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Greece Has Hired Lazard For Restructuring Advice

Tyler Durden's picture




 

EuroWeek magazine reports that Greece has hired Lazard in an advisory capacity: it is not a stretch to assume that this is in connection with a potential, and some say inevitable, bankruptcy... unless the country is really serious about procuring a stalking horse distressed M&A bidder for Santorini. We also note that DebtWire has yet to report on this development: looks like the FT is really starting to slip. It would not be a stretch to see why Greece and Lazard are on good terms: after Greece basically put all banks on the kleptocrata non grata list, the pseudo-French company seems like a legitimated candidate (not to mention that France will fail first should Greece default). Additionally, in March 2009 the firm advised the Hellenic Government on the sale of various Olympic Airlines assets to Marfin. Lazard is also no stranger to sovereign reorg, having worked with Nicaragua, Ecuador and Cote d'Ivoire on various restructuring assignments. However, while those deals were a walk in the park, Jim Millstein and and new (and critical) addition Felix Rohatyn will find Greece, where 80% of the population does not want a bailout and in fact is rooting for a default, a much tougher nut to crack.

Then again, the recent retention of Rohatyn just when Greece was imploding may have been clutch for Lazard. As EuroWeek reports:


If
Lazard does have the big mandate, then the bank’s rehiring of advisory
veteran Felix Rohatyn in February is a masterstroke. Rohatyn was the
man behind the restructuring of New York’s public debt in the 1970s and
since returning to Lazard he has been a vocal advocate of creating a
regional IMF to deal with Europe’s sovereign debt problems. The recruitment of Rohatyn is the most obvious
example of banks ramping up their expertise and coverage of national
governments, which have become big users of investment banks since the
crisis first started in 2007.

The biggest loser if the Lazard news is confirmed (incidentally the firm has not commented either way yet), is Credit Suissde:

Many government mandates involve dozens of bankers working across a diverse range of products — "a complicated matrix of country, capital markets and advisory and the make-up of the team changes, according to one banker at a leading US bank — and they say that governments are among the toughest clients to manage, because they operate across different departments with often conflicting goals. But they have become crucial to banks since the crisis, and the transfer of risk from the private to the public sector last year means they will only become more important.

Credit Suisse is one bank to set up a formal network focused on government work across its investment bank, launching a global government segment (GSS) last year to "promote a bank-wide focus on government clients across products and geographies". Paul Tregidgo, a vice chairman of the bank’s DCM operations, who co-ordinates the group has the job within GSS to pull together expertise from across the bank when required and as a 25 year veteran of the firm he is ideally placed to locate and deploy that expertise. The emphasis of the effort, as with those of its rivals, is on flexibility, allowing banks to draft in the most relevant banker for any given project or country.

Credit Suisse for instance has assembled a formidable team that advises the UK Treasury, led by James Leigh-Pemberton, that includes Sebastian Grigg, the firm’s head of UK investment banking, Euan Ferguson, co-head of European FIG, and Chris Williams, whom it hired from Citigroup in 2008. Williams, who worked with Grigg at Goldman Sachs, is regarded as one of the ‘turn-to’ bankers for the UK Treasury. Other teams are equally stocked with heavyweights of banking and capital markets. Deutsche Bank’s Treasury team comprises Ivor Dunbar, head of global capital markets, Anshu Jain, who runs trading, and Tadhg Flood, European head of the firm’s banking business who was named on the World Economic Forum’s 2010 list of young global leaders.

Another big loser from the upcoming avalanche of sovereign defaults, it stands without mention, is Goldman Sachs:

One bank that has not enjoyed its usual flurry of state-sponsored mandates is Goldman Sachs, formerly a stalwart of government advisory work. Despite its strong links to governments across the world, it has played a minor role in the banking bail-outs. The firm may have made the decision that fees are more important but its low profile has benefited rivals.,

"Goldman used to be the turn-to adviser on big, high profile mandates in the UK and elsewhere. It’s not now. Credit Suisse and others have stolen its thunder," said one banker at a rival US firm.

Goldman’s travails arising from the Securities and Exchange Commission’s fraud charges will not help its cause with governments, irrespective of whether it has done anything illegal. As governments wrestle with spiralling deficits and the risk of contagion, while trying to appease taxpayers, appointing Goldman could be seen as showing a lack of judgement. Chief executives might still, as the mantra goes, appoint Goldman because they know it is the best but government’s may have a different view.

