New Wall Street Sees Profits From Widening Spreads
By Christine Harper

March 18 (Bloomberg) -- Goldman Sachs Group Inc., Morgan
Stanley and JPMorgan Chase & Co. are making money from
traditionally unprofitable corporate loans and trades for their
customers, less than a year after the securities-industry
shakeout eliminated three of their biggest competitors.

The gap between what banks pay to buy fixed-income
securities and what they sell them for, the so-called bid-ask
spread, has almost doubled to 19 basis points in six months,
according to data compiled by Bloomberg. Firms that help
corporate clients sell blocks of stock are buying them at
discounts that are as much as three times deeper than a year
ago, according to bankers who declined to be identified, while
companies are paying more for new loans.

As Wall Street staggers from its worst year since the Great
Depression, there are signs of a new pricing power that’s
mitigating losses from asset markdowns and reduced trading. The
firms with money to lend are charging more for it, and the banks
that can line up investors or execute trades are winning bigger
spreads. Traditional investment banking, overshadowed by debt-
fueled proprietary trading and structured finance before the
credit crisis hit, is suddenly regaining its old appeal.

“Some of the firms are making pretty good money in what
they had viewed previously as unattractive, low-return, flow
business,” said John Colon, a consultant at Greenwich
Associates, a research firm in Greenwich, Connecticut. “People
are really husbanding their capital, they’re using it much more
carefully, so to the extent they are willing to put capital to
work it’s become more expensive.”

Loss-Leaders

Since the deregulation of financial markets accelerated in
the late 1970s, opening the door to a wider array of competitors
and depressing profit margins, securities firms relegated
corporate lending and client brokerage to loss-leader status.
Commercial banks vying with Wall Street firms sold the services
cheaply to capture more lucrative underwriting and advisory
business.

Now the competition has thinned. Three of the five biggest
U.S. securities firms -- Bear Stearns Cos., Lehman Brothers
Holdings Inc., and Merrill Lynch & Co. -- have been absorbed in
the past year. Acquirers JPMorgan, Barclays Plc and Bank of
America Corp. discarded tens of thousands of employees in the
process. UBS AG, Switzerland’s largest bank, and Citigroup Inc.,
once the biggest in the U.S., have been hobbled by a total of
almost $140 billion in writedowns and record losses.

“Much of the notion of using credit as a loss-leader has
kind of gotten squeezed out,” said Colon, the Greenwich
Associates consultant.

Mine the Gap

For survivors such as Goldman Sachs, Morgan Stanley and
JPMorgan, lending and client trading are once again generating
profits.

One reason is pricing. The bid-ask spread for bonds has
climbed, increasing per-trade profit for dealers, according to
composite prices compiled by Bloomberg. The gap is about 19
basis points, according to an analysis of more than 1,724
investment-grade bonds sold over the past decade with at least
$500 million currently outstanding. It was 11 basis points on
Sept. 1, the data show. A basis point is one one-hundredth of a
percentage point.

“The market is much riskier, and it’s much riskier for the
trading desks, so they will demand a bigger risk premium,” said
Manny Labrinos, who helps oversee $3 billion at Nuveen
Investment Management in Los Angeles. “It amounts to
historically wide bid-ask spreads.”

A measure of the extra risk faced by banks laboring under
almost $900 billion of asset writedowns and credit losses is the
rising cost of short-term borrowing.

‘A Big Hit’

The London interbank offered rate, or Libor, that banks say
they charge each other for three-month loans, crept to 1.33
percent last week from this year’s low of 1.08 percent on Jan.
14, the British Bankers’ Association in London said.

William Larkin, a fixed-income portfolio manager at Cabot
Money Management in Salem, Massachusetts, said the widening
spread on company debt is most noticeable when bad news or
rumors circulate. Some General Electric Capital Corp. bonds he
was holding were trading at 79 cents on the dollar a couple of
weeks ago when he asked two banks for bids. They came back at 76
cents and 77 cents. A more typical price would have been 78.875
cents on the dollar, he said.

“I said, ‘Whoa, that’s a big hit,’” he recalled in an
interview last week. He said he decided to hold onto his bonds.

“If you’re selling, you’re going to get hurt, because
they’re going to pad their book” by buying cheaply so they can
sell for a gain, he said.

‘Still in the Game’

New York-based Goldman Sachs, which lost 61 percent of its
stock-market value last year, returned to profitability in the
first two months of 2009, Bank of America analyst Guy Moszkowski
wrote in a Feb. 19 report.

He said that when he met with Lloyd Blankfein last month,
Goldman’s 54-year-old chief executive officer recounted that the
firm was able to capture the widest spreads for executing client
trades that he could recall. Blankfein declined to comment for
this article.

