In this three part series, we discuss macro risk posed to the markets by the enormous Chinese banking sector. In Part #2, we take the perspective of the ‘bulls’, providing reasons why the macro risk posed by the Chinese banking sector is overstated. In Part #1, we provided the perspective of the ‘bears’, discussing why the sector could be the epicentre of a further global sell-off…
Insights: Region
Chinese Banks Part #1: For BEARS, Four Reasons Why Chinese Banks’ Distress Could Amplify the Global Sell-Off
In this three part series, we discuss macro risk posed to the markets by the enormous Chinese banking sector. In Part #1, we take the perspective of the ‘bears’, discussing why the sector could be the epicentre of a further global sell-off and/or additional macro uncertainty. In Part #2, we take the perspective of the ‘bulls’, providing reasons why many believe the macro risk posed by…
Global Growth – Economists vs. the Markets
In this comment, we discuss the seemingly large gap between economists’ growth expectations for the global economy and those of the market. The former is forecasting comfortably positive growth, while the latter’s worries have prompted a global sell-off in equities. We also address the most likely trigger of a global downturn, while reviewing the impact of the European sovereign debt crisis.
Italy: A Deeply Discounted, Fragmented Sector Undergoing Cyclical Recovery and Regulatory Reform
In this note, we provide a review of the Italian banking system, including an overview and a discussion of the most important issues facing the sector. Italian banks represent a deeply discounted, fragmented system undergoing a cyclical recovery while at the same time, undergoing regulatory reform, and potential M&A.
Why AGF Should Sell Itself in 2016
Since 2013, we have travelled throughout Canada giving a research presentation entitled “Canadian Banks – the End of an Era?”, which is based on an essay we wrote in 2011 (and reprinted in the Globe). In this presentation, we reviewed the evolution of the banks over the previous 20+ years and provided a 5 to 10 year outlook for sector.
Another U.S. Mid-Cap Bank Deal as HBAN Buys FMER
The trend in U.S. mid-cap bank M&A continues, with Huntington Bancshares Incorporated (HBAN) announcing an agreement to acquire FirstMerit Corporation (FMER) for US$3.4 bln. HBAN is paying 1.6x tangible book value in a stock and cash transaction (75%/25%), implying a 31% premium for FMER shareholders as of yesterday’s close. The deal follows a very steep correction in the U.S. banks year-to-date (e.g., BKX down ~18%, KRX…
In Person: The Future of Canadian Financial Services – A Mid-Cap Perspective
Today, we hosted “The Future of Canadian Financial Services – A Mid-Cap Perspective” at One King West’s Grand Banking Hall in Toronto. We held a fireside chat with three CEOs of Canadian financial services companies to discuss the most important fundamental and macro themes facing the financials and markets in Canada.
Notes from Switzerland: Rising Regulatory Risk Places Swiss Private Banking Under Pressure
We recently traveled to Switzerland to meet with regulatory policy experts and representatives from the country’s major banks. Switzerland, while geographically small and landlocked, is home to a highly developed and skilled economy. It is one of the world’s most affluent nations, with the 6th highest GDP per capita (3rd excl. very small economies) of ~US$87,000 (Canada at ~US$50,000). Consistent with its longstanding neutrality, Switzerland is…
Notes from Sweden: Large Nordic Country; Oligopoly Banking Sector with High Capital Levels
We recently traveled to Sweden to meet representatives from the country’s four major banks and regulatory policy experts. For background, Sweden is the largest of the five Nordic countries by both population (9.7 mln) and economic output (US$570 bln). Of significance, it remains outside of the eurozone, i.e., it has its own currency/central bank (Finland is the only Nordic country in the eurozone; the other three…
Notes from the Netherlands: Eurozone Country Dominated by Two Large Public Banks
We recently traveled to the Netherlands to meet with representatives from the country’s major banks and regulatory policy experts. The Netherlands is the most densely populated large economy outside of Asia, with 16.8 mln people, and is a member of the eurozone. Its developed economy is focused on foreign trade, and it ranks as the second largest exporter of agricultural products in the world. It’s GDP…
Notes from Denmark: Small, Wealthy Country; Well Capitalized Banks
We recently traveled to Denmark to meet with regulatory policy experts and representatives from the country’s major banks. Denmark is the smallest of the Nordic countries by size, but the second largest by population with ~5.7 mln. It remains outside of the eurozone, along with three of the other four Nordic countries (Finland is a eurozone member). It has a developed (mixed) economy focused on foreign…
BofA Merrill Lynch Financials Conference in NYC: Notes from the Field
We recently attended the Bank of America Merrill Lynch Banking & Financial Services Conference in New York City. Representatives from major banks, asset managers, and consumer finance companies participated in very informative Q&A sessions, providing us and other investors with their thoughts on interest rates, M&A, and the credit environment. We would identify the following key takeaways: