Banks: The gift that keeps on giving…. to bankers!

gift wall st

JP Morgan has just missed earnings expectations on Wall St. As the mega name in a sullied sector that’s not a great start to 2015 but, frankly, everywhere you look it’s not great news for investors in the bank sector….

Consider the following threads which have appeared in your news feeds in the early weeks of January…

1. Santander to buff up its capital position by $9 billion. That’s to apparently help pay the dividend but one suspects commodity ravaged Brazil is occupying most minds in Spanish HQ. Anyways, the investment banks will get nice fees to go busking for more shareholder contributions…

2. Standard Chartered and its $61 billion commodity/trade finance exposure in emerging markets is leading to speculation of a $4-5 billion rights issue to soften the blow of likely debt impairments. Cue more investment banking fees…

3. And top prize for denial is Austrian lender Raiffeisen with a €20 billion exposure to Russia and Ukraine. Its most recent communication with the market was that goodwill associated with its Russian business could see a write-down of €148 million. Now check out the relative share price move(via ActivateAlpha) of the bank over the past 6 months and wonder if Mr. market attaches even the slightest bit of credibility as to the likely holes about to appear in that bank’s balance sheet.   The CEO can drag this out and keep taking salary but one senses a shareholder bloodbath at some point….

What’s that saying about not confusing the bottom of the page with the bottom of the chart?


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