The next best thing! A new super-bank will soon emerge...

b2's picture
Rank: Gorilla | 522

...and that bank's name will be GSMS. I didn't think that Merrill would go under after they ridded the balance sheet of over $30bn in toxic debt, but, alas, extrodinary events caused sharp deterioration in consumer confidence...

how does this alter my opinions? Previous possibilities that I had ruled out as "improbable" are all now completely fair game. I believe that MS still has severe downward potential, and I believe that this crisis is far from over. I think they are using optimistic accounting, as Lehman had in Q3/Q4 of last year, and the future will be bring some surprises. I suspect that Morgan will eventually sell itself to Goldman, to create a new powerhouse - imagine the possibilities!

As I posted a few months back, I think that the U.S. is heading into a new depression... my, oh my.

Comments (12)

Sep 15, 2008

Why do you think MS would merge with GS? They are too many duplicities in a merger like that. It is far more likely that both of them would merge with a commercial bank as the commercial deposits and access to the Fed auction window would help offset the short term funding needs of independent investment banks.

Sep 15, 2008

Same reason that Merrill had asked Morgan to consider an acquisition - GS can afford it. I doubt that GS would merge with a commercial bank... too proud... plus, the bank's doing just fine (there's slowed business from the slowed market environment, but they aren't suffering huge corollary losses). Two or three weeks back, I had actually thought that GS would acqure Lehman... was wrong on that front, but Morgan seems to be a more attractive target.

I had created a post a while back questioning the viability of pure-play banks and noting the trends towards universals (as they are able to withstand huge losses in one division through diversification with others and are able to leverage balance sheets for multi-functions - advisory and financing - w/in a deal). Nonetheless, I believe that GS is one of the few banks that can pull it off, as their GSAM, trading, and all other divisions are just as strong as their banking division.

Sep 15, 2008

say, weren't you the kid telling us how ML was going to be the next ruler of wall street oh, i dunno, 2 days ago?

why would GS/MS combine instead of combining with something that might actually help their businesses, like, oh, i dunno, a commercial bank?

oh right, i forgot. THE PRESTIGE.

everytime i read one of your posts, i lose an iq point.

Sep 15, 2008

If you can please clarify B2 I still don't understand how a merger like that would work. If the two banks would merge there would be cross overs in every single division from trading, banking, research, Asset Management and even BO operations. What would be the main revenue drivers? GS already has one of the strongest trading platforms out there, MS isn't particularly strong in AM so there would be little synergies there, and I thought investment banking was driving by a handful of MDs at each group. No use in having a GS TMT MD and a MS TMT MD chasing the same deals. This might sound a bit elementary to you but I don't see the upside potential.

Sep 15, 2008

Well.. according to my banana points... I have about 283 posts. Assuming that you've read all my posts so far, that puts you at, what, -233 IQ?

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Sep 15, 2008

The upside potential would be avoidance of the alternative. I'm not talking about anything in the immediate future, but I believe that the credit fallout is far from over. A banking fallout affects all others on the street - i.e. bear. Plus, then Goldman would have no competitors and just absolutely ball out!

Sep 15, 2008

GS needs a deposit base if the fed window stays open and more regulation comes to the banks. That's why they could potentially buy a commercial bank.

B2, I love your boldness but man you really missed the ball on that comment about ML being the next great bank.

Sep 15, 2008

Not sure that I agree with a GS/MS merger but consolidation is well under way and there will likely be only 4-5 major banks over the course of the next few years as business models change under the weight of burdensome regulation.

Sep 15, 2008

How about Blackstone/KKR merger.

Sep 15, 2008

I call a triple merger with McKinsey, Goldman, and KKR. They will be like a prestige superhouse!

Sep 15, 2008

McKinsey (top consulting)
Goldman (top inv banking)
KKR (private equity)
Citadel (top diverse hedge fund)
Renaissance Tech (top quant hedge fund)
Google (tech co)
Harvard (top university)

and I have to also include:

Mitsubishi UFJ Financial Group (but will be kept as a little bitch- useful for its huge assets- necessary for financing new opportunities especially in these kinds of markets).

I call my fantasy company:

GOLDEN RENAISSANCE GROUP or GRG.

Who wants a share of GRG? lolz.

Sep 15, 2008
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