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Apr 27, 2009

52 Banks in America failed in last one year

According to the data by FDIC(Federal Deposit Insurance Corporation) 52 banks have failed in the last one year, one failure per week on an average. This, once again, highlights the gravity of the crisis, and its impact on the financial institutions across the United States.

Month
No. of banks failure
Apr-09 8
Mar-09 5
Feb-09 10
Jan-09 6
Dec-08 3
Nov-08 5
Oct-08 4
Sep-08 3
Aug-08 3
Jul-08 3
May-08 2
Total since May 2008
52

These banks combined had an asset size of 388 billion USD. The failure had cost about 2 billion dollars to the FDIC Deposit Insurance Fund.

Washington Mutual was the biggest of them all with 307 billion dollar assets in its balance sheet. Before the failure it was the sixth largest bank in US. The panic started in Washington Mutual when about 16 billion dollars were withdrawn from the bank during 10 day bank-run. This was about 9% of the size of the total deposits in the bank. However, the pain was avoided by the sale of the bank to JP Morgan Chase (JPMC). This failure was the largest in the history of America.

The second biggest bank to fail during the year was IndyMac Bank with 32 billion dollars of assets. This was the fourth largest bank failure in American history. The failure cost FDIC about 9 billion USD.

About FDIC
"The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails."


Apr 25, 2009

Fed Stress test for 19 biggest US Financial Institutions

US Federal Reserve is putting the 19 biggest US financial institutions under stress test to check their stability if the economic situation worsens. Those under the stress test along with their P/E and market capitalization as on 24 April 2009 are listed below:

Name of Finanical Institution P/E Market Cap (Billion USD) Code
J.P. Morgan Chase & Co. 58.6 125.4 JPM
Wells Fargo & Co. 7.8 90.8 WFC
Goldman Sachs Group 27.1 61.0 GS
Bank of America Corp. 12.0 58.2 BAC
US Bancorp 16.5 33.4 USB
Bank of NY Mellon Corp. 27.4 30.9 BN
American Express Co. 13.3 29.3 AXP
MetLife 6.4 24.0 MET
Morgan Stanley - 23.8 MS
PNC Financial Services Group 18.0 19.2 PNC
Citigroup - 17.6 C
State Street Corp. 9.4 16.1 STT
BB&T Corp. 9.7 13.1 BBT
Capital One Financial Corp. - 7.5 COF
SunTrust Banks Inc. 18.3 5.7 STI
Regions Financial Corp. - 3.9 RF
Keycorp - 3.5 KEY
Fifth Third Bancorp - 2.1 FITB
GMAC LLC - -

The stress test which is aimed at assessing the capital adequacy of the major financial institutions under various scenarios comes under the SCAP (The Supervisory Capital Assessment Program). The banks that perform poorly under this stress test will be asked to increase their capital and will come under pressure from the investors. Fed has also released a 21 page document stating the methodology which it will use for the stress testing these institutions. The results of the test will start coming after May 4, 2009. One reason behind Fed stating the methodology 10 days in advance is to prevent any shock to the investors. The press release about the methodology was done about an hour after the closing of the US market for the weekend, thus giving analysts time to analyse and digest the information.

Resources:
The Fed's press release
The Fed's stress testing methodology

Apr 21, 2009

World's top 6 safest banks are still the safest!!

The financial crisis has taken a toll on major banks leaving many top notch banks like America's Citibank, UK's Barclays etc. in never before situation. However, the top 6 safest bank as published by Global Finance Magazine has remained the same during this crisis. Have a look at the top 6 safest banks their ranks in the period 2004-2009.

2009 2008 2006 2004 Bank Country
1
4 3
KfW Group


Germany

2

1

1

1

Caisse des Dépôts et Consignations

France

3

2

2

5

Bank Nederlandse Gemeenten

Netherlands

4

3

5

6

Landwirtschaftliche Rentenbank

Germany

5

4

3

7

Rabobank

Netherlands

6

5

6

2

Landeskreditbank Baden-Wuerttemberg - Foerderbank Germany

Global Finance ranks the banks on the basis of their credit rating as provided by the rating agencies Fitch, Moody's, and S&P. These banks have the highest credit rating of AAA from Fitch & S&P, and Aaa from Moody's. The rating corresponds to the maximum credit worthiness and has lowest risk of default.

