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Alicia Damley

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  • Revisiting Baby Boomer Trends and Opportunities in the Insurance Sector [View article]
    Recent equity and real estate market trends have been untimely for many in both the retired and baby boom generation. Against a reduced total portfolio value and increasing life expectancy, providing for retirement is looking challenging. Increased demand for bonds has contributed to driving yields down. But with already low yields, the income generation is low. These are some of the compelling reasons for shifting investment risk to a reliable third party. And, lower equity exposure is unlikely to enable this.
    Sep 22 08:18 AM | Likes Like |Link to Comment
  • Timing Entry Into European banks [View article]
    Good combination of profitable factors - thanks!
    Sep 12 07:16 AM | Likes Like |Link to Comment
  • Timing Entry Into European banks [View article]
    Your welcome!

    In the broader European banks context, CS is attractive - better capital position, franchise more intact post-crisis, approaching '08 lows. Diversified revenue somewhat mitigates CHF impact, though wealth management business should have received a positive boost. Finding the entry point is key.
    Sep 9 08:13 AM | 1 Like Like |Link to Comment
  • European Financials: Useful Progress [View article]
    A key difference between the EU and US debt situations: the EU's is one of solvency and/or liquidity; the US situation is about an artificial ceiling limit debt within political and fiscal process. The stock vs flow of debt is also very different.

    For the past 18 months, with the EU debt crisis looming, not owning European banks was the call (see previous articles). This article is addressing the changing situation: with forced resolution on EU politicians emerging, the opportunity to own EU bank is presenting itself.
    Jul 28 08:08 AM | Likes Like |Link to Comment
  • What to Do Now as the EU Debt Crisis Lurches Again [View article]
    Nick,

    Apologies on the salutation error. Of course, the rest of the response remains unchanged!!

    Alicia
    Jul 14 01:15 PM | Likes Like |Link to Comment
  • What to Do Now as the EU Debt Crisis Lurches Again [View article]
    Greg,

    Transparency on this would be extremely helpful, but is mostly unavailable. Quarterly stats from the BIS (with a quarter lag) show most EU country banks reducing their exposure. However, it is on-b/s exposure only. The results of the bank stress tests on 7/19 could shed some light.

    Insurers also have been reducing their sovereign debt exposure. The large publicly traded groups have limited exposure relative to their capital.

    So, questions still remain on where the large pockets of exposure are and how it has morphed across the system over the last 2 to 3 quarters, and where the CDS protection has been underwritten. Limited data points are not pointing to the insurance sector as the large u/w of CDS protection.

    As is playing out in the various forums, whether the final plan does trigger CDS contract clauses has yet to be determined. Multiple jurisdictions seem to also be adding complexity to this.
    Jul 14 09:10 AM | Likes Like |Link to Comment
  • How Some Good Can Come From Basel III’s Counter-Cyclical Provisions [View article]
    Yes, and early indicators for CoCos are promising. So far, Lloyds, CSG and Barclays have issued them with good results. CoCos provide an improved vehicle - automatic top-up of pure equity when it is most needed alleviating demands on the taxpayer, better monitoring by FI investors and lower cost of equivalent equity capital. Higher core capital requirements under BIS III means that CoCos provide regulators with an incremental cushion. Regulators and banks have been discussing the idea of using CoCos in mgmt variable compensation - this would be even better alignment than straight stock or option compensation.
    Jun 22 09:36 AM | Likes Like |Link to Comment
  • Japanese Banks Can Play Major Rebuilding Role [View article]
    For a number of years, the challenge for the Japanese banks has been loan growth. The magnitude of the event and re-building projections is a unique opportunity for the banks, outside of economic trends. Given the unexpected nature of the loss event, loan losses from the loan book are unlikely to be triggered immediately. Both the government and BoJ regulatory focus is elsewhere.
    Apr 8 10:36 AM | Likes Like |Link to Comment
  • Japanese Banks Can Play Major Rebuilding Role [View article]
    Unlikely, unless demand is unexpectedly high.
    Apr 3 12:39 PM | Likes Like |Link to Comment
  • U.S. Banks Present Better Investment Opportunities Than Canadian Peers [View article]
    Helpful comments and dialogue on a very interesting investing opportunity. At this point in time, a new investment in the Canadian banks presents a dilemma which is tied directly to the global view for the next few weeks and the medium-term. The Canadian banking system showcases one approach to running a stable, successful and profitable sector. Stock prices have reflected this so far - an investment in these stocks in 2008 was well-timed and profitable. But, in 2011, initiating a new investment in these stocks today requires an assessment of opportunities going forward and this question prompted my reassessment of the investment opportunity in Canadian banks.
    Mar 15 08:32 AM | 3 Likes Like |Link to Comment
  • Too Early to Assess Japan's Effect on Insurers and Reinsurers [View article]
    As indicated in "Additional Disclosure", there is a long position in Munich Re, found below "Disclosure" section. Investments in non-US market traded stocks are shown here.
    Mar 15 08:18 AM | Likes Like |Link to Comment
  • Are High Bank RoEs a Relic of the Past? [View article]
    Thanks for your comment and sharing the video. A series of critical adjustments are still being completed. The chart is a good way to show this.
    Mar 4 08:01 AM | 1 Like Like |Link to Comment
  • European Banks: Invest or Divest? [View article]
    The extent of the recent financial crisis has made this a more common question amongst investors. As the crisis has revealed, not all banks were equally affected indicating that there are banks which actually do have strong business franchises and balance sheets which have protected their value. A number of EM banks are at the top of such a list - see discussions in my most recent articles.
    Feb 23 09:42 AM | 1 Like Like |Link to Comment
  • How Some Good Can Come From Basel III’s Counter-Cyclical Provisions [View article]
    Thanks Ruth, good to hear from you! Glad you find the articles useful.
    Feb 17 09:28 AM | Likes Like |Link to Comment
  • How Some Good Can Come From Basel III’s Counter-Cyclical Provisions [View article]
    There are now a number of circumstances and countries (e.g. Switzerland) where the need for additional capital buffers are being identified. That the Committee has not combined the different conditions under which this happens is creating some confusion. Since the counter-cyclical provisions are computed against loans, I expect that the up to 2.5% of capital quantifies the maximum additional capital which will have to be held in this provision. In other words, 2.5% x RWA equals the maximum incremental capital to be held. Under this interpretation, the absolute Tier 1 could not fall below the BIS III minimum.

    The opportunity to moderate the ups and downs of the credit cycle is compelling, especially if this is a coordinated activity and creates a more level playing field. The global reinsurance industry has experienced this for the last 5+ years and it has added some stability.

    BIS III is clearly focused on raising the absolute level of capital banks are required to hold. This is a positive for the stability of the banking sector, particularly given how far capital levels have declined and commensurate risk increased. BIS II revealed a number of flaws which need to be addressed. Characterizing this as capital hoarding is currently unclear - the uncertainty of how all of the rules will play out is causing banks to hold more capital and the negligible loan growth in developed markets is magnifying their actions. If you are looking for more details on this, there are at least 2 other articles I have written on this topic (see my article title index).

    Thanks for your comments!

    Alicia
    Jan 14 08:12 AM | Likes Like |Link to Comment
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