12.19.07
Subprime bankparade VIII or insurance?
This week the ratings agencies did put some bonds insurers in the spotlight. A few weeks ago I reported some insurance companies experiencing difficulties as a direct result from adjusted ratings. The value at stake was very high and to prevent serious problems two European banks decided to provide backing and solved this way the emerging liquidity concerns. Yesterday Bloomberg reported here more adjusted ratings for bond insurers. Big numbers once more. $ 2.4 trillion at risk when these companies are not able to manage capitalization at Aaa level. It is clear the financial world will make sure these problems will get solved. It will be interesting to see who will lend a helping hand. Some of these companies have been equally hit as their banking counterparts in terms of market capitalization. Given the importance of these companies for the financial world it is likely these companies will recover. This time not a new list with banks, but a list with the most important bond insurers.
AMBAC Assurance Corporation
CIFG Assurance North America, Inc.
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance Inc.
MBIA Insurance Corporation
XL Capital Assurance
Assured Guaranty Corp. (AGC)
Radian Asset Assurance
ACA Financial Guaranty Corporation
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12.14.07
Update subprime bankparade VII
Will 2008 become a happy new year for the financial world? Forecasts are negative for some banks and home owners in the US and in Europe. It is not very clear yet who is loosing from the SIV downgrade. To my surprise hardly any insurance company reported problems (yet). Goldman Sachs, Lehman, JP Morgan are presented as companies in control. Looking at the mitigation of risks you see different approaches for common problems.
Some banks decide to put SIV’s on their balance sheet. This solves liquidity issues, but impacts ratios. The idea behind this is that in the end the market value will return. Closing SIV’s is another option, but it is not good for a banks relation with its investors. Other banks are thinking of initiating a new SIV. The Dutch RABO bank declared the SIV model dead, but at the same time guaranteed Tango Finance. Just to keep track of developments I will add SIV to the HOT tab of riskfriends.
Banks are reacting in a very predictable way. I observed the following, not very creative, actions.
- initially underestimating the impact and unable to provide reliable forecasts
- cutting jobs and closing business units, some do attempt to sell
- firing CEO’s and CRO’s
- closing SIV’s
- attracting capital
- putting SIV’s on the balance sheet, impacting ratio’s
- some improve their communication, others remain silent
- some efforts to work together to share the burden
- starting to reconsider their risk management strategy
Inveztors react by
- selling their shares
- starting lawsuits
- withdrawing cash and investments
- demanding more transparancy
- looking for opportunities
Government waits and waits and then reacts with
- pumping billions of dollars in the market
- starting investigations a little too late
- attempts to reassure the market with ineffective regulations
- predicting negative impact and higher interest rates for the next year
Today I worked with a group of risk professionals and we did an exercise on how to manage this scenario. It was fun to do and resulted in some interesting insights. I will share this with you in the coming weeks. And as always.. an update of the subprime bankparade.
