The Banking and Strategy Initiative

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Old Mutual, Credit Suisse and UBS panic(sell off) in real time

The European banks delveraging was always going to be ugly, but with even Deutsche Bank caught on the wrong side of the fence very few global bank models are going to survive this decade. Pontificating apart, rare wealth and asset management failures from more than a decade earlier , like Old Mutual(OLM) in Africa continue to bleed and yet operate as big leviathans, forced to make a n overnight change because there are not many buyers around. This and the example of AIG/AIA from 2009 makes it tough for the likes of Credit Suisse and UBS also to plan a fair exit or rationalisation of operations having grown in nooks and corners without a strategy from this vantage point.

Old Mutual though got out of its Nordic assets to a regional player Skandia Liv selling the asset management companies for GBP 2 billion. Back in Africa however, its attempts at selling NedBank where it holds a 53% stake haven’t come through yet, HSBC withdrawing from the sale Though the sell down, as and when it happens pays down its debt, it is a portfolio that has been in the skanks for a good part of the last two decades, Old Mutual being an insurer having started from the Cape of Good Hope in 1885 as a mutual company listed in 1999 for a last attempt to not just list publicly but to run as a professional global company listed in London. When it added Sandia in 2005, it sold down all of its global assets in LatAm, Australia and the Far East.  Old Mutual is also selling its funds in the US selectively toclose options for any retail brand investments in the USA Old Mutual Plc apparently does not present majority / minority interest from its global operations in the Old Mutual Pls results casing an even $3 bln in sales in all of 2010 and without details of asset holdings in insurance, Mutual Funds or Banking businesses

Also going back to its roots under Sergio Ermotti is UBS cutting 3500 jobs of which 1750 are from its investment bank unit. UBS has famously lost $50 bln in continued betting in 2008 and since that in each of the three annual results, the latest quarter lost to Delta One ETF trading Desk Manager Kweku Adubolio as many other accounting irregularities also surfaced at their ETF desk in London since.

New Chief Risk Officer Maureen Miskovic has since also left giving the risk position

Photograph of Old Mutual Place, London

Image via Wikipedia

to Philip Lofts who was also the CRO at the bank in its earlier avatar as a wealth bank with an adjunct investment banking arm as UBS goes back to its success stories to underwrite its future starting with $2.1 bln in cost cuts

Credit Suisse has also been in the news in the meantime joining its Fixed Income and Forex business in Asia “( Emerging Markets desk) and including last week’s announcement of Clariden Leu, they have merged all investment banking operations in the back room with the private banking operations to realise a portion of its $2.1 bln savings program. CS also llooks at 3500 job cuts and a marginal bonus pool this year to offset margins and bring back the smile on its balance sheet

Other European biz models never to be seen again were the RBS phenomenon which toolk easy liquidity ABN AMRO story into it in 2007, Lloyds TSB still in losses after 83% stake from the Treasury and Belgian Dexia, still hoping for French participation to actualise its bailout. Australian models have come out robust, as also Chinese banks shouting  about local loans for more than a year as china’s banks overtake the rest of the world in on balance sheet assets. Many is the regional banks have additionally run out of collateral to borrow from the ECB too driving bund collateral premium to pennies ( 2 centimes)

Barclay’s Capital(BCS) and HSBC(HBC) across trading na dwealth survive as winners. Asia/ Africa experts could count StanChart as probably the only other one to survive Credit Suisse merged Forex business in EMs is half its revenues in FX

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This entry was posted on December 15, 2011 by in Banking, European Sovereign Debt crisis and tagged , , , , , , , .


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