The Banking and Strategy Initiative

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Banks set for another downturn (in stock prices) | Banking Insight – Valuation Insight

A large contingent of Bank of America Directors sold 10% of their holdings to underscore the fragility of the Bank’s stock price. BofA directors sold at $7.33 and since the stock has started tradng below $6. Here’s Insider’s Lab’ detailed report which you can also get directly from SEC/Edgar or many other investing sites. ( (courtesy:Marketwatch)

Also two large street downgrades have come for the big 4 last week as no. of lost trading days increase in this quarter (Read:

The Big Four could easily be carrying European exposure of upto 20% of their total assets at this juncture. As for Bank of America it has fewer international operations but depending on its investing strategy its lower exposure may still chur out excessive losses. On the other hand JP morgan could hardly go over another $2 bln in losses when it stil turns out a respectable Q2. However even ast Goldmans Sachs and the pretender Morgan Stanley the number of loss days is higher in Trading Days in Q2

Also the question of these banks being able to raise capital has again become clouded except ironically for JP Morgan which is unlikely to facce a problem in getting investors. both Citi and BofA on the other hand are going to face trouble raising more Capital and mortgage Giant and still largely conventional Wells Fargo has beaten them handsomely in the mortgage market( In Citi’s case despite a larger international portfolio)

inter bank funding being limited, access to rollover funds in the overnight market and the one year paperhas already been flagged as a risk and despite a minimal impact of ratings downgrades, Banks funding costs are likely to inc up even as more client issues absorb new Debt demand than banks’ own.

At this time, Barclays’ sale of $6.1 B worth of Blackrock raises questions too . Also banks like Deutsche Bank and BNP PAribas continue to roll around in pain with access to their favorite markets cut off and a long deleveraging still continuing for Deutsce Bank. HSBC in the mean time clarified again that it keeps a liquid portfolio of mostly global Treasuries in its own CIO office ( Bank Treasury) monitored by the investment Banking Head and the Treasury Head (CFO) without resort to synthetic constructs and hedging. Also the bank has less exposure to unlisted securities according to a Reuters BRV analysis.



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This entry was posted on May 21, 2012 by in Amitonomics, Banking, US and tagged , , , , , , , .


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