The size of the balance sheet of these safest banks is however not of the order of the biggest banks like RBS, Deutsche bank, etc.
Bank Total Assets
billion USD
KfW Group 521
Caisse des Dépôts et Consignations 289
Bank Nederlandse Gemeenten 136
Landwirtschaftliche Rentenbank 131
Rabobank 840
Landeskreditbank Baden-Wuerttemberg - Foerderbank 87

A comparison with the biggest banks:
Bank Total Assets
billion USD
Royal Bank of Scotland Group 3,807
Deutsche Bank Group 2,974
BNP Paribas 2,494
Barclays 2,459
HSBC 2,354

The asset data is as on Dec 31, 2007.
Source: Global Finance

Apr 20, 2009

Despite decline in oil prices Exxon Mobil replaces Wal-Mart as biggest company in 2008

The Fortune 500 list of America's largest corporates is out and there are few changes in the top 10 ranks with the top most rank now occupied by Exxon Mobil. Bank of America & Citigroup are out of top ten list with Hewlett-Packard and Valero Energy making place in the top 10. The Fortune rankings are based on revenues of companies in the year 2008.

2008 Rank 2009 Rank Company Revenues
billion $
1 2 Wal-Mart Stores 406
3 3 Chevron 263
5 4 ConocoPhillips 231
6 5 General Electric 183
4 6 General Motors 149
7 7 Ford Motor 146
10 8 AT&T 124
14 9 Hewlett-Packard 118
16 10 Valero Energy 118
Exxon Mobil made a huge leap forward to make its narrow trail behind Wal-Mart in 2007 a big lead ahead of it in 2008. Its revenues increased by 19%, remarkable for a company of such size and sharp decline in crude oil prices. While Wal-Mart can't be blamed for losing its position as its revenues increased at 7% when the economy halted. Amongst the new top 10 list only the two Auto-majors GM and Ford showed declining revenues.


Company Revenues (bil $)
1 Exxon Mobil 443 373 19%
2 Wal-Mart Stores 406 379 7%
3 Chevron 263 211 25%
4 ConocoPhillips 231 179 29%
5 General Electric 183 177 4%
6 General Motors 149 182 -18%
7 Ford Motor 146 172 -15%
8 AT&T 124 119 4%
9 Hewlett-Packard 118 104 13%
10 Valero Energy 118 97 22%

The profit figures give a better indication of the state of the economy with 4 out of 6 companies suffering losses. While GM and Ford continued their losses from last year, the other two loss reporting firms were impacted by the slowdown in this year only.
Rank Company Profits (bil $)
1 Exxon Mobil 45 41 11%
2 Wal-Mart Stores 13 13 5%
3 Chevron 24 19 28%
4 ConocoPhillips -17 12 -243%
5 General Electric 17 22 -22%
6 General Motors -31 -39 -
7 Ford Motor -15 -3 -
8 AT&T 13 12 8%
9 Hewlett-Packard 8 7 15%
10 Valero Energy -1 5 -122%

For the full list of Fortune 500 companies, please visit Fortune 500.

Head of the top Banks in India



























































Public Sector Banks

State Bank of India

Shri O.P. Bhatt

Chairman

Punjab National Bank

Dr. K.C. Chakrabarty

Chairman and Managing Director

Bank of India

Shri T.S. Narayanasami

Chairman and Managing Director

Bank of Baroda

Shri. M. D. Mallya

Chairman & Managing Director

Union Bank of India

Shri M.V.Nair

Chairman & Managing Director

Canara Bank

SRI. A. C. Mahajan

Chairman & Managing Director

Indian Bank

Shri M S Sundara Rajan

Chairman & Managing Director



Private Sector Banks

ICICI Bank

Ms Chanda Kochhar

Managing Director & CEO

(effective May 1, 2009)

HDFC

Mr. Jagdish Capoor

Chairman




Mr. Aditya Puri

MD





Axis Bank

Ms. Shikha Sharma

CEO

Kotak Mahindra Bank

Mr. Uday Kotak

Executive Vice Chairman & Managing Director


Apr 17, 2009

Tech Mahindra's acquisition of Satyam could change the Indian IT league

Continuation from previous post on Tech Mahindra's bid for Satyam
Currently, the top 10 players in the Indian IT industry (by revenues) are:


Net Sales Profit


Rs. Crore Rs. Crore
1 TCS 18534 4,509
2 Wipro 17493 3,063
3 Infosys 15648 4,470
4 Satyam* 8137 1,716
5 HCL Tech. 3769 1,102
6 Tech Mahindra 3605 326
7 Oracle Fin. (iFlex) 1793 411
8 Mphasis 1452 265
9 Financial Tech. 1254 961
10 Patni Computers 1172 388
* as per the latest audited data which may be subject to change after the revised audit by new auditors.















