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Commerzbank - Dresdner Bank Merger - Compelling despite the Risks?

September 1, 2008

Analysis of:Commerzbank Plans to Sell Linde Stake, Manager-Magazin Reports | www.bloomberg.com

The Commerzbank - Dresdner Bank merger is compelling for all stakeholders. Without the successful completion of this deal, Commerzbank will itself likely become a takenover target. It cannot be in the long-term interest of the Federal Republic of Germany for its financial economy to be wholly managed by London and to a lesser extent by Wall Street. Deutsche Bank is already effectively a US investment bank, the German Landesbanks are on the path to self-destruction and Dresdner Bank in dying a slow death as a ward of Allianz.

Domino-crash and the Worlds Second Homes - Domino-crash in Dominos - What's Missing?

June 26, 2008

Analysis of:Domino-crash and the Worlds Second Homes - Domino-crash in Dominos | www.cifs.dk

If national markets for second homes are really interlinked, then each market must be driven by common factors. Is this actually true?

Lloyds TSB in the Running for Dresdner - Scottish Widows - Why part with It?

June 23, 2008

Analysis of:Lloyds TSB in the running for Dresdner | www.thisismoney.co.uk

Dresdner Bank is appealing for any financial services provider seeking a major foothold in the German retail, Mittelstand business or institutional asset management business. 

Deepening gloom at General Motors - Expensive Oil, High Pension and Medical Expenses Killing the Beast

June 23, 2008

Analysis of:Deepening gloom at General Motors | money.cnn.com

Expensive oil, high current und past employee pension and medical benefits are there killers stalking the US automobilie makers. Effectively, the Big Three already belong to their respective pension fund. The stock is only a very, very leveraged option at this point. The failure to adjust the business model is actually a decision to exit this industry in the long-term. A merger with Daimler didn't not work for Chrysler, and the PE buyout seems already in rough seas. Ford may have a larger investor to hold its hand, but this does not necessarily mean a turnaround is in the offing. The competition is impervious to the three killers by way of natural immunity and intelligent business strategy.

U.S. May Free Up More Land for Corn Crops - Time for Agriculture to move into Free Market Economy?

June 23, 2008

Analysis of:U.S. May Free Up More Land for Corn Crops | www.nytimes.com

With commodity prices climbing and remaining strong for the forseeable future, it is time for the EU and to a lesser extent the US to dismantle the various inefficient land control, price support and production quota systems.

Lehman CEO Fuld Faces Growing Pressure to Sell - Fat Lady has Already Sung

June 19, 2008

Analysis of:Lehman CEO Fuld Faces Growing Pressure to Sell | www.cnbc.com

Lehman is finished as an independent investment bank. Its business model is broken, and the leadership has no medium or long-term game plan. Next in line is Morgan Stanley. Like BSC both of these banks suffer from a common problem, weak senior management, arrogance, lack of risk management and over leveraging the balance sheet.

Ex-Bear Sterns Execs May Face Fraud Charges - Only the Beginning of Legal Accountability for Excess?

June 19, 2008

Analysis of:Ex-Bear Stearns execs may face fraud charges | www.msnbc.msn.com

The main focus to date has been on writedowns and capital raisings in the "aftermath" of the credit crisis. Before we reach the end of the credit crisis road, legal authorities will have to investigate, bring charges, settle or try cases against many of the top names (institutions and persons) for securities fraud, wire fraud, mail fraud, obstruction of justice and other violations of federal and state law. The fines, penalties, interest and restitution expense may, on top of the writedowns, eliminate some institutions from the securities and banking business forever. The potential unfunded legal liabilities are not on any radar screen at the moment. For NASD registered, supervisory individuals, attachment of assets and personal bankruptcy will likely be in the offing.

Austrian Sparkassen Real Estate Arm - EUR 300 Mil. Invested into Bulgaria

June 16, 2008

Analysis of:Sparkassen plans 300M euro in new investments in Bulgaria | www.sofiaecho.com

Eastern European real estate investment opportunties are still attractive despite substantial building and price gains over the last few years. As in many fields in Eastern Europe, the Austrians are the leaders, in particular in the financial services space. Perhaps it is time for real estate investors outside of German-speaking Europe to wake up and smell the coffee. Local capital markets reforms could accelerate this process.

Commodity Prices Show No Letup - Abusive Speculation will Destroy Free Markets

June 16, 2008

Analysis of:Commodity Prices Show No Letup | www.nytimes.com

Unrestrained speculative forces will cause a backlash of regulation, which may well destroy the efficient functioning of commodity markets. Some countries have already halted trading in certain commodities. US Senator Lieberman wants to exclude institutional investors from participating in commodities investments.

Internal Audit Comes of Age - Rather To Be or Not To Be

June 13, 2008

Analysis of:Internal Audit Comes of Age | www.cfo.com

In particular in the financial services industry, the control functions (audit, compliance, risk management and credit) are the key to the long-term success of the enterprise. Greed has made many CEOs forget this fact and ultimately completely disgrace themselves. The list is long........

