Rasputin

http://www.berkshirehathaway.com/news/apr1217.pdf After several months of discussions with representatives of the Federal Reserve, we have concluded that the commitments that would be required of us by the Federal Reserve to retain ownership of 10% or more of Wells Fargo’s outstanding common stock would materially restrict our commercial activity with Wells Fargo.

https://www.davispolk.com/files/Davis_Polk_-_Visual_Comparison_Chart_-_U.S._Supplementary_Leverage_Ratio_SLR_vs._Basel_III_Leverage_Ratio.pdf It seems that even though US GAAP allows netting, for the purpose of calculating the denominator for SLR, unless certain criterias are met, GSIBs must reverse the netting. Point 2 in that presentation (page 4 through 10) seem to indicate similar treatment of derivatives for total exposure calculation.

I just quickly looked at the 3 banks you mentioned, Deutsche Bank, Commerzbank, BNP Paribas. They are not adequately capitalized when I use US rules. Forget their CET1 ratios, their RWAs are fake. Look at their leverage ratios, all under 5% non stressed (4.1% for DB, 4.8% for Commerzbank, 4.5% for BNP Paribas). In the US, minimum is 5%, and 3% minimum stressed. Comparable US banks leverage ratio: WFC 7.7%, JPM 6.4%, BAC 6.77%, C 6.68% Min stressed leverage ratio from 2018 CCAR results (after dividend and share repurchase): WFC 4.5%, JPM 3.2%, BAC 3.6%, C 3.4%

BAC under Brian Moynihan. Biggest short term profit hit decision they took was quitting correspondent mortgage lending. Cost them roughly $2 Billion per year in mortgage banking income.

I put around 1% into DPS around $118.50 too because I think at that price we're paying close to JAB+BDT purchase cost Here is how I think about it: JAB+BDT paid $9 Billion in cash plus Keurig, a business with $1.07 B run rate EBIT to get 1.218 B shares of the combined company. Let's say Keurig is worth 10X EBIT or $10.7 B, subtract $3.3 B of debt, Keurig's equity is worth $7.4 B. So JAB+BDT paid $9 B in cash plus $7.4 B in Keurig equity to acquire 1.218 B shares of DPS+Keurig or $13.5 per share. At $118.50, with $103.75 cash pay out, I paid $14.75 per share or about 9% premium to JAB-BDT's cost. 2018 PF EPS (ex restructuring costs) will be around $1.05 growing to $1.27 (only taking into account cost saves) by 2020. I think it's a reasonable price to pay for this type of business plus the chance to partner with JAB and BDT.

I highly recommend this website/forum https://www.themattressunderground.com/

Big picture, I think, is negative rates causing banks with thin Tier 1 capital layer to lose money, thereby triggering further regulatory capital requirements. At the same time, from 2014 onwards, they almost all have begun financing their T1 capital requirements with CoCo bond issues. Those bonds are a fucking nightmare. They are accepted as T1 capital because when there is too little T1 capital ("trigger event") the bonds are either written off completely or automatically converted into common shares (this depends on the features of the single issue; most are converted). The thing is, the ones that will be converted give bond holders a huge incentive to short the respective stock. This is a known problem called "the death spiral" (see reverse convertibles in the 1990s). But even the CoCos that are not converted are in danger of being written-off completely when it becomes more clear that the trigger event will actually happen. This is all happening right now. Yields on CoCos just exploded. Consequently, for the next few years there is no chance in hell that banks will be able to sell additional CoCos to prop-up their Tier 1 capital. The only option remaining is therefore the issuance of new equity. Well, good luck with that! It wouldn't be that bad were it not for the fact that capital markets are closing for those banks exactly at the moment when they need them the most (which was completely foreseeable at the point when the CoCos where "invented", s. this FT article from 2009 (!) where one guy therefore calls them "equity time bombs"). Add to this that market participants know that tangible book values of the European banks are phony. The balance sheets are loaded with bad assets that have never been written off during the "last" financial crisis. Nearly all the Europen banks need to be recapitalized and you can kick the can down the road only for so long. Then, have a look at DBs derivative book (mostly obscure OTC derivatives) which is the largest or second largest in the world with a nominal amount close to world GDP. They say it's mostly "netted-off" but this is only true as long as no counterparty's failing. Take all this together and you may see why I don't want to own any of the European banks. I'm worried that, in the event of a systemic crisis, European banks are too big to be rescued by their own countries since their books are several times GDP in a lot of cases. This is completely different from the US financial crisis and I think it's the reason why they haven't been recapitalized so far. It is very comparable to Japan from the 1990s onwards, though. Hi ni-co, why do negative rates cause banks with thin tier 1 capital to lose money? do you expect this to continue or can those banks adjust their cost base? Since the world has our play book on how to handle systemic banking crisis, they can just follow it, even prevent it from happening (they can prevent a lehman brother failure). Their sovereign debts are in such high demand that they can easily recap their banks, wipe out shareholders, wipe out junior bond holders, temporarily guarantee everything, new bond issuance, etc. They can also temporarily ban short selling on financial stocks (we did this).

yeah i think they invested $30.5 million for 1.015 million shares. Book value was CAD 68 million as of 9/30/2015. There is about 23.5 million Taurx shares outstanding after latest round of financing. Latest round of financing was at $60 per share.

News about TauRX. Next year will be interesting. If that $15 billion valuation hold, Dundee will make 10 times their investment. http://www.wsj.com/articles/singapore-developer-of-alzheimers-drug-plans-u-s-ipo-1451543494

Thanks for the preferred shares info. I have been looking into Dundee mainly because my relative invested in TauRx (methylene blue for Alzheimer), one of Dundee's investment. I think a lot of the NAVs are zeroes (o&g reserves in Chad seriously?), and it's a collection of crappy asset (Dundee securities results vs Merrill lol) so I haven't pulled the trigger. I get about $5.5 in NAV valuing their publicly traded securities + Dundee securities and 360 real estate at book value minus their corporate and dundee energy debt, zeroing everything else. However the preferred look very interesting, I bought some series 3 shares today.