Subscribe to this blog's feedIn the FT today, the story of a startling merger approach: Lloyd Blankfein apparently rang Vikram Pandit last month to trail his coat for a takeover.
[sources] added that the conversation was brief as Mr Pandit rejected the proposal at once.A deal would have been structured as a Citi takeover of Goldman. In spite of the slide in Citi’s shares, its market value around the time of Mr Blankfein’s call was $108bn, roughly double Goldman’s capitalisation...
If nothing else, it's an example of just how desperate things were getting before the US government announced TARP. But Goldman Sachs? The bank that came out best - or at any rate least worst - from the subprime fiasco, seeking to tie up with Citi and its eleven-figure writedowns? What exactly was Blankfein so worried about?
Elsewhere, PNC in the US has taken over National City Corp - with $7.7 billion of assistance from TARP. Funny, no one mentioned that "funding takeovers of wobbly banks" was one of the core purposes of TARP. The rationale escapes analysts:
Commenting on possible reasons for the sale, Citigroup analyst Keith Horowitz said "it is possible there was a change in management's outlook or a push from the government, though we have no confirmation of either scenario."
Or there's always "unthinking instinct" of course - PNC had that $7.7 billion burning a hole in its pocket...
And now that the bailout is doing so well for the banks, the insurers are getting in on the act. Seems only fair, given that AIG has burned through $90 billion already. General Motors is eager to be next in line - there's a merger it wants to complete with Chrysler, but it just needs $10 billion to help it through.
Why can't GM raise the money itself - by, say, securitising auto loans? Because the market's dried up thanks to the government bailout and the premiums would be astronomical.
Looks as though the US government is turning itself into not just a lender of last resort to banks, but an actual investment bank. What's next - a sovereign wealth fund?
Comments (1)
I can't believe Sarkozy has the audacity to admit he wants to create an SWF to gain politically-strategic stakes in companies -- something that not even the Middle-Eastern and Asian ones dare admit. (If it's even their real goal.)
Perhaps he would be better suited to the European renaissance, when mercantilism could be practised without shame.
Posted by Anon | October 31, 2008 2:47 AM
Posted on October 31, 2008 02:47