Swip invests EUR 60 mil. in German Real Estate Portfolio

June 11, 2008

Analysis of:Swip invests €60m in European real estate portfolio | ftadviser.com

There are substantial funds available for investment in German real estate from both domestic and foreign investors. Commercial real estate price volatility in German-speaking Europe will be substantially lower than in the UK, USA or Asia going forward. As the economy in German-speaking Europe is much less leveraged and remains much stronger than in other countries, real estate assets will very likely show stable and positive returns. Demand from all potential sources, foreign and domestic, will increase.

European Banks Harder Hit in Credit Crunch - But the Long Term Winners?

June 10, 2008

Analysis of:European banks harder hit by credit crunch | www.ft.com

While the figures in the article may well reflect the numbers, there is more to the story than actual write-downs and capital raising. To bring these into proper perspective and allow a risk adjusted view, each individual bank's business model, diversity of revenue and overall risk profile must be considered.

Real Estate Woes of Banks Mount - New REIT Vehicles a Solution?

June 9, 2008

Analysis of:Real Estate Woes of Banks Mount | online.wsj.com

As problem real estate loans to consumers and builders rise and more residental and commercial real estate goes into foreclosure, perhaps it is time for the banking industry to set up new REITs to pool these assets. The goal? Increase liquidity and lower risk by creating attractive investment portfolios. 

LBO Debt Risk Rising in Europe - How to Fix the Problem

June 4, 2008

Analysis of:LBO Debt Risk Rising in Europe on Lower Cash Coverage (Update2 | www.bloomberg.com

As the global (in particular American) economy slows, emerging markets and Europe will suffer. As true for many years, European -especially non-UK - corporates have been more leveraged than their US compeititors. In particular, unfunded pension liabilities are an issue. Medium-sized and smaller European enterprises often entirely lack access to public debt and equity markets. European banks lack the capability - at the moment - to create further securitized credit and are not keen to offer more traditional lending facilities as their capital ratios melt in the sun of the credit crisis, and summer is still ahead of us.

Lehman Brothers - Shoulder to Lean On?

June 4, 2008

Analysis of:Lehman Seeks South Korean Partner, Buys Back Shares, WSJ Says | www.bloomberg.com

Lehman Brothers has a very weak equity capital position, too many illiquid and hard to value assets, a poorly diversified business and the weakest global reach of all of the investment banks. The loss of confidence in the CDS and equity options market will be hard to recover. Why should it and how can it survive?

German Property Fund - €4bn into Asia and More to Come Globally

June 4, 2008

Analysis of:German property fund to pour €4bn into Asia | www.businessspectator.com.au

German retail investors are reviewing their investment portfolio with the advent of the 'Abgeltungssteuer' (capital gains tax) in January 2009. A lot of cash will flow out of equity and equity mutual fund investments into direct and indirect property investment due to the introduction of this 25% capital gains tax. Therefore, property investments, which have always been a key component of German retail investors portfolios, is about to gain another significant tail wind. Now is the time for top-ranked foreign property fund managers to market to German retail (and institutional investors).

Jittery Corporate Treasurers - Asset Managers will retake ground from Investment Banks

June 2, 2008

Analysis of:Jittery corporate treasurers hand spare cash to money managers | www.ft.com

In the last few, years corporate treasurers have given their cash to investment bank fixed income sales desks after pitches for expensive, illiquid and complex financial products rather than to traditional long only asset managers. Interest rate and credit derivatives, which offered yield pick up over money market products, come especially to mind in this context. Some corporate cash was even consumed by hedge fund and private equity wrapped in a security. This security, however, was completely illiquid and perhaps carried with a capital guarantee. Protection hardly makes sense in a well diversified investment/risk portfolio. The ground has shifted. Traditional asset managers, boring money market mutual funds will likely recover a lot of their lost territory.

Banks launch central clear for deriviatives - Finally a Global Cleraing House?

June 2, 2008

Analysis of:Banks launch central clearer for derivatives | www.ft.com

Clearing and stettlement risk management in the global capital market should not be controlled by investment banks, who have a conflict of interest and are entirely profit driven. The central banks - as lenders of last resort - should drive this process. The ultimate goal should be a Global Clearing House for stock, bond, futures, option, commodities and OTC transactions. A well capitalized and regulated central clearing organization would significanly reduce clearing and settlement risk in the global capital market. In the end, risk, financing and transaction costs would fall for all market participants.

Why the Global Housing Market Boom Bypassed Germany - The East - West Divide

May 30, 2008

Analysis of:Why the Global Housing Market Boom Bypassed Germany | www.spiegel.de

The article - while correct  - is too focussed on residential and East German real estate. The real opportunity for profitable German property investment is in the major West German cities for appartments and homes and for commerial real estate, mostly in West German medium-sized cities.

Deutsche Bank/Citibank Germany - Why do a bad deal?

May 30, 2008

Analysis of:Deutsche Bank, Santander May Bid for Citigroup Unit | www.bloomberg.com

Deutsche Bank is completely undercapitalized after writedowns and the repurchase of shares over the last few years to increase return on equity. A substantial takeover would require a massive capital increase. In addition, Citibank Germany would have to be purchased at a premium over fair value. Its client base would offer no real potential to sell high margin Deutsche Bank products and services, and this operation would add no scale to DB's private client business. How can Joe Ackermann even face the investment banking music on such a proposition?

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