Portuguese banks, already undercapitalised and loaded with bad debt, are bracing for heavy losses from Lisbon’s so far unsuccessful attempts to sell Novo Banco, the lender salvaged from the collapse of Banco Espírito Santo.
The Russian currency is still far below its historic average; aside from making the country dirt cheap for anyone with foreign currency, we discovered something very interesting today... Some of Russia’s coins are now worth less than their metal values.
Based on the fact that the P/S ratio has been steadily rising and has eclipsed prior peaks, we are left to select from one of two conclusions: that investors are extremely optimistic about the potential for revenue growth; or investors are once again caught in the grasp of bubble mentality and willing to pay huge premiums to avoid missing out on further gains. However, the means of magically boosting these asset prices are 'finite' in nature and eventually the "devil will be paid his due."
Standard Chartered CEO Bill Winters is fighting the battle to right the ship at the bank on two fronts. First, Winters needs to figure out a way to deal with plunging revenues and billions in NPLs. On the other front, the CEO is working to change a culture in which he is finding many bankers consider themselves "above the law."
"I can't tell you how long it's going to take but I'm anticipating an 80% drop or 70% drop, something in that neighborhood. Tobin's Q got down to 0.54 in 2009...The reason it didn't go lower is because we had the biggest fucking bailout ever orchestrated in the history of the banking system..."
The relationship between a client and a money manager is like a marriage: even if you’re married to the right person, it’s just a matter of time before your relationship will hit hard times that test the strength of your marriage.
"The biggest problem is that DBK has too much leverage. On our measures, we believe DBK is still over 40x levered. DBK can either reduce assets or increase capital to rectify this. On the first path, the markets do not exist in the size nor pricing to enable it to follow this route. Going down the second path also seems impossible at the moment, as the profitability of the core business is under pressure. Seeking outside capital is also likely to be difficult as management would likely find it hard to offer any type of return on new capital invested."
In a stark reminder, that what central banks buy they eventually have to sell, Japan's Nikkei writes that the Bank of Japan has begun selling equities it bought from commercial banks in the previous decade to ease anxiety over the financial sector. But before some interpret the move as a risk to Japan's stock "market" as the biggest equity backstopper now becomes a seller, concurrent with the BOJ's liquidations Kuroda will offset these divestments with extra purchases of exchange-traded funds, in effect netting out selling with even more stock buying.