The year 2008 saw a slew of discount M & A (mergers and acquisitions) deals, most of them below book value. Among these were Wachovia and National City. Capital One Financial bought Chevy Chase Bank at .64 times book value.
If you look at the financial landscape for 2009, some names are already popping up for distressed sales, such as Citizens Republic Bancorp (NASDAQ:CRBC), Huntington Bancorp (NASDAQ:HBAN), Midwest South Financial (NASDAQ:TSFG) and Colonial Banc Group (NYSE:CNB).
It seems that we will see a continuation of the purging of bad bank assets in 2009. Banks use a practice of good/bad assets and move their worst assets to a separate company that absorbs the assets' future losses. Then the original bank emerges as a healthier, deleveraged institution.
All of this is taking place under the radar and it is difficult for investors and the public to know which banks are using this practice. When deleveraging becomes unmanageable, the federal government may need to step in and absorb a bank losses to avoid the bank's failure.
Do you believe the financials are a place to invest in 2009?
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Reader Comments (Page 1 of 1)
1-05-2009 @ 3:53PM
BHarrison said...
And the defrauding of the American people continues . . . .
These corporations should have to either "absorb" the losses or
simply file for bankruptcy. That is the Free Market Economy "natural
resolution" of these types of management and economics.
We are well past the shock of major firms going under, and runs on
banks. The natural market should determine the outcome of these
matters.
All that is being done is to "bailout" irresponsible and/or corrupt
corporations (and their managment personnel who orchestrated and
perpetuated the felonious crimes of pyramid and Ponzi schemes and
other forms of BLATANT FRAUD. They are merely passing the losses to
the tax payers . . . and there is NO JUSTIFICATION for doing that at
this point.
The CRIMINAL, unethical CEOs and upper managment are being "bailed
out"; and the taxpayers and other citizens are being fleeced.
It's time to put a stop to all of this; and time to start indicting
and prosecuting CEOs and other "managment personnel" who are
responsible for these blatant FRAUDS, none of which "happened in a
vaccum" . . . they knew damn well what they were doing.
1-05-2009 @ 4:50PM
bill said...
I hope a lot of readers are listening to Harrison and writing their congressman and senators telling them no more bail outs for big business. I write mine everyday telling them my next vote will be determined by your vote on future bailouts. Time to hold our congressmen and senators responsible for their actions