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“We’re keeping our eyes and ears open for the right situations.”
Timothy J. Sloan, chief financial officer of Wells Fargo
By NELSON D. SCHWARTZ
As Europe struggles with its debt crisis, American businesses and financial firms are swooping in amid the distress, making loans and snapping up assets owned by banks there — from the mortgage on a luxury hotel in Miami Beach to the tallest office building in Dublin.
The sales are being spurred on because European banks are scrambling to raise capital and shrink their balance sheets, often under orders from regulators. European financial institutions will unload up to $3 trillion in assets over the next 18 months, according to an estimate from Huw van Steenis, an analyst with Morgan Stanley.
This month a team of three bankers from the London office of the buyout giant Kohlberg Kravis Roberts headed to Greece to examine a promising private company that cannot get Greek banks to provide credit for future growth. The Blackstone Group agreed to buy from the German financial giant Commerzbank $300 million in real estate loans that are backed by properties, including the Mondrian South Beach hotel in Florida and four Sofitel hotels in Chicago, Miami, Minneapolis and San Francisco. Commerzbank is under pressure from regulators to raise 5.3 billion euros ($6.9 billion) in new capital by mid-2012.
Google too saw an opportunity. It bought the Montevetro building in Dublin this year from Ireland’s National Asset Management Agency, which acquired it after a huge bank rescue by the Irish government.
American financial firms are taking the plunge in a troubled Europe despite problems of their own. In the last quarter, JPMorgan Chase, which has taken hits to its earnings, increased its total loans to European borrowers.
At Kohlberg Kravis, Nathaniel M. Zilkha, co-head of the special situations group, is expanding his London team to eight, from two, and hoping to take advantage of opportunities in Europe.
“If no one is willing to turn over the rocks, that’s when you can make extraordinary investments,” Mr. Zilkha said. “The market dislocation in Greece is creating significant opportunities that wouldn’t be otherwise available.”
Last month, Wells Fargo bought the $3.3 billion in real estate loans, which are backed by commercial properties in the United States, that had been owned by the former Anglo Irish Bank. Wells has also bought $2.4 billion in loans and other assets from the private Bank of Ireland, which is trying to raise 10 billion euros ($13 billion) after a bailout by the European Union and the International Monetary Fund.
Even with opposition from consumer advocates, Capital One Financial could soon win final approval from the Federal Reserve for its $9 billion acquisition of ING Direct in the United States, one of the year’s biggest banking deals. Based in the Netherlands, ING has been forced by European authorities to divest ING Direct, an online bank, after ING required a $14 billion bailout following the 2008 financial crisis.
Experts expect these kinds of sales to jump as European banks race to meet the June deadline imposed by the European Banking Authority to raise more than 114 billion euros in fresh capital. Financial institutions also have to increase their Tier 1 capital ratio — the strictest yardstick of a bank’s ability to absorb financial blows — to 9 percent of assets.
Investing in Europe is not without risk; a big bet on European sovereign debt helped bring down MF Global, which went bankrupt on Oct. 31.
And even as they jump into the new deals, some American banks must deal with their own woes, especially the overhang of soured mortgages from the subprime bubble and bust in the United States. Bank of America, for example, has raised billions recently by selling stakes in banks in Brazil and China.
At the same time, even the strongest banks, like Wells Fargo and JPMorgan Chase, are suffering significant earnings hits from weak demand for loans, moribund capital markets and new regulations that cut deeply into lucrative fees on debit cards and other products.
Besides buying assets from struggling overseas rivals, Mr. Kotowski predicts that firms like JPMorgan Chase, Citigroup and Goldman Sachs will capture more trading business on Wall Street, especially as French banks like Société Générale and Crédit Agricole and other European institutions pull back.
French banks, in particular, have been heavily dependent on American money-market funds to obtain financing in dollars. With many of these funds now pulling back from those loans, French firms are shrinking. This month, Crédit Agricole said it would exit the commodity trading business, while Société Générale said it was getting out of physical gas and power trading in North America.
Inside his firm, Stephen A. Schwarzman, the chief executive of the Blackstone Group, recently cited the $3 trillion estimate of how much European banks will have to unload, and this summer he told investors that Europe was back on Blackstone’s radar after being absent for several years.
“As people become increasingly negative on the environment there, we think we are buying good companies at very good values,” he said.
Stephen Schwarzman, chief executive of the Blackstone Group
http://www.nytimes.com/2011/12/26/bu...ef=global-home
Tracking Europe's Debt Crisis
As Europe’s banks scramble to raise capital and shrink their balance sheets, American businesses and financial firms are swooping in, making loans and snapping up assets owned by European banks — from the mortgage on a luxury hotel in Miami Beach to the tallest office building in Dublin. Got an idea for an update? Send a suggestion by e-mail.
Timothy J. Sloan, chief financial officer of Wells Fargo
By NELSON D. SCHWARTZ
As Europe struggles with its debt crisis, American businesses and financial firms are swooping in amid the distress, making loans and snapping up assets owned by banks there — from the mortgage on a luxury hotel in Miami Beach to the tallest office building in Dublin.
The sales are being spurred on because European banks are scrambling to raise capital and shrink their balance sheets, often under orders from regulators. European financial institutions will unload up to $3 trillion in assets over the next 18 months, according to an estimate from Huw van Steenis, an analyst with Morgan Stanley.
