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Banking Crisis 2008: Repricing the bank take-over candidates

Posted April 3, 2008

"It’s time to re-approach bank takeovers in this market. Instead of betting on share prices to increase in anticipation of takeovers, it may now be time to go short on banking stocks as soon as the word buyout is mentioned." — J. Christoph Amberger

By J. Christoph Amberger TodaysFinancialNews.com

Baltimore – (TFN): The following was taken from this week’s 60-Second Buzz on TFN. Watch this video.

Welcome to TFN’s 60-Second Buzz. I’m J. Christoph Amberger. After trading for over $100 a share, investment bank Bear Stearns recently sold out to JPMorgan for the fire sale price of $2 a share — less than a bottle of water – less than the value of its New York headquarters.

Rather watch the financial video? Click here.

The deal could provide new leverage for the prospective buyers of other distressed banks. Why, for example, would anyone pay the current stock price of $4 for Countrywide Financial Corp. (NYSE: CFC), which Bank of America agreed to acquire for $4 billion. The other potential take-over target is SunTrust Banks Inc. (NYSE: STI). Priced currently at $54 a share, it would seem difficult to justify that price in the face of Bear Stearns’ $2 a share deal.

It’s time to re-approach bank takeovers in this market. Instead of betting on share prices to increase in anticipation of takeovers, it may now be time to go short on banking stocks as soon as the word buyout is mentioned. For TodaysFinancialNews.com, I’m J. Christoph Amberger.

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[tags]banking crisis,bank take-overs,JPMorgan,investment banking,Bear Sterns, J Christoph Amberger


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    RBI have directed banks to set up financial literacy and credit counselling centres (FLCCs). The central bank is also considering issuing guidelines to facilitate the setting up of FLCCs by banks for group and individual counselling. These are a part of the recommendations of RBI’s concept paper on FLCCs, which is open for public comments. It is also suggested that banks would have to share customer credit information with FLCCs.
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