German Banks May Need New Capital

Bloomberg News, The New York Times, September 6, 2010

The 10 biggest lenders in Germany, including Deutsche Bank and Commerzbank, may need about 105 billion euros ($135 billion) in capital because of new regulation, the Association of German Banks said. The lenders would need to raise that sum to reach an estimated 10 percent Tier 1 capital ratio, a crucial measure of financial strength, according to Dirk Jaeger, who is responsible for regulatory topics at the group.

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Senior Deutsche Bank Adviser Quits UK Bank Industry

Jessica Hodgson, The Wall Street Journal, August 12, 2010

LONDON (Dow Jones)--Basil Geoghegan, one of the bankers who played a key role
in restructuring the U.K. banking industry during the financial crisis, has left
his job at Deutsche Bank AG (DB) to join a telecoms start-up.

Geoghegan has left Deutsche Bank after just over a year, a spokeswoman for
the bank confirmed, but declined to provide more specific information.

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Britain Hires Banker to Sell RBS and Lloyds Stakes

  

The New York Times, July 19, 2010

The British government hired an American investment banker on Monday to help it manage and sell its stakes in two of the country’s largest banks, Royal Bank of Scotland and Lloyds Banking Group, The New York Times’s Julia Werdigier reports.

Jim O’Neil, who is based in London, will join United Kingdom Financial Investments, or U.K.F.I., as head of market investments in October. He is currently head of corporate finance outside the Americas at Bank of America Merrill Lynch. He will report to Robin Budenberg, chief executive of U.K.F.I. and a former UBS banker.

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Why the EU’s new compensation regulations are dreadful, and why they’re tame

Sarah Butcher, Efinancial Career News, July 1, 2010

If you tell a senior banker that between 40% and 60% of his or her bonus must be deferred over three to five years and that the cash portion will be limited to 20-30%, he or she is unlikely to bat an eyelid. After all, Bank of America reduced the cash component of its bonuses to just 15% last year, and most banks deferred at least 50%of 2009 bonuses for three years’ minimum.

Tell the same thing to a junior trader, and he or she is likely to choke on his Red Bull.

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AIG Rescue Spared European Banks From Raising $16 Billion

Hugh Son, Bloomberg, June 14, 2010

American International Group Inc.’s U.S. government rescue spared European banks from raising as much as $16 billion in capital during the depths of the global financial crisis, according to a Congressional panel.

ABN Amro Holding NV and Danske Bank A/S, Denmark’s biggest bank, were among the firms that bought the most derivatives from AIG to trim reserves they held against investment losses, theCongressional Oversight Panel said last week in a report. ABN Amro may have had to raise $3.5 billion if New York-based AIG was allowed to fail in 2008, and Danske Bank would have lost as much as $2.1 billion in relief, the panel wrote.

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UPDATE: Europe’s Private Equity Trade Body Elects New Chair

(Adds detail, background.)

Marietta Cauchi, The Wall Street Journal, June 14, 2010

LONDON (Dow Jones)–Europe's private equity industry body said Monday it has elected Uli Fricke as chairwoman to succeed Richard Wilson of London-based Apax Partners.

Fricke is managing general partner and founder of Triangle Venture Capital Group, a German-based investor in spin-offs from universities and research centers.

Fricke's appointment by the European Private Equity and Venture Capital Association comes at a critical time for the industry as the European Commission's Alternative Investment Fund Managers directive, or AIFM, moves into its final stages after European finance ministers and lawmakers last month backed legislation imposing regulations on hedge funds and private equity firms.

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FSA pays £22m in bonuses

Robert Watts, Business.Timesonline.co.uk

THE Financial Services Authority (FSA) paid its staff record bonuses of £22m last year, despite railing against similar awards paid at the banks that it regulates.

Seven staff at the City watchdog, which attracted heavy criticism for its regulation of banks before the financial crisis, were paid bonuses of more than £45,000. One official received an award of £80,000.

Although the FSA’s staff handbook states that the annual individual incentive plan should “reward and retain our highest performers”, the regulator has disclosed that 84% of its staff received a bonus in 2009-10. The average payment was £7,269.

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In London, Banks Begin to Hire Again

London (above)

The New York Times, May 25, 2010

Less than a year after reporting giant losses and cutting thousands of jobs, many banks in London’s financial center are hiring again.

And the search for talent means compensation is rising — despite government efforts to control it, The New York Times’s Julia Werdigier reports.

The curbs on bonuses enacted in the wake of the financial crisis resulted in base salaries doubling last year for many senior bankers. But in London at least, bonuses have started to rise again, though they remain below their 2007 peak. And some hiring incentives from the boom years — like multi-year bonus guarantees — are returning in altered forms, such as “gentlemen’s agreements” or stock options.

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Prudential Announces $21 Billion Offering

The New York Times, May 17, 2010

Prudential, the British insurer, announced the terms of its $21 billion rights issue Monday, a move that keeps it on track to finance its acquisition ofAmerican International Group’s Asian life insurance unit.

The insurer said it would offer 11 shares for every two existing, at 104 pence per share, 80.8 percent less than its May 14 closing price.

The company’s shareholders will vote on the rights issue, which requires 75 percent approval, on June 7.

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Fired London Bankers Overcome Bonus Backlash in Court

Lindsay Fortado, Bloomberg.com, May 10, 2010

U.K. bankers, the butt of political and public criticism for getting taxpayer bailouts and large bonuses, at least have some friends in London’s courts.

A former Societe Generale managing director, an ex-Seymour Pierce Ltd. investment banker and a derivatives trader who had worked at Rabobank International, have all won rulings on unpaid compensation claims this year.

“The judges are showing that they’re not being browbeaten by government pressure,” said Jo Keddie, a partner at Winckworth Sherwood in London.

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