All the big banks have reported earnings so let’s take a little stock of things, shall we? A thing I did midyear was look at the ratio of trading net revenues to VaR for GS and MS, to prove that MS was winning the trading or something. Let’s expand that a bit. The result is, I think, an interesting chart:
The interpretation you could put on this is “this is how much money GS/MS/JPM/BAC made on an average trading day for every dollar of capital that they said they had at risk on that day.” Technically, this is is a graph, quarterly from 1Q2006, of [Trading Net Revenue / (Average Daily VaR * Trading Days in Quarter)], for four banks. Go read caveats here.*
This is obviously a toy chart, and too aggregated/undersampled to tell you all you might want to know, but still kind of fun. Continue reading »
Last week Goldman and Morgan Stanley dropped sneaky hints about maybe changing their accounting so they could lend their way into more M&A deals. But this week we’re back to Barclays lending its way into more M&A deals, and Skip McGee got a little excited about it for DealBook:
“We’ve long had a big-boy M.& A. business,” Hugh E. McGee III, Barclays’ head of investment banking and a Lehman veteran, said in an interview. “And now we’ve got a big-boy checkbook.”
That’s a pleasingly straightforward take on the Barclays rises from Lehman’s ashes story, in which Lehman bankers find it quite congenial to be able to win deals by lending gobs of money to companies to pay for their mergers. Not that that’s how Barclays wins mandates or anything:
But Mr. McGee said the bank’s aim was not to rely on lending to get into deals. Barclays is less likely to make a giant loan commitment if it is not one of the lead advisers on a transaction, he said, and is being discerning about to whom it lends.
“We want to lead with our relationships and then use our balance sheet,” he said. “We don’t want to lead with our balance sheet.”
So is that working? Just for fun/to play with the Secret Dealbreaker Bloomberg/to make some charts, I made some charts. Continue reading »
Nah, it was much worse.
Some people have questioned the “proclivity of UBS for getting involved in fiascos in which the bank believed it was taking relatively little risk but ended up losing large amounts of money” and a risk management policy that (really!) consisted of “still don’t lose any money, but do more.”
You might feel justified in those doubts about UBS risk management after reading (1) that stuff about the guy who lost all the moneys and (2) this:
Continue reading »
