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The Wall Street investment bank Lehman Brothers is this weekend locked in talks with a group of foreign government-backed investment funds in an effort to secure billions of dollars in new equity capital.
The Sunday Telegraph has learned that Lehman has intensified talks in recent days with Korea Development Bank, the South Korean government-backed lender, about a capital injection of as much as $6bn (£3.3bn). KDB has drafted in bankers from the heavyweight advisory boutique Perella Weinberg to provide counsel on the talks, which could be concluded this week.
The acceleration of the negotiations, which Lehman wants to have wrapped up before it reports third-quarter earnings in mid-September, underlines the urgency with which one of the US banking industry's most venerable names is seeking capital.
If the talks with the Koreans fall through, Lehman is lining up alternative investment from other sources, including Citic Securities, a Chinese brokerage which was on the verge of investing in Bear Stearns before its implosion earlier this year, which resulted in a cut-price takeover by JP Morgan, another Wall Street banking group.
More on banking Lehman is also holding talks with a number of sovereign funds from the Middle East, which have been invited to participate in a capital-raising. These are understood to include investors from Abu Dhabi and Qatar.
Under the structures being discussed by Lehman executives, including Richard Fuld, the bank's chairman and chief executive, KDB could buy up to 25 per cent of Lehman, which has a market value of just $11.2bn following a slump in its share price this year.
And if you have visited this site before following the Lehman saga, you already know that YourMortgageOrYourLife.com and at the Implode-O-Meter are the only sitesto have exclusive inside information as to where and when those layoffs would occur. Scooped ya WSJ and NYT!Anyway, we had speculated two weeks ago at that developments at Lehman were TBA anyday, and I offered a time-frame of sometime this last week. It's Saturday as of thispost, and I would expect Lehman to make an announcement sometime Tuesday.So enter the men in black suits with thick accents. They are not the first, nor will they bethe last to come looking to pick through the pieces of what was once the most powerfuleconomy in the world.
Better get used to it.
(P.S. - Best wishes to all of those threatened by hurricane Gustav.
Get safe, stay safe.)
Integrity Bank and Trust has reportedly Imploded. Only details so far state Regions Financial will either gain possession of the servicing rights to the Integrity portfolio, or possibly take possession of the portfolio entirely. Source: Faux Biz News
Integrity Bank, based in Georgia, became the 10th bank this year to be taken in to receivership by the FDIC. A small bank, with about $1 billion in managed assets, Integrity is the latest victim of the mortgage market meltdown and credit crisis after a series of aggressive bets on loans in the Atlanta market.
From Reuters:
U.S. regulators on Friday took over Integrity Bank, which became the 10th bank to fail this year as the economy struggles under the weight of falling home prices and the credit crisis.
The Federal Deposit Insurance Corp said Georgia regulators closed the Alpharetta-based bank, which had $1.1 billion in total assets and $974 million in total deposits as of June 30.
…
FDIC spokesman Andrew Gray said Integrity Bank pursued aggressive loan growth in the metropolitan Atlanta real estate market, especially in the construction loan area.
Falling real estate prices combined with inadequate risk management and poor lending practices led to significant loan losses and erosion of the bank’s capital, Gray said.
So the FDIC has determine if your bank is on the edgeissued a list of more than one-hundred troubled banks - but they won't tell you who they are? insurance
Not very Civil for Servants! Well then, I suppose I will try to point you in the right direction so you may answer some of the questions that will help you .
First, got to the Federal Reserve Bank of San Francisco website and read about their CAMELS Ratings - the system for determining the relative strengths and weaknesses of lending institutions.
The acronym "CAMEL" refers to the five components of a bank's condition that are assessed: Capital adequacy, Asset quality, Management, Earnings, and Liquidity. A sixth component, a bank's Sensitivity to market risk, was added in 1997; hence the acronym was changed to CAMELS. (Note that the bulk of the academic literature is based on pre-1997 data and is thus based on CAMEL ratings.) Ratings are assigned for each component in addition to the overall rating of a bank's financial condition. The ratings are assigned on a scale from 1 to 5. Banks with ratings of 1 or 2 are considered to present few, if any, supervisory concerns, while banks with ratings of 3, 4, or 5 present moderate to extreme degrees of supervisory concern.
All exam materials are highly confidential, including the CAMELS. A bank's CAMELS rating is directly known only by the bank's senior management and the appropriate supervisory staff. CAMELS ratings are never released by supervisory agencies, even on a lagged basis. While exam results are confidential, the public may infer such supervisory information on bank conditions based on subsequent bank actions or specific disclosures. Overall, the private supervisory information gathered during a bank exam is not disclosed to the public by supervisors, although studies show that it does filter into the financial markets.
Nice! I mean we are all adults here, right?. We all need information like this in order to make adult decisions, right? And there is this from the last place I look for info, Wiki:
CAMELS ratings in U.S. are intended to reflect the evaluation of regulators and supervisors about bank condition. These evaluations are not publicly released but only given to the bank managers. Banks pay deposit insurance premium to the FDIC based on their rating.
A 1 or 2 rating bank do not pay a premium since it is considered to be safe. This is ironic, given the fact that one-third of the 1037 banks that failed between 1984 and 1992 have had a 1 or 2 rating (deemed very safe) only two years prior to their failure.
Oh, that is why they won't tell us - they don't mean anything...
Second thing you can do, now that you are armed with some basic knowledge, is read Is My Bank Safe?. It has the link and how-to for checking your bank's health on-line.
Lastly, if this is not enough for you, I suggest this other WIKI article that goes more in-depth describing, Fractional-Reserve Banking, an interesting explanation of the system in general.