If Goldman misses out on the current wave of government mandates, its investment banking team may find itself struggling for relevance while others sacrifice high fees in favour of building their businesses.

We won't cry for Goldman - after all we are convinced that its prop desk has already reaped mad profits from its directional bets on Greek spreads, while its flow and Corr trading desk has likely traded tens of billions in Greek CDS with Paulson and all these other funds who attended the Goldman organized Greece "reconnaisance' mission. Plus, due to conflicts of interest (yes, when too glaringly obvious, even Goldman would acknowledge them), should the firm get caught up in advising various European nations, it would be prevented from trading respective cash and CDS product, expect on an unsolicited basis... Which as we all know kills sales people and trader margins... Which hurts almost as much as when they lose their credibility when pitching Timberwold, GSAMP and Hudson CDOs to clients only to see the price plunge from 95 to 15 in a matter of weeks.

Yet the take home here is that Greece has finally acknowledged that a Chapter [11|7] may be inevitable. Just as AIG stock plunged about 25% when David Faber broke that the firm had hired Weil Gotschal for bankruptcy work in March 2009 (and which associated advisory presentation by Morgan Stanley) we are still waiting for as per our FOIA with the FRBNY, we anticipate that this news will make an the need for an ironclad IMF agreement emerging over the next 24 hours to unavoidable, absent Greek bonds hitting 30on Monday. Lastly, but not least, based on empirical data, Greece would make a truly terrific recurring client.

 

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Sat, 05/01/2010 - 15:05 | 327153 williambanzai7
williambanzai7's picture

Independent liquidation agent? I know this may sound ill informed, but who the hell has been advising them these past three months?

The Hills are Alive...:

http://williambanzai7.blogspot.com/2010/05/sound-of-euro-deadbeats.html

Sat, 05/01/2010 - 15:47 | 327200 Hulk
Hulk's picture

Stiglitz

Sat, 05/01/2010 - 16:08 | 327223 williambanzai7
williambanzai7's picture

No wonder...

Sat, 05/01/2010 - 15:01 | 327158 jedwards
jedwards's picture

Good idea on hiring Lazard, they make really prescient calls.  Finally, Greece is on the right track!

 

http://www.streetinsider.com/Downgrades/Dendreon+(DNDN)+Cut+to+Hold+at+Lazard/5552820.html

Sat, 05/01/2010 - 15:10 | 327167 Fish Gone Bad
Fish Gone Bad's picture

Default would be very interesting to see.  This would be wildly unpopular for banks.  There is a saying in business.  If a customer owes a bank a small amount of money, the bank can dictate how the money is repaid.  If a customer owes a bank an absolutely tremendous amount of money, the customer gets to dictate how the money is repaid.

Sat, 05/01/2010 - 17:21 | 327279 tom a taxpayer
tom a taxpayer's picture

Yes, wildly unpopular with the banks. But the bankers hair is too long and needs a good haircut. And it is time for the bankers to get their dose of austerity. Now German and French banks, put down that lollipop and open wide.

Sat, 05/01/2010 - 15:21 | 327178 Thomas
Thomas's picture

"Greece is also no stranger to sovereign reorg"

You meant Lazard, not Greece I believe.  

BTW-Bill Cohan wrote an excellent book describing the history of Lazard, Felix, et al.

Sat, 05/01/2010 - 15:33 | 327192 kaiserhoff
kaiserhoff's picture

Wonderful,

The bondholders have a choice.

Lose two thirds of their value now.

Lose two thirds of their value in a year or two.

Get over it already. 

Sat, 05/01/2010 - 15:42 | 327197 Albatross
Albatross's picture

Lastly, but not least, based on empirical data, Greece would make a truly terrific recurring client.

 

No kidding. I was wondering all along why not more people talk

about default, or debt  restructuring in fancy words!

It's about damn time where banks also start to book their losses.

 

Sat, 05/01/2010 - 20:53 | 327392 dumpster
dumpster's picture

the keep um busy over their routine

 

 

Thought For The Day

Greece and Goldman hog the news as 33 US states head for bankruptcy.

