Weil on Finance: European Bank Mergers
Good morning, View fans. Here’s a look at some of my breakfast reading today.
A novel approach to jawboning on European banks
European bank stocks, by and large, still trade for huge discounts to book value. In part, that’s because investors don’t trust their balance sheets. So here’s what seems like a pretty shameless attempt by a regulator/central banker to spur a rally in their stock prices: Start talking about an upcoming merger wave. Speaking in Dublin, European Central Bank Vice President Vitor Constancio said: “I would not be surprised if the [Single Supervisory Mechanism] would open a period of restructuring in the European banking sector, in particular through more mergers and acquisitions. M&A activity has been very weak in the euro area since the crisis -– from 2008 to 2012 the overall value of deals decreased fourfold to just 10 billion euros, with cross-border deals the most affected. Nevertheless, the weak profitability and excess capacity of the European banking sector suggests that efficiency gains could be achieved.”
The U.S. still has more banks than it needs
Ryan Tracy of the Wall Street Journal writes that “the number of banking institutions in the U.S. has dwindled to its lowest level since at least the Great Depression, as a sluggish economy, stubbornly low interest rates and heightened regulation take their toll on the sector.” The number is down to 6,891, according to the Federal Deposit Insurance Corp. And it probably will keep going down because it’s still too many.
Well, this would help explain why Steven Cohen wasn’t charged
One of the government’s key witnesses in the trial of an SAC Capital Advisors fund manager testified that Steven Cohen didn’t know the tips he received about Dell Inc. were obtained illegally. The witness who obtained the tips, former SAC analyst Jon Horvath, already has pleaded guilty to insider-trading charges. His testimony continues today.
Be happy, shop less
This personal-finance article by Ben Steverman of Bloomberg News came out before Thanksgiving, and it’s still worth a link, especially for anyone who is depressed and hasn’t finished shopping for the holidays: “New marketing research is shedding more light on what retailers have known for a long time: How we shop has as much to do with our mental state as with our material needs. People shop because they’re sad, and splurge because they’re feeling guilty or insecure. With retailers using every trick to get us in the mood to spend, shoppers unaware of their emotional vulnerabilities may find themselves regretting their holiday purchases and buried in debt.”
What in the world is fingerbreaking?
It’s break dancing with your fingers. And it’s hit the big time, sort of.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)