Facing a crisis of investor confidence in Wall Street after
Lehman Brothers collapsed in the biggest bankruptcy in U.S.
history, Goldman and Morgan Stanley converted in September from
securities firms to bank holding companies, gaining access to
funding from deposits and regulatory oversight by the Federal
Reserve.

“Clearly there is a pricing advantage to those who are
still in the game,” Morgan Stanley Chief Financial Officer Colm
Kelleher said at a Jan. 28 conference. “You are seeing a
systemic or thematic increase in margins.”

CDX Indexes

Steve Black, co-CEO of JPMorgan’s investment bank, sounded
a similar note in a meeting with David Trone, an analyst at Fox-
Pitt Kelton Cochran Caronia Waller in New York. Black, 56, told
Trone that “trade and deal margins are much higher than 2006
levels” and that JPMorgan was gaining market share, Trone wrote
in a Feb. 24 note to investors.

JPMorgan, Bank of America and Citigroup, the three largest
U.S. banks by assets, all said this month that the year started
profitably for them. Barclays, the U.K.’s third-biggest lender,
also said it had “a strong start” in 2009. Analysts predict
Goldman Sachs and Morgan Stanley, which reported fourth-quarter
losses, will return to profitability in the first quarter.

Bank executives who declined to be identified said they’re
reaping gains as middlemen for customers trading the Investment
Grade CDX Index, a compilation of credit-default swaps linked to
the bonds of 125 companies that allows banks and investors to
speculate on creditworthiness.

Risk Premiums

The bid-ask spread on the index has widened to about two
basis points from one-quarter of a basis point 18 months ago,
said one executive at a New York-based bank.

For trades on the High Volatility CDX Index, which
represents the 30 companies in the Investment Grade index that
dealers deem to be the most volatile, the spread has jumped to
10 basis points from about one basis point, the executive said.

Part of that is the result of wider risk premiums on bonds,
the executive said. When a top-rated bond’s interest rate was
just 5 basis points over U.S. Treasuries, the bid-ask spread was
as narrow as one basis point. Now, that same bond may pay as
much as 70 basis points over Treasuries, and the bid-ask spread
has jumped to 5 basis points, increasing the potential profit on
each trade, the executive said.

Banks are seeing fewer competitors bid for business and
more opportunity to offer rates that can make them money or at
least protect them against losses, executives at two New York-
based banks said.

‘Out of the Market’

The terms on corporate loans, which lost money for banks
because low rates were used to lure other types of business from
clients, have returned to a more rational level, the executives
said.

“Loan pricing is better, stemming from reduced
competition,” Fox-Pitt’s Trone said in an interview. “There’s
obviously a huge market share gain because so many people are
out of the market.”

More than 60 percent of companies surveyed in North
America, Europe and Asia say they’re paying higher prices for
bank loans or other types of credit, Greenwich Associates found
in a poll of 517 chief financial officers, treasurers and
assistant treasurers conducted between Jan. 28 and Feb. 3.

“They’re really charging usurious rates,” said Thomas
Deas, vice president and treasurer of Philadelphia-based soda
ash producer FMC Corp. and a board member of the National
Association of Corporate Treasurers. “Where the banks are
really trying to make their money is on the bank-loan side.”

Costly Credit

Bankers have told Deas that if FMC needed to renew its $600
million five-year U.S. credit facility today, the company
wouldn’t be able to get a loan for more than three years and
would have to pay two percentage points more than Libor, up from
the 0.45 percentage points the company is now paying. Deas said
he’s “very gratified” that he doesn’t need to renew the
agreement until 2012.

“Any treasurer who has got a renewal that he needs to do
this year is just cringing because it doesn’t matter who you
are, you’re going to pay through the nose,” Deas said. “What
I’m seeing is that the bank-lending side is just scary.”

Banks are also making more money on block equity trades,
defined by the New York Stock Exchange as transactions worth at
least $200,000 or involving at least 10,000 shares. Companies
trying to unload large holdings of stock now have to sell to
banks at a steeper discount to market value, enabling banks to
resell the shares at bigger profit, said the head of equity
capital markets at a large European bank.

Rights Offers

A discount that would have been 3 percent to 5 percent a
year ago has now tripled to 10 percent or 15 percent, he said.
Still, he said that fewer deals are being done and the
transactions are riskier in today’s markets than a year ago.

Underwriters of rights offers, in which companies in Europe
give existing investors the option to buy new stock, often at a
discount, are charging 50 percent more than a year ago,
according to data compiled by Bloomberg. On average, fees have
jumped to 2.9 percent of the value of the sale from 1.9 percent
in 2008, filings show.

As with block trades and bid-ask spreads, the higher fees
are designed to help protect the banks against sharp drops in
the value of securities they hold before they can be sold.

David Viniar, Goldman Sachs’s chief financial officer,
predicted last September that Lehman’s implosion and JPMorgan’s
government-backed takeover of Bear Stearns would ultimately
prove a boon to Goldman Sachs.