The top 3 players were at a much higher level compared to others. The combined revenues of Tech Mahindra and Satyam will reduce the gap and the combined entity could pose a serious threat to the top 3 in the medium to long run. However, in the short run there are strong challenges for Tech Mahindra. Retaining customers of Satyam is a crucial factor and Tech Mahindra will be doing every bit to save each customer. Besides other M&A related issues, managing diverse domain businesses will be tough task for senior management.
If managed well the synergies between the two companies can pose serious threat to TCS, Infosys and Wipro. Tech Mahindra's promoter British Telecom (BT) has businesses with all the top 3 companies and its business with Infosys is 6% of Infosys' total revenues. With Satyam in Tech Mahindra's kitty it could as well provided those services to BT which Infosys, TCS and WIpro are providing currently. Moreover its automotive IT business can be positively impacted because of Mahindra group's automobile business.

Apr 16, 2009

Top 10 stainless steel producers in world

The top 10 producers of Stainless steel in the world as in 2008 were (not in order):

ArcelorMittal The Netherlands
Acerinox Spain
ThyssenKrupp Stainless Germany
TISCO China
POSCO South Korea
Outokumpu Finland
AK Steel USA
NSSC Japan
YUSCO Taiwan
INI Steel South Korea
Allegheny USA

The top six players by installed capacity in 2008 were:

SS Slab Capacity Million MTA*
ArcelorMittal 3.16
Acerinox 2.9
ThyssenKrupp Stainless 2.9
TISCO 2.6
POSCO 2.6
Outokumpu 2.55

*Million MTA - Million Metric Tonnes per Annum

Apr 14, 2009

A look at Tech Mahindra’s winning bid for Satyam Computers

Recently Tech Mahindra won the bidding auction for a majority stake in Satyam Computer Services Ltd. which has been seeking some rescue since it was hit by the country’s biggest accounting fraud. Tech Mahindra outbid the other two bidders: engineering giant Larsen & Toubro (L&T) and International distressed fund investor WL Ross and Co. While Tech Mahindra bid at Rs 58/share L&T and Ross were distantly behind at Rs 45.90 and Rs 20 /share respectively. The reason for such low bid by WL Ross & Co. is cited by many that it lost interest as its partner for the bidding Cognizant Technology Solutions withdrew from the bid. As the next bidder was at less than 90% of the highest bid value Tech Mahindra was easily declared the winner.

Tech Mahindra has to pay Rs 1756 crore ($351 million) for 31 % preferential allotment of new shares. Later it has to make open offer for further 20 % at Rs. 58 /shares. If the open offer does not get fully subscribed, Tech Mahindra will have the option of going for a second preferential issue and raise its stake to 51 % to become the majority shareholder. Overall it will be investing Rs 2880 crores to get the 51% stake. This deal values the fraud-hit Satyam Computers at about Rs 5,665 crore ($1.1 billion).

Tech Mahindra will require Rs 2880 crore to sail through this deal smoothly. Moreover it may have to immediately invest for operating expenses of Satyam which according to some analysts could go up to Rs 1000 crore. In its balance sheet Tech Mahindra has about Rs 700 crore in cash. It will be looking for debt financing for the rest of the acquisition value. This is likely to put stress on its balance sheet which as on Mar 2008 had total asset value of Rs 1323 crore.

About Tech Mahindra
“Tech Mahindra is a leading provider of solutions and services to the telecommunications industry, majority stake owned by Mahindra & Mahindra Limited, in partnership with British Telecommunications plc. With total revenues of Rs 37,66 crore in the year ended March 31, 2008, Tech Mahindra is India’s 6th largest software exporter, and serves telecom service providers, equipment manufacturers, software vendors and systems integrators. Tech Mahindra solutions enable clients to maximize returns on IT investment by achieving fast time to market reduced total cost of ownership and high customer satisfaction. Tech Mahindra achieves this through its domain and process expertise, distinctive IT skills, research and development, proven innovative delivery models and approach to off shoring.”

About Satyam
“Satyam (NYSE: SAY) is a leading global business and information technology services company, delivering consulting, systems integration, and outsourcing solutions to clients in 20* industries and more than 65* countries.”
* Figures as of September 30, 2008


Before Satyam's scandal was disclosed in January, Satyam was ranked India's fourth-largest outsourcing firm and Tech Mahindra was sixth-largest.