Bankers should take these red flags into account when assessing corporate credit and vendor risk. No. 1 on the list: when a company's chairman and CEO are the same individual.
The strategy of purchasing troubled banks at depressed prices no longer works. The focus should now be on long-term partnerships based on operating improvements and growth.
Isn't the most important, pervasive reason why banks and bank stocks are not bought that no one can have confidence what rules banks will have to follow, and hence what they will earn or be worth, one year or five years from now?
In this interconnected world, your customer in Kansas City could be affected if its revenue sources depend on one or more customers with significant European exposure.
I remember ING Direct CEO Arkadi Kuhlmann explaining that he hired dancers and artists and other "creative" people. Will ING Direct be worth what Capitol One paid for it when it is run by bankers?
Emerging markets tend to have low penetration rates for banking services, which gives Western banks an opportunity to grow at a higher rate than is possible in their home markets.
Expansion, with its subpar returns, may make the kingdom bigger, but its citizen investors will be poorer as it traps capital in a hostile environment.
Acquisitions may or may not be immediately accretive to earnings. They may, however, improve long term viability. But gone are the days when some banks sold for three or four times their book value.
