We've been here before. Once again, the great and the good of the banking/Treasury complex will be scrambling over the weekend on a possible rescue, this time of Citi. I don't think there's any need to repeat how Citi got themselves into this mess.
A TV headline earlier screamed "Citi denies breakup plan". In other words, they're busy going through spin off options as we speak. Thinking of banks generally, this post made me pause and reflect on a couple of European banks, which seem (relatively) unscathed.
I'm quite nervous about Santander, given that they have such a large domestic loan book - take a drive through parts of Spain, and you'll suddenly think Florida real estate isn't so bad. One firm that stands out is BNP Parisbas. More generally, why do french banks seem to be more resilient?
Elementaire! The french banks were very slow in getting a taste for racier debt securities - it might be a side effect of that country's natural disdain for leverage (try getting a buy to let mortgage in France!). Hence they were late to the CDO party and missed the shrapnel.
As an aside, a similar "slowness" in taking on more aggressive (read North American) debt investments also saved the smaller Swiss banks from the misfortunes of UBS. Sometimes not making a decision is the best decision.
Posts
Thursday links: a vicious cycle
6 hours ago
No comments:
Post a Comment