Market Analysis

U.S. banks rush to freedom. Freedom is better Toschaya fat slavery - to speak, through the classic financiers on Wall Street, barely recovered from the losses and write-offs as a result of the mortgage crisis. Few today remember panic last fall, tsarivshie not only in the New York office, but throughout the world. Then the U.S. government has proved in fact the only wish to become an investor in the problems of American banks. In total, he had bought shares over 600 companies amounting to about $ 200 billion in exchange for money power have undercut banks in administrative costs and activities.

Today, in order to get rid of the imposed restrictions, financial institutions have begun to repay its public debt. Unequivocal response to such actions of their yet: experts were divided in opinions, the authorities разводят hands and the market reacted fall.

Top Ten

Among the first lucky ones, returning gospomosch, were ten banks, has successfully passed the spring test stress tests. Ministry of Finance of the USA granted JPMorgan Chase Co, Goldman Sachs Group Inc, Morgan Stanley, US Bancorp, Capital One Financial Corp, American Express Co, BB T Corp, Bank of New York Mellon Corp, State Street Corp and Northern Trust Corp to return to total of $ 68.27 billion, banks also intend to purchase from the Ministry of Finance of warrants for shares of common stock that they have received, along with public money. Warrants give the Ministry of Finance the right to purchase shares of common stock at a price finuchrezhdeny within ten years, but banks can buy back warrants from the state for fair market value.

According to market participants, such actions finuchrezhdeny show that the banking industry comes back on its feet after the incurred losses, which are sunk a few companies and led to the recession the world economy over the past year. I have not seen that someone has sat idly by. No doubt, this is what we wanted to see - is pleased Representative BB T Corp. The head of the bank's Kelly King said that his decision to return finuchrezhdenie visits by the distinguished honor for employees, which was abolished under political pressure.

returned the money the government can continue to lend assistance to other needy organizations. Under the TARP (Troubled Asset Relief Program) is still $ 110 billion, they could still be made available to insurers and small banks.

with banking institutions that have already been calculated with the state, will now be lifted restrictions on the payment of bonuses of top managers, increasing the amount of dividends, the recruitment of foreigners and the amount of hospitality. For example, Goldman Sachs employees have already been on record bonus payments if the bank will show the highest annual income in its history. Experts believe such a perspective is quite realistic in view of the fact that the bank has virtually no competitors in the first half and significantly grow revenue from foreign exchange trading, bonds and fixed income products. Executive Director of Goldman Sachs, Lloyd Blankfeyn said that the bank is obliged to make compensation to reflect the true effectiveness of institutions and motivate employees to conduct.

interesting that in the last month, several banks had to raise wages by more than 50%. This reinforced the staff turnover in the market and forced many financial institutions to follow the example of competitors. According to the head of recruiting company Hanover Search Patrick Field, UBS and Merrill Lynch lost this year, about a quarter of its best staff. Many of them have gone to developing now Barclays, Credit Suisse and Deutsche Bank. This led to the fact that, despite the lack of ability to pay off today with the state, for example, Citigroup will increase the salary of its employees to compensate for his reduction of annual bonuses. Most grow investbankirov salaries and traders.

Besides Citigroup, permit the payment of the debts were not also such giants as Bank of America and Wells Fargo, but the statements of representatives of these institutions, the management will try to do everything possible to quickly calculate the state.

 

Zolotoi Buffett

When once asked Warren Buffett what is the best time to sell the shares, billionaire replied that such a moment there, and he prefers to buy shares ever. This response does not always match the actual behavior of Buffett, but certainly showed that the investor buys only reliable paper. If the past eight months, the U.S. government action-oriented Buffett, States today would have received dividends from a bank organizations. Last fall, for $ 5 billion Warren Buffett received preferred shares of Goldman Sachs, giving him the right to a dividend of 10%. In addition, in the midst of financial crisis, Goldman Sachs has offered to guide billionaire ordinary shares in the same amount to acquire that he may at any time within five years at a cost of $ 115 per share. A few months later, in spite of pessimistic predictions, Buffett added to his portfolio in shares of two more banks - Wells Fargo and the US Bancorp. Again, the choice was right: over the past three months, the paper finuchrezhdeny all grown up in price. Shares Goldman Sachs showed an increase of 76%, US Bancorp - by 100%, and Wells Fargo - by 190%. While Buffett has no plans to dispose of bank assets, preferring to earn them until they will remain profitable.

Unlike Warren Buffett, the U.S. government was not ready for such a rapid recovery of banking institutions. U.S. administration fears that the return of state funds invested in saving the largest banks, and an unwillingness to cooperate with the government may become a main obstacle to restoring the financial system and economy as a whole. We want to get out of the financial system. We want people to back the debts of the government. But we do not want the payments to the State put them in jeopardy and left them with insufficient capital, - said chairman of the President's National Economic Council Lawrence Summers.

Minister of Finance of the U.S. is also concerned that finuchrezhdeniya waive the means necessary for their recovery. The last time Timothy Gaytner only, and is that trying to overcome mistrust finsektora to the Government, the Government - to finuchrezhdeniyam, ordinary Americans - and those to the other. In his view, should be simple and available to explain why it is necessary to spend taxpayers' money to help the U.S. financial system. It is impossible to restore the economy without the financial system. Without the financial system, no credit, which means rising unemployment, declining productivity and increasing the number of problem companies - sure Gaytner. However, it is now States could demonstrate not only the citizens of their own country but worldwide, how to manage the problem banks and to make their recovery. Numerous critics accompanying crisis moves of the U.S. government could now be reverse additional income received from banks in the state treasury, if such conditions had been prescribed in the mechanism through banking institutions.

The market is also not encouraged the actions of some banks, and reacted to news of the return of the debt reduction in prices. For example, shares of JP Morgan Chase Co cheaper by 2%, BB T Corp - on 1,9%, Morgan Stanley - to 2.1%. Increased costs showed only a US Bancorp. And the U.S. stock market index Standard Poor s 500 completed the decline in the third trading session in succession, having lost in this period 3.6%, which was the strongest fall since April.

mixed and the reaction of U.S. media: Some of them are very skeptical reaction to statements by Goldman Sachs and Citi on the payment of bonuses of top managers and an increase in travel expenses. Recipients of assistance under the TARP demonstrate their gratitude for the generosity of Americans, handing out travel and bonuses in a year when millions of citizens were left without jobs and shelter, - says one of reputable publications. The country is seriously concerned that the bankers to return to the pre-crisis life, which may stimulate a new round of crisis. Meanwhile, bankers are confident that the crisis has taught them to work and do not repeat their mistakes. I do not think it will be a ticket at the will - I am sure the Washington counsel of Gibson Dunn Crutcher LLP Kantvell Makenfass, representing the interests of financial institutions. Bankers themselves say that continuing to tightly control its expenses. According to the Financial Director of JP Morgan Chase Co Michael Kavenaha, it is time for change, but should not think that they will come soon, just because the bank has paid the debts under the TARP.

According to banking analyst Portales Partners LLC (an analytical company in New York), the company prematurely repay their obligations may briefly become a source of pride. They can say that they no longer belong to the government. And yet I do not think that this competitive advantage will be long, - said the expert. Why? This issue is open to many: a brave bankers will soon have to seek assistance from the state or the pioneers dared to go all the rest.

Elena Moshenets

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