Fw: Alliance Bernstein perspective on recent financial turmoil
Bianca Mardikoesno
From: Eduard Goenawan <eduard...@gmail.com>
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Sent: Tuesday, October 7, 2008 5:33:01 PM
Subject: Alliance Bernstein perspective on recent financial turmoil
Dear All,
The attached brief bulletin issued overnight by the global CEO of AllianceBernstein is certainly worth reading because he quickly strips out the emotion to recap on corporate fundamentals.
Key points include:
- In aggregate, corporate debt levels outside of the financial sector are historically low, meaning they are better positioned to withstand difficulty relative to previous economic contractions.
- Consolidation amongst financials can deliver improved market share and higher profit potential for the buyer
- Adjustments to deal with the toxic debt in financial institutions are well advanced, and many of the institutions that are vulnerable on account of that debt have already taken the hit.
In addition to the Bernstein bulletin, I've attached a couple of tables that make the points in relation to the financial sector more concrete.
The first of these lists 16 of the largest financial institutions and shows that 10 of these actually managed to modestly increase their assets during the exceptionally challenging period since September 2007 to mid 2008. Of the six that posted a decline in assets, two have effectively been removed from the system while Morgan Stanley has recently been accorded bank status.
The second table underscores the third point above, namely that the peak in write-downs certainly appears to have passed and we are now well into the more positive capital re-building phase. I recommend printing this out and running through it line by line. The losses are most heavily clustered in Q4 2007 and Q1 2008, with some exceptions. When you see the exceptions who posted larger losses
in Q2 and Q3 this year, it's notable that most of them have subsequently been 'dealt with' through takeover (Wachovia, Merrill Lynch, Washington Mutual), while Lehman's is scouting for a buyer.
Kind regards,
Eduard Goenawan