Tag: Merrill Lynch

Deutsche stays in black despite further GBP 1.8bn

Deutsche Bank has written off a further EUR 2.3bn (GBP 1.8bn) to take its total credit crunch bill to more than GBP 5bn – one of the largest reported by any European bank.

Germany’s biggest bank was forced to admit to further losses caused by investments in mortgage-backed securities, commercial property loans and the monoline insurers that support bond issuers.

The write-downs drove its second-quarter earnings down to EUR 642m compared with EUR 1.8bn in the same period last year. There was some relief that the bank had managed to stay in the black after reporting a first-quarter loss.

This helped prompt speculation that Deutsche may be interested in bidding for Postbank, the retail banking division of Deutsche Post.

The losses also prompted discussions about whether Deutsche is too reliant on investment banking, which contributes about a third of its pre-tax profit.

The pain felt by Deutsche from the seizing up of financial markets has not been as great as that reported by UBS, which has recorded about GBP 19bn of write-downs. Wall Street firms have been hit harder. Merrill Lynch is trying to shore up a balance sheet dented by GBP 26bn of write-downs.

Deutsche may manage to avoid raising capital as the bank’s tier one capital ratio, used to measures its financial strength, is 9.3 pct. Its target is 8-9 pct.

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Korea Express sale attracts 10 bidders: court

Korea Express has attracted 10 bidders, an official at a South Korean court said on last Tuesday 11th December, in a sale that analysts say could fetch up to USD 2.2 billion.

The deal would be the biggest acquisition in the country’s transportation sector and also provide hefty fees for investment banks advising a list of major South Korean companies interested in bidding.

The official said the creditors of the logistics firm will allow the preliminary bidders to conduct due diligence from December 17 to January 4 before submitting a formal bid on January 11.

Korea Express declined to comment.

Local news provider MoneyToday said the bidders include transport groups such as Kumho Asiana, Hanjin Group HANJ.UL, the parent of Korean Air, Hyundai Heavy Industries and STX Corp, as well as retail giant CJ Corp.

Korea Express, in which Goldman Sachs is the biggest shareholder, plans to sell a 50 percent stake plus one share to a buyer by issuing new shares.

Korea Express picked in October a consortium consisting of Merrill Lynch and Samil PricewaterhouseCoopers to manage the sale.

The logistics firm has been placed under court receivership since 2000 due to its debt guarantees for bankrupt former affiliate Dong Ah Construction.

Shares in Korea Express rose 2.0 percent to 102,000 won, compared with a 0.98 percent rise in the broader market .

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China Postal eyed for next big bank IPO

Investment bankers hunting for the newest big game in China’s financial services market are circling the reborn China Postal Savings Bank, the mainland’s fifth-largest lender by deposits.

China Postal was relaunched as a retail-focused bank in March with 1.6 trillion yuan (USD 208 billion) in deposits. Its predecessor, the postal savings bureau, could not lend and most of those deposits wound up with the central bank.
Armed with a new mandate and a plan to restructure its 36,000-branch network, China Postal has been talking to investment bankers about a 2008 IPO in the range of USD 2-USD 3 billion, sources have said.

Some bankers call that kind of talk premature, saying China Postal is more likely to hire advisers on a further restructuring as a precursor to an IPO, perhaps also bringing on strategic investors.

Bankers agreed that any deal would not happen until 2008, at the earliest.
But the draw of the public market is compelling: CITIC Bank Corp., China’s No.7 lender, raised USD 6 billion in a simultaneous Hong Kong-Shanghai offering last month.

Its domestic A shares are up 75 percent from the 5.80 yuan offer price, while its Hong Kong H shares are up 8 percent.

The disparity in performance prompted one foreign investor to call one of the underwriters and jokingly request that his allocation be made in A shares rather than H shares.

China Postal would also be keen on a simultaneous listing, one source said. Such listings are becoming more popular now that two have been achieved, and Beijing is keen to develop the mainland capital markets.

“When it does happen, it’s going to be huge,” said one banker who has spoken with China Postal management about a deal. “But this is going to be a long gestation period.”

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