|
Company |
News |
|
|
Dec 12 |
Citi |
$15 billion downgrade SIV |
|
Dec 12 |
Lehman |
12%profit drop, no write offs, |
|
Dec 10 |
Fannie Mae |
Expects $5.5 billion loss next |
|
Dec 10 |
Freddie Mac |
Expects $7.5 billion loss next |
|
Dec 10 |
BoA |
Closes investment fund, value |
|
Dec 10 |
Washington Mutual |
Closing 60% of home loan |
|
Dec 10 |
Citi |
Take over speculations are starting |
|
Dec 10 |
UBS |
$10 billion write off |
|
Dec 6 |
Rabo |
Adds $7.6 billion to its |
|
Dec 6 |
Citi |
Moody’s downgrades 52 tranches |
|
Dec 6 |
RBS |
$2.6 billion and $ 0.6 |
|
Dec 6 |
Local government |
Various states and cities |
|
Dec 5 |
Standared chartered |
Adding $ 1.7 billion of |
|
Dec 3 |
WestLB |
German bank guarantees $36 |
|
Dec 3 |
H&R Block |
$ 0.4 billion write off, closing |
|
Dec 3 |
RBS |
$ 4 billion expected. |
|
Dec 1 |
Morgan Stanley |
CEO Cruz leaves |
|
Nov29 |
Terra securities |
Norwegian brokerage bankrupt, |
|
Nov29 |
BoA |
$ 1 billion write off |
|
Nov29 |
Florida |
$ 8 billion run on the |
|
Nov29 |
IKB |
$ 9 billion rescue costs |
|
Nov28 |
Bear Stearns |
1500 jobs in total lost, about |
|
Nov28 |
Freddie Mac |
$ 6 billion sale of preferred |
|
Nov27 |
Citi |
$ 7.5 billion sale . |
|
Nov26 |
GMAC |
$ 1.6 billion so far and more |
|
Nov26 |
Citi |
45.000 jobs at risk in |
|
Nov26 |
JP Morgan |
100 jobs gone and CRO replaced |
|
Nov26 |
HSBC |
$ 35 billion injection to protect |
|
Nov23 |
News |
Delinquency rates rising for |
|
Nov22 |
News |
FSA sees $11 billion exposure |
|
Nov21 |
News |
Fitch downgrades $30 billion |
|
Nov21 |
MGIC |
SEC inquiries, restructuring |
|
Nov21 |
Radian |
SEC inquiries, restructuring |
|
Nov21 |
AIG |
Derivative lawsuit started, |
|
Nov21 |
Countrywide |
Denying bankruptcy threats. |
|
Nov20 |
News |
Insured CDO’s at risk due to |
|
Nov20 |
Citi |
Predicted $15 billion write |
|
Nov20 |
Countrywide |
Liquidity concerns, signs of |
|
Nov20 |
Freddie Mac |
$ 2 billion write off, liquidity |
|
Nov20 |
Swiss re |
$ 1 billion write off |
|
Nov16 |
Citi |
$ 11 billion write off. |
|
Nov16 |
News |
Banks reassuring investors, |
|
Nov16 |
Novastar financial |
$ 0.4 billion write off, |
|
Nov16 |
UBS |
$ 7 billion write off. |
|
Nov15 |
Barclays |
$ 2.7 billion write off. |
|
Nov14 |
Bear Stearns |
$ 1.2 billion write off. |
|
Nov13 |
BoA |
$ 3.3 billion write off. |
|
Nov13 |
HSBC |
$ 3.4 billion write off. |
|
Nov13 |
News |
$ 3 billion exposure for |
|
Nov13 |
RBC |
$ 0.4 billion write off. |
|
Nov12 |
Blackstone |
$ 0.8 billion write off |
|
Nov12 |
Citi |
$ 25 billion exposure |
|
Nov12 |
Etrade |
$ 3 billion exposure and an |
|
Nov12 |
Metlife |
Insurance company with $ 91.3 |
|
Nov12 |
Principal Financial group |
Insurance company with $ 12.3 |
|
Nov 9 |
CIBC |
Canadians reporting $ 0.5 |
|
Nov 9 |
Fanny Mae |
|
|
Nov 9 |
HSBC |
Antoher 120 jobs in addition |
|
Nov 9 |
JP Morgan |
4th quarter warnings, exposure |
|
Nov 9 |
Wachovia |
$ 1.6 billion subprime loss |
|
Nov 8 |
Merrill |
SEC starts investigation |
|
Nov 8 |
Morgan Stanley |
$ 3.7 billion subprime write |
|
Nov 8 |
News |
RBS expects another $250 to |
|
Nov7 |
