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News & Commentaries

News & Commentaries

Normal in Slow Motion
By Robert B. Albertson, Principal - While the past cycle may feel anything but similar to the past, if we compress the time scale since 2008, the progression of phases takes on a more familiar, if not comforting pattern.
Asset Manager Transaction Review – Deal Activity Slows, but Headline Transactions Lead the Way
Transaction activity in the asset manager sector in the first half of 2014 slipped behind last year’s strong pace, though a handful of large deals pushed overall deal value higher than in recent periods.
The Rising Tide - 2013 M&A Activity in the Asset Management Industry
The optimism shared by investors and managers alike coming into 2013 proved to be well-founded by the year’s end. The rising tide lifted all boats, as deal making, IPO activity, and follow-on equity offerings across the asset management industry all posted strong showings in 2013.
Tapering Everywhere
by Robert B. Albertson, Principal - While the supply of new Treasury debt is declining with the deficit, giving the Fed a helpful window to taper QE, foreign demand has already tapered more. The overall slack in demand must be taken up by domestic institutional and retail buying, which would require a sharp change in sentiment.
Collins Amendment Carve Out - Volcker Rule Relief for Investments in Bank TruPS CDOs
In response to industry pressure after the release of Volcker Rule requirements, U.S. regulatory agencies have offered an interim final rule, the Collins Amendment Carve Out, that would permit banking entities to retain investments in collateralized debt obligations (CDOs) consisting of Qualifying Trust Preferred Securities Collateral.
The Volcker Rule’s Impact on Regional and Community Banks
by Thomas W. Killian, Principal - The Volcker Rule restricts U.S. banks from investing in funds with collateral comprised of less than 100% loans that are not registered with the SEC and from engaging in hedging activities that do not hedge a specific identified risk. We examine the rule's impact and outline changes in bank investment and hedging strategies.
Another Housing Bubble
by Robert B. Albertson, Principal - Home prices have once again advanced considerably faster than incomes, and have broken out of their historical band. QE has undeniably kept mortgage rates below where they would normally be. Tapering or withdrawal of QE would almost certainly cause home prices to fall again.
Asset Manager Transaction Review - Deal Activity Ramps Up in Third Quarter
Transaction activity in the asset management sector in the third quarter of 2013 climbed back to recent norms, as 44 deals were announced. The slowdown in deals in the second quarter appears to have been an aberration.
Impact of Final Basel III Capital Ratios on U.S. Banking Organizations
by Thomas W. Killian, Principal - The OCC, Fed, and the FDIC have issued reports that will go a long way toward finalizing how Basel III capital rules will apply to U.S. depositories. We summarize the rules and key changes from previous guidance on how U.S. agencies will apply Basel III rules to U.S. institutions and highlight significant changes in capital planning, M&A strategy, and investment strategy.
Asset Manager Transaction Review - Deal Activity Returns to Normalized Levels in Second Quarter of 2013
After two consecutive breakout quarters of robust transaction activity in the asset management sector, each with in excess of 40 deals announced, the pace decelerated in the second quarter of 2013 to more normalized levels.
Less is More
by Robert B. Albertson, Principal - A bank contemplating or structuring a sale is making two important decisions at the same time: its most important sell decision and its most important buy decision. A banking consolidation cycle is underway in which powerful earnings accretion can be realized when sellers do not push for the final dollar. Book dilution is still important, but no longer solely defines post-announcement stock price reaction. Earnings impact is gaining recognition and has been an effective counterbalance.
A Letter to Our Clients
Our Senior Managing Principals reflect on the firm’s 25th anniversary, deep client relationships and continued focus on financial companies.
Shifting Into Higher Gear - 2012 M&A Activity in the Asset Management Industry
Resurgent global equity markets delivered a measure of prosperity and a reason for optimism to investors and the asset managment sector in 2012. Both M&A and IPO activity saw modest progress in 2012.
Asset Manager Transaction Review - Improved Transaction Activity in 2012
Transaction volume among asset managers increased for the second consecutive year, reflecting improving stock markets globally, increased M&A activity among independently owned asset managers seeking to avoid anticipated tax hikes, and the continued unwinding of non-core businesses by larger financial institutions.
End of the Consumption Era
by Robert B. Albertson, Principal - We believe financials remain sufficiently disconnected from the economy to be overweighted as the world continues struggling to recover. Signs of life continue to become increasingly evident in business lending. A fiscal crisis has been narrowly avoided without addressing fundamental problems. U.S. consumer spending faltered and remains weak despite short burst of promise.
Sandler O'Neill Comment Letter on on Basel III bank capital rules jointly proposed by the OCC, FRB, and FDIC
Sandler O'Neill comprehensively states the firm’s position on the historic bank capital regulations now under consideration. Divided into 11 distinct topics, Sandler O'Neill seeks to contribute constructively to a rulemaking process that enhances the safety and soundness of U.S. banks without sacrificing their efficiency and competitiveness or damaging the U.S. financial system.
Sandler O'Neill Comment Letter on the Basel III inclusion in regulatory capital of unrealized gains and losses on AFS securities
We urge the federal agencies to to reject the Basel III inclusion in regulatory capital of unrealized gains and losses on AFS securities. The flawed underlying accounting treatment does not reflect the banking business model and the proposed application to the capital accounts of banks would be unsafe and unsound for banks and detrimental to investors in banks.
Webinar replay: Stress Testing and Capital Adequacy - What Every Bank Should Know
A webinar featuring an expert panel from Sandler O'Neill and global management consulting firm Oliver Wyman discussing additional bank stress testing requirements for virtually all U.S. banks. The webinar details how the stress tests will work and what adjustments banks can make in their strategic and business planning now to ready themselves.
Webinar replay: Basel III - The Impact on Your Bank
A webinar featuring an expert panel from Sandler O'Neill and law firm Wachtell, Lipton, Rosen & Katz, moderated by SNL. Panelists discuss the serious and far-reaching implications of Basel III capital rules on U.S. banks.
Scale Increasingly Matters (Why Consolidation is Destiny)
by Robert B. Albertson, Principal - The negative narrative on banking, that it is doomed to being a moribund utility sector, burdened by regulation and hefty levels of capital, does not fit the data. Rather, recent quarterly data reveals a remarkable recovery in profitability despite record levels of capital.