While Morgan Stanley has some problems of its own, these have not stopped its European equity analysts from busying themselves in search of solution to the trials of the European banking system.
Following yesterday's rescue of Dexia and a report in today's Financial Times that,
'European Union finance ministers are examining ways of co-ordinating recapitalisations of financial institutions,' Morgan Stanley's analysts have suggested three ways in which this might be done. They are as follows and mostly involve the ECB buying lots more potentially dubious debt from European banks.
1) Expand the ECB's Long Term Refinancing Option LTRO from 6 months to as much as 36 months
This will allow banks to refinance their existing debts through the ECB and will go a long way to solving their liquidity problems.
2) Re-open the ECB's covered bond programme, which closed last June
Under this programme, announced in 2009, the ECB agreed to directly purchase €60bn of covered bonds across the Euro area. Covered bonds are popular in continental Europe and seen as a, silver bullet for funding problems at European banks."
3) The creation of a temporary bank funding guarantee scheme similar to the US Troubled Assets Relief Programme
This would be most effective, say Morgan Stanley analysts, but it also looks least likely with "multiple calls on EFSF," which is looking a little inadequate already.
"Dexia is by no means alone in terms of being at risk here. There are plenty of other banks out there that have grown their assets way in excess of their deposit base..." (Bloomberg)
Dexia may be left as a bad bank. (Bloomberg)
Most banks have now marked down their Greek debt by 51% but SocGen and BNP Paribas have only marked it down 21%. (Bloomberg)
SocGen's own analysts yesterday recommended that clients buy protection against the debt of Barclays. (Telegraph)
Yesterday, it cost $563k a year to insure $10m of Morgan Stanley debt for five years. (Financial Times)
George Osborne has defeated plans to regulate over-the-counter (OTC) derivatives that would have given EU financial supervisors the power to decide who could trade in the City. (Telegraph)
Hedge fund administrator Globe Op is hiring in Dublin. (FinAlternatives)
UBS has made five senior commodity derivatives executives redundant. (Financial News)
If UBS insists on a Swiss CEO, there are almost no candidates. If it doesn't it could have John Thornton or John Thain. (Breaking Views)
If UBS sells its investment bank, it won't attract rich Asian entrepreneurs seeking corporate finance advice to its private bank. (Reuters)
How my firm screens resumes and cover letters. (Wall Street Oasis)
The streets are alive with Wall Street protestors, or not. (Tim Parkinson)
Someone allegedly wrote "We are the 1%" on the 8th floor windows of Goldman Sachs. (TwitPic)
Four in ten workers would rather see a colleague made redundant than take a pay cut themselves. (Telegraph)