本文发表在 rolia.net 枫下论坛September 29, 2008, 9:03 am
Posted by Heidi N. Moore
The fall of Washington Mutual wasn’t a surprise to the government. Nor was it a surprise to J.P. Morgan.
Three weeks before J.P. Morgan bought WaMu’s deposits for $1.9 billion, officials at the Federal Deposit Insurance Corporation had called J.P. Morgan to say that the FDIC was carefully monitoring WaMu and that a seizure of its assets was likely. The FDIC said it would want to immediately auction off WaMu’s assets if a seizure was necessary, people familiar with the situation told Deal Journal.
J.P. Morgan was well-prepared, then, when the FDIC asked for bids on Tuesday, Sept. 23. On Wednesday night, the regulators told J.P. Morgan that the bank had won the bidding, one person close to the situation said. The Wall Street Journal reported the sale at around 7 p.m. on Thursday, and J.P. Morgan hurriedly called a conference call in two hours to discuss the sale.
But that was just the first step. J.P. Morgan had known for three weeks that if WaMu was seized, and J.P. Morgan won the assets, the big bank would want to raise enough capital to keep its Tier 1 capital at at least 8%. Tier 1 capital is the gauge of a bank’s health watched by regulators, and it measures whether a bank has sufficient capital to cushion future losses. The federal government requires a minimum Tier 1 ratio of 4%, and 8% is typically thought to be robust. J.P. Morgan’s plan was to gather $8 billion in one big capital-raising, which would put its Tier 1 ratio between 8% and 8.5%
It is not, however, easy to raise $8 billion of capital without revealing why. J.P. Morgan could not risk revealing anything about WaMu’s potential seizure, or face the FDIC’s wrath and a major market disruption. So the bank chose a strategy that has become increasingly popular in these times of crisis: “wall-crossing.”
Here’s how it worked. J.P. Morgan picked 10 major financial firms that could help the bank raise money. None were sovereign wealth funds or private equity firms, according to people familiar with the situation; all 10 were U.S. asset managers, and several were already among the list of the biggest J.P. Morgan shareholders. Some of the firms — who remain unnamed — also helped Goldman Sachs raise billions of dollars last week.
J.P. Morgan’s bankers called the 10 chosen firms and posed a question: the bankers were advising a U.S. bank that was contemplating a strategic acquisition of a retail bank, and a capital-raising could be connected. The bankers could not reveal their client until the bidding was done. Did the investors want to hear more? If they said yes, they would get details; if they said no, they would be left out in the cold on a deal that could potentially move the markets.
Nine of the 10 investors that J.P. Morgan invited said they were interested in hearing more. As soon as they agreed, they were asked to sign confidentiality agreements that would make them official J.P. Morgan insiders, which would mean that they could not trade in the bank’s stock. J.P. Morgan’s CEO, Jamie Dimon, along with CFO Mike Cavanagh and retail chief Charlie Scharf triple-teamed to speak with the investors in half-hour conference calls that extended throughout the day on Thursday. The investors were told that the U.S. bank in question was J.P. Morgan itself. Some of the investors independently guessed that the takeover candidate was WaMu, but none knew that a potential seizure of WaMu’s assets was in the works, nor did J.P. Morgan tell them.
By the end of the day, J.P. Morgan had raised $7 billion from the nine investors. By 9:15 p.m., when J.P. Morgan held its public conference call to announce the deal, all seven investors were taken off the “insiders” list and no longer had any access to material non-public information about the bank. J.P. Morgan also planned to raise another $1 billion in the capital markets on Friday by opening the offering to anyone who wanted to participate. Meanwhile, Dimon repeatedly touted the effort as an “offensive” one, painting the capital-raising as an effort to get ahead while other banks, he indicated, were just trying to keep up.
Between 7 a.m. and 9:30 a.m. on Friday, before the markets opened, J.P. Morgan pitched the offering to new investors, who clamored for enough shares to double the amount J.P. Morgan had expected to raise in the open market to $2 billion. A “greenshoe,” or overallotment, added another $1.5 billion. The bank had gathered $11.5 billion, enough to take its regulatory capital ratio very close to 9%, a full 100 basis points above what it had expected just a day before.
J.P. Morgan had sold its open-market shares at their Wednesday closing price of $40.50, a 6.8% discount to the Thursday close of $43.46. Investors expected a thick discount because the offering itself was so large. In addition, investors wanted the benefit of a lower price where they would not be paying for Thursday’s one-day rally in a volatile market.
In an internal memo, J.P. Morgan executives Steve Black and Bill Winters warned employees, “the dislocation and volatility in the markets are far from over.” Many investors, including J. Christopher Flowers and his old shop Goldman Sachs, are gearing up to bid for the masses of distressed bank assets that are expected to flood the markets in coming months.