This month a team of three bankers from the London office of the buyout giant Kohlberg Kravis Roberts headed to Greece to examine a promising private company that cannot get Greek banks to provide credit for future growth. The Blackstone Group agreed to buy from the German financial giant Commerzbank $300 million in real estate loans that are backed by properties, including the Mondrian South Beach hotel in Florida and four Sofitel hotels in Chicago, Miami, Minneapolis and San Francisco. Commerzbank is under pressure from regulators to raise 5.3 billion euros ($6.9 billion) in new capital by mid-2012.
Google too saw an opportunity. It bought the Montevetro building in Dublin this year from Ireland’s National Asset Management Agency, which acquired it after a huge bank rescue by the Irish government.
American financial firms are taking the plunge in a troubled Europe despite problems of their own. In the last quarter, JPMorgan Chase, which has taken hits to its earnings, increased its total loans to European borrowers.
At Kohlberg Kravis, Nathaniel M. Zilkha, co-head of the special situations group, is expanding his London team to eight, from two, and hoping to take advantage of opportunities in Europe.
“If no one is willing to turn over the rocks, that’s when you can make extraordinary investments,” Mr. Zilkha said. “The market dislocation in Greece is creating significant opportunities that wouldn’t be otherwise available.”
Last month, Wells Fargo bought the $3.3 billion in real estate loans, which are backed by commercial properties in the United States, that had been owned by the former Anglo Irish Bank. Wells has also bought $2.4 billion in loans and other assets from the private Bank of Ireland, which is trying to raise 10 billion euros ($13 billion) after a bailout by the European Union and the International Monetary Fund.
Even with opposition from consumer advocates, Capital One Financial could soon win final approval from the Federal Reserve for its $9 billion acquisition of ING Direct in the United States, one of the year’s biggest banking deals. Based in the Netherlands, ING has been forced by European authorities to divest ING Direct, an online bank, after ING required a $14 billion bailout following the 2008 financial crisis.
Experts expect these kinds of sales to jump as European banks race to meet the June deadline imposed by the European Banking Authority to raise more than 114 billion euros in fresh capital. Financial institutions also have to increase their Tier 1 capital ratio — the strictest yardstick of a bank’s ability to absorb financial blows — to 9 percent of assets.
Investing in Europe is not without risk; a big bet on European sovereign debt helped bring down MF Global, which went bankrupt on Oct. 31.
And even as they jump into the new deals, some American banks must deal with their own woes, especially the overhang of soured mortgages from the subprime bubble and bust in the United States. Bank of America, for example, has raised billions recently by selling stakes in banks in Brazil and China.
At the same time, even the strongest banks, like Wells Fargo and JPMorgan Chase, are suffering significant earnings hits from weak demand for loans, moribund capital markets and new regulations that cut deeply into lucrative fees on debit cards and other products.
Besides buying assets from struggling overseas rivals, Mr. Kotowski predicts that firms like JPMorgan Chase, Citigroup and Goldman Sachs will capture more trading business on Wall Street, especially as French banks like Société Générale and Crédit Agricole and other European institutions pull back.
French banks, in particular, have been heavily dependent on American money-market funds to obtain financing in dollars. With many of these funds now pulling back from those loans, French firms are shrinking. This month, Crédit Agricole said it would exit the commodity trading business, while Société Générale said it was getting out of physical gas and power trading in North America.
Inside his firm, Stephen A. Schwarzman, the chief executive of the Blackstone Group, recently cited the $3 trillion estimate of how much European banks will have to unload, and this summer he told investors that Europe was back on Blackstone’s radar after being absent for several years.
“As people become increasingly negative on the environment there, we think we are buying good companies at very good values,” he said.
Stephen Schwarzman, chief executive of the Blackstone Group
http://www.nytimes.com/2011/12/26/bu...ef=global-home
Tracking Europe's Debt Crisis
As Europe’s banks scramble to raise capital and shrink their balance sheets, American businesses and financial firms are swooping in, making loans and snapping up assets owned by European banks — from the mortgage on a luxury hotel in Miami Beach to the tallest office building in Dublin. Got an idea for an update? Send a suggestion by e-mail.
| Country | Latest developments | Coming events | Vital statistics | Recent articles |
|---|---|---|---|---|
France | Dec. 19: Yields on French 10-year bond rose slightly, to 3.15 percent. |
| Why Europe’s Downgrades Matter (Time, Dec. 19) | |
Germany | Dec. 25: Wolfgang Schäuble, Germany's finance minister, vowed to push ahead for a financial transaction tax in the European Union in 2012 despite objections from Britain. |
| Liberalism in Germany and the Crisis of the Free Democrats (Deutsche Welle, Dec. 16) | |
Greece | Dec. 20: Efforts at restructuring parts of Greece's public debt stalled. |
| Task Force Leader Cleans House in Greece (Spiegel, Dec. 21) | |
Italy | Dec. 22: Italy's Senate voted overwhelmingly to approve a $40 billion austerity and growth package aimed at eliminating the country's budget deficit by 2013 and stimulating the economy. |
| Senators in Italy Pass Plan for Budget (The New York Times, Dec. 23) | |
Portugal | Dec. 20: The International Monetary Fund said that Portugal might have difficulty meeting its budget goals because of the spread of the sovereign debt crisis. |
| I.M.F. Says Portugal Faces Risk From ‘Rising Stress’ in Europe (Bloomberg, Dec. 20) | |
Spain | Dec. 21: Mariano Rajoy was sworn in as prime minister and appointed a former investment banker as economics minister, tasked with improving Spain’s finances and troubled banking sector. |
| New Spanish Leader Asks Banker to Fix State Finances (The New York Times, Dec. 22) |
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