Bear Stearns |
Expected write offs 4th |
|
Nov7 |
BofA |
Expected write offs another $3 |
|
Nov7 |
Citi |
Shareholders lawsuits |
|
Nov7 |
Commerzbank |
$337 million write off |
|
Nov7 |
Goldman |
Expected write offs 4th |
|
Nov7 |
Lehman |
Expected write offs 4th |
|
Nov7 |
Merrill |
Expected write offs 4th |
|
Nov7 |
Morgan Stanley |
Expected write offs another $4 |
|
Nov7 |
News |
Level 3 assets concerns, $400 |
|
Nov5 |
Market news |
Asian markets drop sharply |
|
Nov 3 |
Bear Stearns |
CEO accused of inappropriate |
|
Nov 3 |
Citigroup |
Write off $ 11 billion in |
|
Nov 3 |
Merrill |
Merril not aware of |
|
Nov 2 |
Barclays Morgan Stanley |
Market and analysts expect |
|
Nov 2 |
Credit Suisse |
2.2 billion Swiss francs write |
|
Nov 2 |
First American Washington Mutual |
Accused for inflating mortgage |
|
Nov 2 |
UBS |
Another $ 8 billion expected |
|
Nov 1 |
Citi |
Downgrade $30 billion expected |
|
Nov 1 |
Deutsche bank |
3,2 billion loss, but in |
|
Nov 1 |
Federal reserve |
41 billion injection |
|
Nov 1 |
State Street |
$2,6 billion loss, law suits |
|
Oct 31 |
General Electric |
1 billion at stake, mortgage |
|
Oct 31 |
Merrill |
Lawsuits by shareholders |
|
Oct 31 |
UBS |
3,68 billion loss in francs |
|
Oct 30 |
Countrywide |
Offering cds at highest rates |
|
Oct 29 |
Bank of China |
$7,9 billion mortgage write |
|
Oct 29 |
HSBC |
Sells mortgage unit, $795 |
|
Oct 29 |
Market news |
Double digit price drop California housing |
|
Oct 29 |
Market news |
80% price drop mortgage backed |
|
Oct 29 |
Perpetual |
Cut first-half profit forecast |
|
Oct 28 |
Countrywide |
Analysts stating CEO is |
|
Oct 28 |
Fremont Inv & Loan |
Approved fast foreclosures |
|
Oct 28 |
Market news |
Foreclosures wi11 to 14 months |
|
Oct 28 |
New Century Fin Corp |
Approved fast foreclosures |
|
Oct 28 |
WMC Mortgage |
Approved fast foreclosures |
|
Oct 27 |
Countrywide |
CEO accused for dumping stocks |
|
Oct 26 |
Countrywide |
Largest home lender, $1.2 |
|
Oct 26 |
Moody’s |
Cut the ratings of |
|
Oct 26 |
S&P |
Lawsuits, wrong rating |
|
Oct 25 |
AIG |
Analysts predicts $9,8 billion |
|
Oct 24 |
News |
$400 billion write off |
|
Oct 22 |
Bank of America |
$750 million loss, provisions |
12.04.07
Update subprime bankparade VI.
Although the focus is on the US more and more European banks are reporting impact of the crisis. Especially German, Swiss and UK based banks seem to be hit. Where are the figures of the big French and Spanish banks? No problems there? Let’s wait for a while. For some reason I think cultural differences between Northern and Southern Europe could also result in different approaches to transparency. Well once more an updated list. After write offs, CEO’s leaving, reduced market capitalization, job cuts and efforts to attract capital for some companies bankruptcy is near or even reality. A Norwegian investment company linked to Citi closed down. Insurance companies are not really in the news yet. I find this also surprising. The only insurance related news is a report stating the expectation of higher claims resulting from home owners putting their house on fire.
