Banks Explore Ways to Deploy Surplus Capital
Global Finance › Vol. 18 Nbr. 9, October 2004
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Summary
For some companies, not having enough capital is a constant source of headaches. However, the situation is quite different for many global banks, as they are now sitting on stockpiles of cash. HSBC chairman Sir John Bond brought the issue clearly into focus in August, with a warning that the world's five biggest banks would use an expected $60 billion in surplus capital over the next two years to launch a price war and undercut their rivals. For Tanya Azarchs, a bank credit rating analyst at Standard & Poor's, a key question is whether cross-border acquisitions will become more prevalent. Deploying the funds wisely is a challenge for CEOs and CFOs. Overpaying for acquisitions, in spite of Sir John's war call, may destroy value, while putting the funds into low-risk instruments may not yield much profit.
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Banks Explore Ways to Deploy Surplus Capital
For some companies, not having enough capital is a constant source of headaches. However, the situation is quite different for many global banks, as they are now sitting on stockpiles of cash. HSBC chairman Sir John Bond brought the issue clearly into focus in August, with a warning that the world's five biggest banks would use an expected $60 billion in surplus capital over the next t...
See the full content of this document
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