Viniar’s View

“We have a lot of compassion for them, we wish it never
happened,” Viniar, 53, said on Sept. 16, the day after Lehman
filed for bankruptcy. “When things start getting better, and if
there are more opportunities and fewer competitors, that will
help our market shares and our pricing power.”

The sunnier profit outlook is reflected in analysts’
earnings estimates and in stock prices.

Goldman Sachs and Morgan Stanley, the two biggest U.S.
securities firms before they converted to banks, have surged in
NYSE trading this year, with Goldman gaining 17 percent to
$98.99 and Morgan Stanley climbing 48 percent to $23.81. The
average estimate of analysts surveyed by Bloomberg is for
Goldman to report $1.16 in earnings per share for the first
quarter. Morgan Stanley is expected to make 35 cents a share
during the period.

To be sure, the rising profits may prove fleeting should
spreads narrow, according to Shubh Saumya, a partner at The
Boston Consulting Group in New York.

‘Long-Term Equilibrium’

“In the short run, these businesses have benefited from
wider spreads and in some cases, increased volumes,” said
Saumya, who helped write a report titled “The Next-Generation
Investment Bank,” published this month. “It’s a good thing and
certainly welcome for banks, but building a sustainable business
model has to look at the long-term equilibrium of these
spreads.”

Some analysts aren’t convinced that the bigger profits on
customer trades can substitute for a drop in revenue at
companies such as Goldman Sachs from when they borrowed $25 for
every $1 of equity to juice returns. That so-called leverage
ratio of assets to equity dropped to 13.7 at the end of November
from 26.2 a year earlier at Goldman Sachs.

“I think you’ve got to be a real optimist to believe that
spreads are going to mathematically exactly offset the decline
in leverage,” said Brad Hintz, an analyst at Sanford C.
Bernstein & Co. in New York. “Goldman’s leverage is half the
leverage it was before.”

Die Deutsche Bank hat nach Einschätzung der Analysten von JP Morgan den stärksten Kapitalbedarf aller großen Investmentbanken weltweit. Das führende deutsche Geldhaus habe im Vergleich zur internationalen Konkurrenz einen zu hohen Verschuldungsgrad, heißt es in einer Studie der US-Großbank.

Die in Bezug auf die Deutsche Bank traditionell skeptischen JP-Morgan-Experten Kian Abouhossein und Jacob Kruse sehen einen zusätzlichen Bedarf an frischem Kapital in diesem Jahr von 7,8 Mrd. Euro. Dies führe auf Basis des aktuellen Kurses zu einer Verwässerung des Ergebnisses je Aktie von 29 Prozent...

http://www.n-tv.de/1122735.html

ich mag die deutsche bank nicht. im grunde ist das eine abzocker bank. drum lasse ich auch die finger von der bank, da kann man nur verlieren.

aber ahnung vom geschäfte machen haben sie. ausserdem geht es nicht um die verschuldung, die ist nicht größer als bei anderen banken. die erste bank hat einen höheren verschuldungsgrad, selbst wenn man bereits die 2,7 mrd. ps-kapital mit einrechnet.

was aber schon stimmt ist, dass die deutsche bank dick im geschäft ist. damit meine ich das sie einen hohen multiplikator hat. gib der deutschen bank einen euro und sie wickelt geschäfte über dreißig euro ab.

wie hoch die geschäfte aktuell sind, weiß ich nicht, aber am beginn der krise hat die deutsche bank geschäfte über 50 billionen euro am laufen gehabt. das ist klarerweiße nominal, aber es bleiben schließlich immer noch 2 billionen in der bilanz übrig, nach dem netting und hedgen (übrigens, da hat es eine änderung in den bilanzierungsregeln gegeben, seither hat die deutsche bank alleine fast 1 billion zusätzliche bilanzsumme).

wenn man sich zum beispiel die einmaligen verluste der deutschen bank und der ersten bank vergleiche, die sich alleine durch die krise ergeben, steht die deutsche bank viel besser da. die erste bank hat viel mehr verluste im verhältnis zur bilanzsummer als die deutsche bank.

eines ist klar, hätte die deutsche bank genauso schlecht wie die anderen banken gewirtschaftet, wäre die deutsche bank schon längst pleite. aber die deutsche bank ist um einiges besser.

ich kann nur wiederholen, ich mag die deutsche bank nicht, aber was diese bank in der krise geleistet hat, verdient meinen allerhöchsten respekt ...

