69th bank failure in the US for 2009

The US Federal Deposit Insurance Corporation closed the 69th bank of 2009 recently. The rate of closures has increased recently, leading some analysts to believe that well over 100 banks could be closed this year. The Savings and Loan crisis of the 1980s in the US started at about the same pace, with 100 closures …

Lack of faith in ABSA house price index

ABSA appears to be restricting the access of equity in home loan accounts that were specifically sold with this feature in mind.  Moneyweb’s article on the real estate shocker has already totally nearly 70 comments. What this says about ABSA’s house price index What’s interesting is that ABSA’s house price index has remained positive throughout …

Packing for Prague

Heading off to a Solvency II conference in Prague this evening. QIS 4 is hot news at the moment, and the conference is going to cover many of the details and requirements of the exercise. Large European multinationals have spent enormous effort on the 4 QIS exercises. The data requirements alone are huge. Somehow CEIOPS …

Confidence and capital – Nationwide has neither

Nationwide Airlines is on the ground. A series of business and operational problems met the global economy of skyrocketing avgas prices and left them insolvent by R172m (assets of R46m less liabilities of R218m). They’ve also left friends of mine stranded in South Africa after a trip from Ireland for another friend’s wedding (congratulations Kay and …

Nick & Jerome

Jérôme Kerviel, a 31 year-old banker at Soc Gen is blamed for losses of €4.9 billion incurred through rogue trades spanning over a period of some months. The story has a remarkable similarity to Nick Leeson, the Original Rogue Trader who is blamed for the demise of Barings Bank in 1995. Unfortunately for Soc Gen, …

Solvency II makes another milestone – QIS3 out

Apparently the results for QIS3 are now available.  QIS3 (“Quiz 3”) is the third Quantitative Impact Study along the path to rolling out Sovlency II for insurance companies between 2010 and 2012. It provides further light on what capital requirements will actually be when Sovlency II comes into effect. Perhaps a warning is required for …

Life insurers getting WACC’d by debt issues

Life insurers in South Africa have been stumbling over each other to issue long-term debt. The reason? Ostensibly to reduce their WACC and generate greater value for shareholders. Common sense tells us that this is a sensible thing to do. Companies all over the world have been using debt capital to reduce their WACC by …