Confidence has never been lower
Dick Kovacevich, chairman emeritus of Wells Fargo, is concerned another shock will set the world back into recession. December 09, 2011 | Peter HoflichWith a liquidity crisis looming in Europe, banks are facing a situation that requires them to repatriate funding to shore up capital at home in the absence of a commitment to rights issues or other methods of shoring up capital. This is providing opportunities for non-European banks, both in Asia and the US. “European banks are not only going to have to cut back in Asia, but even more likely to have to cut back in the United States, because they don’t have access to dollars; it’s a funding issue,” says Dick Kovacevich, chairman emeritus of Wells Fargo. Kovacevich will give the opening keynote speech at The Asian Banker Summit 2012 in Jakarta. And although Kovacevich no longer runs the bank that he built into one of the strongest in the world from 1985 to 2007, he is still close to the management, which recently spent $1.55 billion buying US commercial real estate loans from Bank of Ireland, and a loan portfolio of 61 performing US-based commercial real estate loans with the face value of $3.3 billion from the former Anglo Irish Bank. Other strong US banks, such as JP Morgan and Citi, are believed to be looking at the same opportunities. Kovacevich’s observation is partly backed up by Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk, who notes that troubled Western banks that are withdrawing from lending in the Asia Pacific region are reducing the supply of credit to Asian businesses, either providing opportunities to those with the balance sheet, or causing serious problems for Asia Pacific businesses. Whereas in 2007 European and US banks accounted for 30% and 10% of loans in Asia Pacific respectively, this has halved to 15%–16% for European banks and 5%–6% for US banks. “The level of participation is likely to shrink further as a result of the problems of these banks,” says Das. “Troubled French banks account for about 11% of maturing loans in Asia Pacific. It ... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Asset Management, Trustees and Custodians, Capital & Strategic Issues, Risk and RegulationTrustees Custodians and Depositories,Capital & Strategic Issues,Risk and Regulation, Asset Management, Trustees and Custodians,Capital & Strategic Issues,Risk and Regulation, Keywords:Dick Kovacevich, Wells Fargo, Asian Banker Summit 2012, MF Global, Dodd Frank Dick Kovacevich, Wells Fargo, Asian Banker Summit 2012, MF Global, Dodd Frank
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