PS: um nur die völlig falsche logik hinter der jp morgen argumentation zu verstehen.

was ist risikoreicher?

ausgangslage (rein fiktiv):

- 2.000 mrd. bilanzsumme mit 30 mrd. eigenkapital
- somit ein multiplikator von 66

jp morgen schlägt vor:

- 2.000 mrd. bilanzsumme mit 38 mrd. eigenkapital
- der multiplikator fällt auf 52, jp morgen argumentiert dadurch ergibt sich ein geringeres risiko

die deutsche bank macht seit einem jahr:

- 1.560 mrd. bilanzsumme mit 30 mrd. eigenkapital
- der multiplikator fällt ebenfalls auf 52, aber nicht durch das höhere eigenkapital, sondern durch die niedriger bilanzsumme

ich denke die methode der deutschen bank eignet sich viel besser zum risikoabbau, als der vorschlag von jp morgen. um das ganze noch zu untermauern. alleine im vierten quartal hat die deutsche bank 340 mrd. an assets verkauft, durch sondereffekte hat sich das großteils wieder neutralisiert, dass selbe wäre auch mit einem höheren eigenkapital gewesen.

also hätte die deutsche bank es alleine im vierten quartal so gemacht wie die jp morgen vorschlägt, hätte die deutsche bank alleine im vierten quartal eine kapitalerhöhung von gut 10 mrd. gebraucht, nur um ihren akutellen multiplikator halten zu können.

ich meine, die deutsche bank hat sich für den einzig richtigen weg entschieden.

Ich meine,dass die Deutsche Bank weiss auf welch schmalen und unübersichtlichen Grad sie balanciert.

Ich wünsch ihr aber nix schlechtes,da ICH zu dick im Geschäft bin...

>Ich meine,dass die Deutsche Bank weiss auf welch schmalen und
>unübersichtlichen Grad sie balanciert.
>
>Ich wünsch ihr aber nix schlechtes,da ICH zu dick im Geschäft
>bin...

Wieder investiert, SierKolou?

Wieder investiert, SierKolou?

Nicht in DB aber wo anders (ein bissal).Da kann ich keine DB Probleme oder gar Pleite gebrauchen

Im Kampf gegen Steueroasen geht Finanzminister Steinbrück nun auch gegen deutsche Banken vor, die Tochterfirmen in der Schweiz unterhalten. Nach SPIEGEL-Informationen erregen Hunderte Stiftungskonten den Argwohn der Aufseher. Mit Sonderprüfungen soll das Geschäft ausgetrocknet werden...

weiter:http://www.spiegel.de/wirtschaft/0,1518,614692,00.html

Das Management der Deutschen Bank hält die Rückkehr in die Gewinnzone im laufenden Jahr für möglich. Voraussetzung dafür ist laut Ackermann jedoch, dass die Weltwirtschaft nicht stärker einbricht als bisher erwartet...

http://www.wirtschaftsblatt.at/home/boerse/binternational/367469/index.do

>Das Management der Deutschen Bank hält die Rückkehr in die
>Gewinnzone im laufenden Jahr für möglich. Voraussetzung dafür
>ist laut Ackermann jedoch, dass die Weltwirtschaft nicht
>stärker einbricht als bisher erwartet...

Das kann ohnehin niemand einschätzen. Aber ich denke die Deutsche
Bank ist eine der Banken die am besten positioniert ist.

Eine Kapitalerhöhung schließt Ackermann erneut als nicht notwendig
aus, das ist wichtig.

>Eine Kapitalerhöhung schließt Ackermann erneut als nicht
>notwendig
>aus, das ist wichtig.

es gab drei kapitalerhöhungen, die wurden medial nur gut vermarktet:

- einmal um die kernkapitalquote von 10% hinzubekommen trotz 1. teilkauf der postbankanteile

- eigene aktien wurden veräussert, was praktisch einer kapitalerhöhung gleichkommt, weil die 8 jährige serie von aktien einzuziehen unterbrochen wurde und die eigenen aktien eigentlich zu diesem zweck angeschaft wurden

- erneute kapitalerhöhung für postbankanteile mit einstieg der deutschen post bei der deutschen bank

+ zusätzlich kann man noch dazurechnen das vier nachranganleihen gewandelt wurden, um die kernkapitalquote oben zu halten und somit half ohne regulärer kapitalerhöhung auszukommen.

Zustimmung bei den ersten Punkten, aber diesen Punkt:

>+ zusätzlich kann man noch dazurechnen das vier
>nachranganleihen gewandelt wurden, um die kernkapitalquote
>oben zu halten und somit half ohne regulärer kapitalerhöhung
>auszukommen.

Wann und welche sollen das gewesen sein?

>Zustimmung bei den ersten Punkten, aber diesen Punkt:
>
>>+ zusätzlich kann man noch dazurechnen das vier
>>nachranganleihen gewandelt wurden, um die
>kernkapitalquote
>>oben zu halten und somit half ohne regulärer
>kapitalerhöhung
>>auszukommen.
>
>Wann und welche sollen das gewesen sein?

gewandelt wurden sie im 4q 2008
gestärkt wurde das kernkapital um 3,9 mrd.
begeben wurden die anleihen zwischen 2007 und 2008