If you work at a European bank and are holding a lot of stock from deferred bonuses past, then this should come as good news: that stock could rise massively in value.
According to Dirk Hoffman Becking of Bernstein Research (he who came up with the depressing analysis of the potential outcome of a disorderly Greek default), yesterday's European debt deal should prove incredibly good news for European bank stocks. He's predicting 76% upside for SocGen and Credit Suisse, 74% upside for UBS, and 43% and 48% upside for Barclays and Deutsche respectively.
Hoffman Becking bases these cheering predictions on the fact that European bank stocks have been falsely depressed by fears of a disorderly default, which he says now appears to have been taken off the table.
Much as yesterday's deal looks like a prolongation of the existing strategy, Hoffman-Becking argues that it isn't because:
"...buried within the text is the commitment by the European leaders to swap the private sector bonds into 15 and 30 year bonds where the principal is almost completely collateralised. That shifts the risk of a write-down of the principal to the EFSF. We believe this would remove the risk of a systemic meltdown in the system and stop the contagion into Italy and Spain.
Despite suggestions that EFSF (European Financial Stability Fund) is nowhere near big enough, Hoffman-Becking could possibly be right: bank shares are up in Europe today.
Wherein I attempt to explain the Greek default in English. (Reuters)
The European Central Bank may be able to accept Greek collateral in the event of a default because euro-area states have agreed to provide guarantees. (Bloomberg)
Julius Baer suffers the effects of the strong Swiss Franc. (Bloomberg)
The bank tax was dropped because it would have taken too long to raise the funds. (Financial Times)
A very senior person has now left Brevan Howard. (Financial Times)
Morgan Stanley called analysts into a weird meeting with Kenneth deRegt to gloat about its fixed income success. (Fox Business)
James Gorman spends Morgan Stanley conference call lauding 'Kenny.' (Seeking Alpha)
One JP Morgan Chase boss regularly lends his number two his Porsche for the weekend so the junior can impress at social occasions. (CityAm)
Students still want to work for Goldman Sachs even though they think it encourages deep groupthink. (Bloomberg)
"I worked 85 hours last week!" said one Goldman Sachs summer analyst, a college senior who spoke on the condition of anonymity because she was not allowed to speak to the media. (DealBook)