One man with hand in the cycling world is Peter Sagan and his Cannondale Evo Super Six. Sagan did it again at Tirreno - Adriatico yesterday. Apparently (I haven't seen the highlights yet) there was a 365-meter, 27% ramp which featured three times on the circuit around Porto Sant’Elpidio and riders were forced to climb back-and-forth across the road. Alberto Contador was quoted as saying: “Sometimes you don’t believe it’s possible to go up on the bike.” I guess that says it all.
It kind of makes me want to go for a ride in the rain. Sagan is awesome isn't he . . . you gotta love that kissing of his own biceps as he crosses the line.
Back to finance and lots today regarding the financials and the way the Europeans are going to be paying their staff. I honestly don't care a lot about this. I reckon they could have kept the old low pay - high bonus system and tweaked it a little to allow for longer tails on compensation instruments and the bond type structures everyone seems to be issuing. I kind of think it's unseemly this rush to double or quadruple base pay ahead of an artificial cut-off date and it does no one any credit in the eyes of the public. Perhaps more important is the wrangling about various capital ratios.
Here's a graphic from Barclays courtesy of the FT. What we can see is a general de-leveraging by financial institutions. Don't be mislead by the fact that the US banks seemed less leveraged than their Euro cousins because we know the US banks hold a lot of leverage off balance sheet in SPV's. On Monday UK banks started to try and push back against the legislature's attempt to require them to hold a higher amount of reserves than that set under Basel III. Maybe they'll get somewhere on this and maybe they won't. It seems to me that the capital reserves no matter how you frame them can never 100% guarantee that a bank doesn't fail. The problem will be how much is left when the regulators step in. I'm guessing no one in government or parliament for that matter in the UK wants a repeat of RBS. Whatever the result investors have to be aware that it's unlikely you'll ever be seeing 20% RoE's again without some extraordinary circumstances. That is why I have been staying away from financials . . . so far to my own cost.
The asset sales by zombie-ish institutions are picking up pace. Commerzbank who was at the centre of the bank-insurance merger craze is selling off their UK property interests. I for one didn't even know they had £5bn in property on their books! The assets in question come via the acquired Eurohypo business that the regulators have told them they need to sell by 2015. I wonder what the book value of these assets was at the height of the boom? I'd also like to know what the occupancy rates are and the duration of the tenancies. With Sterling at 1.50 the Euro denominated balance sheet of Commerzbank is about to take a hit . . . . luckily the bank is state bank. Danke people and tax payers of Germany.