Sat, 05/01/2010 - 15:48 | 327199 Comrade de Chaos
Comrade de Chaos's picture

if you think of it, nothing will make the French banks to lobby their government to push for the Greek bailout as the thread of debt restructure. Be I running a default show in the Greek gov, that's exactly what I would do. (K, I lied, I would just default and get it over with so the efforts could be directed into the restructure of the economy and recovery. )

Sat, 05/01/2010 - 16:13 | 327227 mchawe
mchawe's picture

The best thing for the Euro would be to simply kick Greece out of the EEC for not obeying the rules.

Sat, 05/01/2010 - 16:30 | 327244 ignorant
ignorant's picture

"  will find Greece, where 80% of the population does not want a bailout and in fact is rooting for a default "

 

How the heck you got tht fgrs,  official or coming out of your tomy ?

Sat, 05/01/2010 - 22:43 | 327454 MacedonianGlory
MacedonianGlory's picture

Greeks don't want IMF because they afraid that they will end up as Argnetinians did. Claiming that they do "not want a bailout and in fact is rooting for a default" is what socialist gvnt propaganda says to terrorise people. Everyone in Greece knows that the Gvnt speculated with debt to feed some few corrupted servisemen and companies that survive through gvnt money support. Thats why Greeks say no to this bailout for a few corrupted companies (media-construction-Gvnt interweaving) and don't want to the legitimate ones to be punished.

Propaganda from corrupted media accuse Greeks of beeing totally corrupted while the only onew that are corrupted is the socialist interweaving of Gvnt-media-construction companies-etc.

Sat, 05/01/2010 - 16:34 | 327246 Mitchman
Mitchman's picture

It took these guys this long to figure out they needed adult help?  I wonder how much pressure was put on the choice of a French firm in light of the French banks' $78 billion exposure?

Sat, 05/01/2010 - 16:58 | 327265 Augustus
Augustus's picture

So, IF Goldman is out of the loop on this one,

They won't be accused to trading against the client interest when they short the massive hell out of all of the Euro soverign debts.  More money from that, IMHO.

Sat, 05/01/2010 - 17:03 | 327267 Augustus
Augustus's picture

So, it seems that those who sold the Greek debt last week, priced to give a 20% yield for the purchaser, were the smart traders after all.  I wonder how little Stevie Liesman likes those Greek bonds he recommended a few weeks ago?  Go, Steve, Go.

Sat, 05/01/2010 - 17:43 | 327288 goober
goober's picture

I agree with mchawe. Germany would look brilliant if they insisted on throwing Greece out of the Union. They could orchestrate a series of loans that would keep Greece from infecting others any further and put the onus of responsibility on Greece. It would set an example for all the ratio cheaters and put the fear of god into them. It would completely restore faith in German leadership and the EU. Anything less is kicking the can a little further into the future and enabling the other fiscal miscreants. I think the reverse psychology of such a move would be asolutely brilliant at this time. Obama should pay attention as well, it would get him reelected for sure because he could claim fiscal responsibility even if there is none? Genius.....................

Sat, 05/01/2010 - 17:51 | 327295 taraxias
taraxias's picture

Default is NOT an option.

It's either squeeze the life out of the Helladic people or the collapse of French and German banks, followed by a collapse of the euro zone, followed by a collapse of UK and US banks, followed by a collapse of global finance.

They can riot in the streets until the second coming of the golden age of Pericles but the choice is simple and it has already been made, everything else is eye-wash. Grossly unfair but when did this matter to politicians and banksters.

Sat, 05/01/2010 - 19:55 | 327358 BrianOFlanagan
BrianOFlanagan's picture

which is what is going to happen anyway.  Better to just default now and get it over with.  The ponzi must end.

Sat, 05/01/2010 - 19:58 | 327361 Caviar Emptor
Caviar Emptor's picture

Austerity in the midst of plenty? Hard to believe that will ever work for more than 5 minutes. Just wait till the Germans come partying in their yachts. 

Sun, 05/02/2010 - 00:51 | 327548 Grand Supercycle
Grand Supercycle's picture

 

DOW chart shows an expanding wedge indicating a significant move is probable.

MARKET UPDATES:
http://www.zerohedge.com/forum/latest-market-outlook-0

Sun, 05/02/2010 - 19:43 | 328364 magellon
magellon's picture

Is that Lt Lazard aka Police academy?

Do NOT follow this link or you will be banned from the site!