Risk Rap

Rapping About a World at Risk

Private Equity: Source of Strength

It was a big day for banking news yesterday.

Bank of International Settlements issued its 78th annual report.

A quick read is a most sobering exercise. The world economy is at a tipping point. The credit market frenzy has lead to a major hangover for the global economy.  Unsustainability is the word that was prominently used and economic recovery drivers remain suspiciously absent from the world stage.

Speaking of banks SRZ issued a memorandum on private equity firm’s increased interest in acquiring bank assets. There are a number of regulatory issues concerning expanded investment of private equity firms in regulated banks; but the sector needs major capital infusion and a major shakeout and rationalization of the sector is inevitable.

With the disappearance of credit availability the sector is cursed with excess capacity. There’s blood in the water and private equity firms are starting to circle the regional and community banks looking for deals.

We post a lot about banks and the capital markets because we believe it represents one of the greatest risks to the economic security of our clients.

The banking industry and its role in the capital markets is undergoing a sea change.

I Want Money, by the Flying Lizards.

Risk: credit, market, sustainable business models, Basel 2, BIS, private equity, bank capitalization

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July 1, 2008 - Posted by | banking, Basel II, hedge funds, pop, private equity, regulatory | , , ,

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