WaMu is largest U.S. bank failure
Elinor Comlay and Jonathan Stempel (Reuters)
Sep 25, 2008
http://biz.yahoo.com/rb/080925/
business_us_washingtonmutual_jpmorganbiz.html?.v=3
Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.
The rescue marks a historic step to clean up a U.S. financial system littered with toxic mortgage debt.
Seattle-based Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The nation's largest previous banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.
The transaction gives JPMorgan roughly 5,400 branches, and fulfills JPMorgan Chief Executive Jamie Dimon's long-held goal of becoming a retail bank force in the western United States.
It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price.
Washington Mutual's collapse is the latest of a series of takeovers and outright failures that have transformed the American financial landscape and wiped out hundreds of billions of dollars of shareholder wealth.
These include the disappearance of Bear, government takeovers of mortgage companies Fannie Mae and Freddie Mac and the insurer American International Group Inc, the bankruptcy filing of Lehman Brothers Holdings Inc, and Bank of America Corp's planned purchase of Merrill Lynch & Co.
JPMorgan, based in New York, ended June with $1.78 trillion of assets, $722.9 billion of deposits and 3,157 branches. Washington Mutual had 2,239 branches and 43,198 employees.
Shares of Washington Mutual plunged $1.24 to 45 cents in after-hours trading after news of a JPMorgan transaction surfaced. JPMorgan shares rose $1.04 to $44.50 after hours.
Thursday's transaction makes JPMorgan close in size to Citigroup, now the largest U.S. bank by assets.
JPMorgan has surpassed Bank of America in size. That bank would become the largest U.S. bank once it completes its planned purchase of Merrill Lynch, expected in the first quarter of 2009.
Once a golden child at Citigroup before his mentor Sanford "Sandy" Weill engineered his ouster in 1998, Dimon has carved for himself something of a role as a Wall Street savior.
Some historians see parallels between him and the legendary financier John Pierpont Morgan, who ran J.P. Morgan & Co and was credited with intervening to end a banking panic in 1907.
Bank of America Chief Executive Kenneth Lewis has also been credited with helping reduce damage on Wall Street with his acquisitions this year of Merrill Lynch and Countrywide Financial Corp, the nation's largest mortgage lender.
Showing posts with label Citigroup. Show all posts
Showing posts with label Citigroup. Show all posts
Saturday, September 27, 2008
Wednesday, August 27, 2008
The new carry trade
‘Stead LBO, SWF: The new carry trade
Financial Times
Aug 21, 2008
http://ftalphaville.ft.com/blog/2008/08/21/15269/
stead-lbo-swf-the-new-carry-trade/
The oil-rich sovereign wealth funds have it good, if we didn’t already know that. Citigroup’s Robert Buckland reinforces the idea in his latest Global Equity Strategy note to clients, in which he claims a new carry trade - with SWFs poised to be prime beneficiaries:
Just as the equity market looked cheap to anybody who could source capital from the debt markets between 2003 and 2007, now it looks cheap to anybody who can source capital from the oil market. And just as markets missed the point about private equity - they could afford to pay higher prices for assets given their access to cheap debt capital - maybe they are now missing the point about oil-rich investors. Most financial assets looks cheap when your source of capital is oil at over $100 a barrel.
The re-rating of global equities against oil over the past year has been just as significant as the re-rating of debt against equity that kicked off the de-equitisation trade. A combination of rising oil and falling share prices means that a barrel of oil will now buy enough equities to deliver $8 of corporate earnings per year (we divide the oil price by the market PE to calculate this), way up from the $5 that it would have bought a year ago.
Financial Times
Aug 21, 2008
http://ftalphaville.ft.com/blog/2008/08/21/15269/
stead-lbo-swf-the-new-carry-trade/
The oil-rich sovereign wealth funds have it good, if we didn’t already know that. Citigroup’s Robert Buckland reinforces the idea in his latest Global Equity Strategy note to clients, in which he claims a new carry trade - with SWFs poised to be prime beneficiaries:
Just as the equity market looked cheap to anybody who could source capital from the debt markets between 2003 and 2007, now it looks cheap to anybody who can source capital from the oil market. And just as markets missed the point about private equity - they could afford to pay higher prices for assets given their access to cheap debt capital - maybe they are now missing the point about oil-rich investors. Most financial assets looks cheap when your source of capital is oil at over $100 a barrel.
The re-rating of global equities against oil over the past year has been just as significant as the re-rating of debt against equity that kicked off the de-equitisation trade. A combination of rising oil and falling share prices means that a barrel of oil will now buy enough equities to deliver $8 of corporate earnings per year (we divide the oil price by the market PE to calculate this), way up from the $5 that it would have bought a year ago.
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