As the euro remains strong, despite Draghi’s recent attempts to talk it down, and deflation looms, I am wondering how European banks will fare in this difficult environment. Organic growth may be difficult as the economy sputters along.
So might some bold European chiefs contemplate cross-border mergers which would at least provide scale, cost–savings and redefine the playing field? For example, a deal between the Italian bank, UniCredit, which owns the German group, HVB, and Commerzbank would make an interesting challenger to the pre-eminent German bank, Deutsche. Indeed, a Credit Suisse /Deutsche Bank deal has been muttered about for years and would certainly rescue Credit Suisse from the impasse in which it finds itself. Let’s see what the next 18 months bring. But it is intriguing that although M&A fever is rising, the financial space remains relatively unaffected.
Talking of dealmaking, Morgan Stanley’s global head of M&A, Rob Kindler must be embarrassed. Valeant Pharmaceuticals recently launched a $53 billion, hostile bid for the Botox producer, Allergan. Morgan Stanley is now advising the predator, Valeant, but originally pitched to defend Allergan. In its communication with Allergan, Morgan Stanley made derogatory comments about Valeant, which it then went on to advise.
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| Now that Rob Kindler is working on behalf of Valeant, I guess the atmosphere in the war room is a little frosty |
David Horn, a senior Morgan Stanley healthcare banker, wrote to an Allergan executive: “Part of what Rob [Kindler] is suggesting is to allow him to use his significant relationships with media and analysts to provide a clear and detailed articulation of why Valeant is a house of cards and your investors should not want to take their stock.”
Now that robust Rob and his colleagues are working for the so-called house of cards, I guess the atmosphere in the war-room, over at Valeant’s HQ, must be pretty frosty. Sigmund Warburg, that renowned relationship banker, must be turning in his grave. My mole pouted: “Honestly, it’s this sort of behaviour which gives us bankers a bad name. Of course, most investment bankers pitch to both sides of a deal. But you give it your best shot and then move on. Is there really a need to join the dirty tricks brigade?”
A few weeks ago an email entitled, ‘Unusual interview’ dropped into my in-box from a well-connected source. It involved Pierre Lagrange, a founder of hedge fund group GLG, which was sold to Man Group in 2010, and his life and business partner, Roubi L’Roubi, a clothes designer. They are co-owners of Huntsman, a Savile Row men’s clothing brand. The interview published, during June, is the sort of piece that makes you blush for the participants. Lagrange and L’Roubi come across as out-of touch eccentrics, but not in a good way! The two men regale the journalist with tales of their Berkshire country house where they host shooting dinners and weekend parties. They collect vintage cars, and art – “ walls of it” – and surround themselves with thoroughbred animals. L’Roubi insists that the couple is the embodiment of the Huntsman brand and describes himself as a chameleon when it comes to his attire:
“We’re chameleons; in a week you can wear very different things.”
I appreciate the need to spread the word about the excellence of the Huntsman range. However when I read such an interview, I find myself sympathizing with those who claim that the gulf between the very rich and the rest of us is unsustainable.