Wall Street snubbed in European sovereign bond sales
US banks are losing the opportunity to earn fees on the roughly $500 billion in planned European debt offerings this year.
It looks like US banks are losing the opportunity to earn fees on the roughly $500 billion in planned European debt offerings this year. It probably shouldn’t come as a big surprise, given the less than savory details that emerged regarding Goldman’s relationship with Greece, and the series of black eyes the euro currency has been enduring as a result of sovereign debt-related instability.Skip to next paragraph
The Daily Reckoning
Addison is editorial director of The Daily Reckoning and executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post, as well as major network news programs.
Subscribe Today to the Monitor
According to the Guardian:
“For the first time in five years, no big US investment bank appears among the top nine sovereign bond bookrunners in Europe, according to Dealogic data compiled for the Guardian. Only Morgan Stanley ranks at number 10.
“Goldman Sachs doesn’t make the table. Goldman made it to number five last year and in 2006, and number eight in 2007, the data shows. JP Morgan was in the top ten last year and in 2007 and 2006 but doesn’t appear this year.
“‘Governments do not have the confidence that the excessive risk-taking culture of the big Wall Street banks has changed and they still cannot be trusted to put the stability of the financial system before profit,’ said Arlene McCarthy, vice chair of the European parliament’s economic and monetary affairs committee. ‘It is no surprise therefore that governments are reluctant to do business with banks that have failed to learn the lesson of the crisis. The banks need to acknowledge the mistakes that were made and behave in an ethical way to regain the trust and confidence of governments.’
“European sovereign bond league tables are now dominated by European banks such as Barclays Capital, Deutsche Bank, and Société Générale, the Dealogic table shows. Their business model is usually seen as more relationship-based, while US investment banks have traditionally been focused on immediate deal-making.”
Another important relatively “nationalistic” and pride-driven effort underway in the euro zone is the potential development of its own European Monetary Fund, based on the International Monetary Fund (IMF), but to be headquartered in Europe rather than in Washington, DC. It’s almost as if Europe wants to be in charge of its own destiny… go figure.
You can read more about both developments in the Guardian’s coverage of how Europe seems to have barred Wall Street banks from government bond sales.
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.