|
Company |
News |
|
|
Dec 3 |
H&R Block |
$ 0.4 billion write off, selling Option One, 600 jobs lost. |
|
Dec 3 |
RBS |
$ 4 billion expected. |
|
Dec 1 |
Morgan Stanley |
CEO Cruz leaves |
|
Nov29 |
Terra securities |
Norwegian brokerage bankrupt, Citi connection. |
|
Nov29 |
BoA |
$ 1 billion write off Countrywide investment |
|
Nov29 |
Florida |
$ 8 billion run on the investment fund |
|
Nov29 |
IKB |
$ 9 billion rescue costs provided by German banks. |
|
Nov28 |
Bear Stearns |
1500 jobs in total lost, about 10% of work force. |
|
Nov28 |
Freddie Mac |
$ 6 billion sale of preferred stocks, dividend reduction of 50 percent |
|
Nov27 |
Citi |
$ 7.5 billion sale . |
|
Nov26 |
GMAC |
$ 1.6 billion so far and more to come. |
|
Nov26 |
Citi |
45.000 jobs at risk in addition to previously announced 17.000 jobs. Almost 20% staff reduction this year. |
|
Nov26 |
JP Morgan |
100 jobs gone and CRO replaced |
|
Nov26 |
HSBC |
$ 35 billion injection to protect SIV’s. |
|
Nov23 |
News |
Delinquency rates rising for real estate and credit card |
|
Nov22 |
News |
FSA sees $11 billion exposure for Japanese banks |
|
Nov21 |
News |
Fitch downgrades $30 billion CDO’s. |
|
Nov21 |
MGIC |
SEC inquiries, restructuring via C-BASS $467 million . $ 0.5 billion difference with last years 3rd quarter results. |
|
Nov21 |
Radian |
SEC inquiries, restructuring via C-BASS $467 million and selling service units to raise money. Almost $ 0.8 billion difference with last years 3rd quarter results. |
|
Nov21 |
AIG |
Derivative lawsuit started, accusations of concealing information and personally selling shares. |
|
Nov21 |
Countrywide |
Denying bankruptcy threats. |
|
Nov20 |
News |
Insured CDO’s at risk due to possible downgrade of insurance companies resulting in inability to make termination payments and effectively wipe out these insurers and subsequently more write offs by banks. |
|
Nov20 |
Citi |
Predicted $15 billion write offs next 6 months, downgraded |
|
Nov20 |
Countrywide |
Liquidity concerns, signs of bankruptcy |
|
Nov20 |
Freddie Mac |
$ 2 billion write off, liquidity problems |
|
Nov20 |
Swiss re |
$ 1 billion write off |
|
Nov16 |
Citi |
$ 11 billion write off. expected in 4th quarter |
|
Nov16 |
News |
Banks reassuring investors, IMF and OECD issue warnings. |
|
Nov16 |
Novastar financial |
$ 0.4 billion write off, probably expelled from NYSE |
|
Nov16 |
UBS |
$ 7 billion write off. expected in 4th quarter |
|
Nov15 |
Barclays |
$ 2.7 billion write off. |
|
Nov14 |
Bear Stearns |
$ 1.2 billion write off. |
|
Nov13 |
BoA |
$ 3.3 billion write off. |
|
Nov13 |
HSBC |
$ 3.4 billion write off. |
|
Nov13 |
News |
$ 3 billion exposure for director-and-officer insurances, claims resulting from lawsuits. |
|
Nov13 |
RBC |
$ 0.4 billion write off. |
|
Nov12 |
Blackstone |
$ 0.8 billion write off |
|
Nov12 |
Citi |
$ 25 billion exposure resulting from liquidity puts, survival concerns. |
|
Nov12 |
Etrade |
$ 3 billion exposure and an analyst report resulted in a 60% price drop of shares and concerns about going bankrupt. |
|
Nov12 |
Metlife |
Insurance company with $ 91.3 billion mbs exposure |
|
Nov12 |
Principal Financial group |
Insurance company with $ 12.3 billion mbs exposure |
|
Nov 9 |
CIBC |
Canadians reporting $ 0.5 billion write offs, more Canadians to follow. |
|
Nov 9 |
Fanny Mae |
|
|
Nov 9 |
HSBC |
Antoher 120 jobs in addition to the 750 reported in August are lost |
|
Nov 9 |
JP Morgan |
