and anyone who has bought big paper to hold on financials is a total sucker. . . . But then those new ‘buyers’ took the junk to short it, maybe, right? Kind of like Shuttlecock the Hand Grenade, but it’s the other fella who’ll lose an arm, right? Right??

The next major financial to turn turtle and head down by the nose will be the one that sucks down the last of false illusions re: the scale of the present problem, whether in the UK, the US, of Europe proper. Hedgies don’t count for as much, leverage nothwithstanding, and mostly they have nothing like the assets which may come unmoored and swamp the liquidity pool. I have no idea whether RBS, WM, HBOS, LEH, MS, or who know will be the one—but the next one to roll does so on the first day of the rest of our lives (under new management).

By: Anonymous

Anonymous — Thu, 12 Jun 2008 04:05:00 +0000

Deary me, what is this trend? HBOS, Lehmans, Bradford and Bingley? Sure they can do a sweet pref share deal with a SWF but go ahead and try to dilute the heck out of the commoners? They’ll walk with their feet.
I thought RBS were not far from the line in the sand either– wasn’t their rights price at 200p? And shares closed where? 212.5? What about the 5% of rights unsold that were placed around 230? This is not good.
The CFO of Lehmans was confident in their numbers, implying they cherry picked the portfolio, selling off the dregs and leaving them with future returns from the remainder that will defy naysayer thoughts of diminished performance. Given this and the underwater rights offering, shouldn’t Carl Icahn be salivating at the lips now? What is the market doing to this stock?!