Will J.P. Morgan be a buyer again?更多精彩文章及讨论，请光临枫下论坛 rolia.net
Posted by Heidi N. Moore
The fall of Washington Mutual wasn’t a surprise to the government. Nor was it a surprise to J.P. Morgan.
Three weeks before J.P. Morgan bought WaMu’s deposits for $1.9 billion, officials at the Federal Deposit Insurance Corporation had called J.P. Morgan to say that the FDIC was carefully monitoring WaMu and that a seizure of its assets was likely. The FDIC said it would want to immediately auction off WaMu’s assets if a seizure was necessary, people familiar with the situation told Deal Journal.
J.P. Morgan was well-prepared, then, when the FDIC asked for bids on Tuesday, Sept. 23. On Wednesday night, the regulators told J.P. Morgan that the bank had won the bidding, one person close to the situation said. The Wall Street Journal reported the sale at around 7 p.m. on Thursday, and J.P. Morgan hurriedly called a conference call in two hours to discuss the sale.
But that was just the first step. J.P. Morgan had known for three weeks that if WaMu was seized, and J.P. Morgan won the assets, the big bank would want to raise enough capital to keep its Tier 1 capital at at least 8%. Tier 1 capital is the gauge of a bank’s health watched by regulators, and it measures whether a bank has sufficient capital to cushion future losses. The federal government requires a minimum Tier 1 ratio of 4%, and 8% is typically thought to be robust. J.P. Morgan’s plan was to gather $8 billion in one big capital-raising, which would put its Tier 1 ratio between 8% and 8.5%
It is not, however, easy to raise $8 billion of capital without revealing why. J.P. Morgan could not risk revealing anything about WaMu’s potential seizure, or face the FDIC’s wrath and a major market disruption. So the bank chose a strategy that has become increasingly popular in these times of crisis: “wall-crossing.”
Here’s how it worked. J.P. Morgan picked 10 major financial firms that could help the bank raise money. None were sovereign wealth funds or private equity firms, according to people familiar with the situation; all 10 were U.S. asset managers, and several were already among the list of the biggest J.P. Morgan shareholders. Some of the firms — who remain unnamed — also helped Goldman Sachs raise billions of dollars last week.
J.P. Morgan’s bankers called the 10 chosen firms and posed a question: the bankers were advising a U.S. bank that was contemplating a strategic acquisition of a retail bank, and a capital-raising could be connected. The bankers could not reveal their client until the bidding was done. Did the investors want to hear more? If they said yes, they would get details; if they said no, they would be left out in the cold on a deal that could potentially move the markets.
Nine of the 10 investors that J.P. Morgan invited said they were interested in hearing more. As soon as they agreed, they were asked to sign confidentiality agreements that would make them official J.P. Morgan insiders, which would mean that they could not trade in the bank’s stock. J.P. Morgan’s CEO, Jamie Dimon, along with CFO Mike Cavanagh and retail chief Charlie Scharf triple-teamed to speak with the investors in half-hour conference calls that extended throughout the day on Thursday. The investors were told that the U.S. bank in question was J.P. Morgan itself. Some of the investors independently guessed that the takeover candidate was WaMu, but none knew that a potential seizure of WaMu’s assets was in the works, nor did J.P. Morgan tell them.
By the end of the day, J.P. Morgan had raised $7 billion from the nine investors. By 9:15 p.m., when J.P. Morgan held its public conference call to announce the deal, all seven investors were taken off the “insiders” list and no longer had any access to material non-public information about the bank. J.P. Morgan also planned to raise another $1 billion in the capital markets on Friday by opening the offering to anyone who wanted to participate. Meanwhile, Dimon repeatedly touted the effort as an “offensive” one, painting the capital-raising as an effort to get ahead while other banks, he indicated, were just trying to keep up.
Between 7 a.m. and 9:30 a.m. on Friday, before the markets opened, J.P. Morgan pitched the offering to new investors, who clamored for enough shares to double the amount J.P. Morgan had expected to raise in the open market to $2 billion. A “greenshoe,” or overallotment, added another $1.5 billion. The bank had gathered $11.5 billion, enough to take its regulatory capital ratio very close to 9%, a full 100 basis points above what it had expected just a day before.
J.P. Morgan had sold its open-market shares at their Wednesday closing price of $40.50, a 6.8% discount to the Thursday close of $43.46. Investors expected a thick discount because the offering itself was so large. In addition, investors wanted the benefit of a lower price where they would not be paying for Thursday’s one-day rally in a volatile market.
In an internal memo, J.P. Morgan executives Steve Black and Bill Winters warned employees, “the dislocation and volatility in the markets are far from over.” Many investors, including J. Christopher Flowers and his old shop Goldman Sachs, are gearing up to bid for the masses of distressed bank assets that are expected to flood the markets in coming months.
Will J.P. Morgan be a buyer again?更多精彩文章及讨论，请光临枫下论坛 rolia.net