Analyst Says Morgan Stanley May Have Been Better Off Under Purcell
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Bove is predicting that Merrill will post a second-quarter loss of around $2.5bn, and will be forced to raise additional capital some time soon. As for Morgan Stanley, Bove has said that the firm probably had a tough June as 'the equity markets plunged. Plus the company has been in the midst of management turmoil in the past 12 months as it comes to get to grip with the issues in its risk management business'. Bove's research note continues: 'It is possible that had (former CEO Philip) Purcell remained in charge, Morgan Stanley would not have suffered a disastrous loss in the fourth-quarter last year; its earnings would be much higher at present; and the firm would be in (a) very strong position relative to its industry (peers), and not looking at a possible rating cut by Moody's'.
Bloomberg reports that, according to unnamed 'people from the financial industry', talks between Commerzbank and Allianz about a possible Commerzbank - Dresdner Bank merger are 'intensifying'. The 'critical audit phase' (the searching look over the numbers) is due to be completed this month. Then it's decision time.
The Wall Street Journal reports that Legg Mason came out late Monday and confirmed that it would provide up to $240m to support three under-pressure money market funds run by a subsidiary. The move will result in a $150m charge (before taxes) in the firm's second-quarter.
The newspaper also reports that staff at Wachovia better watch it. Acting CEO Lanty Smith is tightening the expenses belt, telling staff in a memo that 'the easiest capital that we can generate to support our business and the needs of our customers and clients is the expense dollars we save'.
Shares in Royal Bank of Scotland are coming under pressure Tuesday amid concerns of further asset writedowns and loan defaults. And there's a rumour flying round trading floors that Deutsche Bank may be about to issue a profit warning.
Finally, according to data compiled by Bloomberg, there were fewer IPOs in the first-half of 2008 than at any comparable period since 2003. According to the news agency, 333 companies went public in the period, down from 702 in the same period last year.
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