4th quarter warnings, exposure $ 8 billion. |
|
Nov 9 |
Wachovia |
$ 1.6 billion subprime loss |
|
Nov 8 |
Merrill |
SEC starts investigation investments |
|
Nov 8 |
Morgan Stanley |
$ 3.7 billion subprime write off |
|
Nov 8 |
News |
RBS expects another $250 to $500 billion write offs in level 3 assets in addition to subprime write offs |
|
Nov7 |
Bear Stearns |
Expected write offs 4th quarter $3.9 according to CreditSights |
|
Nov7 |
BofA |
Expected write offs another $3 to 6 billion, according to Deutsche Bank |
|
Nov7 |
Citi |
Shareholders lawsuits |
|
Nov7 |
Commerzbank |
$337 million write off |
|
Nov7 |
Goldman |
Expected write offs 4th quarter $5 according to CreditSights |
|
Nov7 |
Lehman |
Expected write offs 4th quarter $3.9 according to CreditSights |
|
Nov7 |
Merrill |
Expected write offs 4th quarter another $9.4 according to CreditSights |
|
Nov7 |
Morgan Stanley |
Expected write offs another $4 to 6 billion, according to Deutsche Bank |
|
Nov7 |
News |
Level 3 assets concerns, $400 billion downgrade resulting from adjusted ratings. |
|
Nov5 |
Market news |
Asian markets drop sharply (5%) |
|
Nov 3 |
Bear Stearns |
CEO accused of inappropriate conduct |
|
Nov 3 |
Citigroup |
Write off $ 11 billion in addition of the $ 6.8 billion reported 3 weeks ago. |
|
Nov 3 |
Merrill |
Merril not aware of inappropriate transactions, not denying it. |
|
Nov 2 |
Barclays Morgan Stanley |
Market and analysts expect losses |
|
Nov 2 |
Credit Suisse |
2.2 billion Swiss francs write down |
|
Nov 2 |
First American Washington Mutual |
Accused for inflating mortgage appraisals |
|
Nov 2 |
UBS |
Another $ 8 billion expected in addition to the $3.8 billion |
|
Nov 1 |
Citi |
Downgrade $30 billion expected loss |
|
Nov 1 |
Deutsche bank |
3,2 billion loss, but in control, appraised |
|
Nov 1 |
Federal reserve |
41 billion injection |
|
Nov 1 |
State Street |
$2,6 billion loss, law suits wrong investment advice |
|
Oct 31 |
General Electric |
1 billion at stake, mortgage staff cuts |
|
Oct 31 |
Merrill |
Lawsuits by shareholders |
|
Oct 31 |
UBS |
3,68 billion loss in francs |
|
Oct 30 |
Countrywide |
Offering cds at highest rates |
|
Oct 29 |
Bank of China |
$7,9 billion mortgage write off |
|
Oct 29 |
HSBC |
Sells mortgage unit, $795 million |
|
Oct 29 |
Market news |
Double digit price drop California housing |
|
Oct 29 |
Market news |
80% price drop mortgage backed securities |
|
Oct 29 |
Perpetual |
Cut first-half profit forecast by 5%, spooked investors |
|
Oct 28 |
Countrywide |
Analysts stating CEO is telling lies |
|
Oct 28 |
Fremont Inv & Loan |
Approved fast foreclosures |
|
Oct 28 |
Market news |
Foreclosures wi11 to 14 months |
|
Oct 28 |
New Century Fin Corp |
Approved fast foreclosures |
|
Oct 28 |
WMC Mortgage |
Approved fast foreclosures |
|
Oct 27 |
Countrywide |
CEO accused for dumping stocks |
|
Oct 26 |
Countrywide |
Largest home lender, $1.2 billion loss |
|
Oct 26 |
Moody’s |
Cut the ratings of collateralized debt obligations tied to $33 billion of subprime mortgage securities |
|
Oct 26 |
S&P |
Lawsuits, wrong rating mortgage backed securities, conflict of interests, rating related to fees |
|
Oct 25 |
AIG |
Analysts predicts $9,8 billion loss |
|
Oct 24 |
News |
$400 billion write off prognoses |
|
Oct 22 |
Bank of America |
$750 million loss, provisions up $1,5 billion, profit drop with 94%, 3000 jobs lost, blaming risk mgmt. |
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