Geoff Cutmore - Morning Thoughts

Who Would Buy a European bank?

Geoff Cutmore

To answer the headline: James Bevan would. Our guest host Monday morning said yep, he would buy. But he could only think of one: SocGen. He described the French bank as an attractive opportunity in an unloved sector. What about the rest?

There is still a problem with the financials that has not been resolved yet: what are these companies really worth? UBS hasn't done the sector any favors with its appalling earnings update. In fact, so unpleasant was the fallout that Credit Suisse rushed out an update early to let the market know it isn't laboring under the same losses.

Interestingly, it came close enough behind the UBS announcement that it must have been prepared some days in advance. For once, the PR flacks behind that particular chess move should get some credit.

We have had to wait sometime for this news flow from UBS, and market reax suggests there was some headline shock. Again pointing up the question: what else is out there that we don't know about?

My suggestion to the bankers is that they go in for some "kitchen sinking." As in, if in doubt, throw the kitchen sink at it. The sooner the uncertainty is gone the sooner we can refocus on the real question of what the financials are truly worth.

By the way, a viewer got in touch about my last blog on Germany and made the point that it is now easier to get a divorce in Germany than it is to lay off a worker.  Now I don't know whether that is true, but it has a ring of authenticity about it.

Feedback welcome - here.