CBA - Commonwealth Bank of Australia

[drsmith]

US malls have been reported as drying up all over the country. I can probably dig up a link if you like.

I'd be interested in such a link(s).

With regard to Centro the balance of media opinion is that the banks will give it a stay of execution.

 

[sinner]

Hi drsmith,

This is just one example I found quickly before bed, you can go to news.google.com, I searched "commercial real estate malls" for a crapload of very fresh results with similar stories.

http://online.wsj.com/article/SB122929964304905239.html?mod=googlenews_wsj

Commercial real estate is yet to burst in the US, but in my opinion it is unavoidable. Wow we are getting off topic.

Shares of Simon Property Group SPG.N, the No. 1 U.S. mall operator, slid 13 percent to $41.07, and Boston Properties Inc BXP.N, which owns skyscrapers and other office buildings in key U.S. markets, dropped 12.1 pct to $43.60. The benchmark MSCI U.S. REIT index .RMZ declined 13.4 percent, compared with a 6.1 percent drop in the S&P 500 .SPX.

"The mall operators are really, really in trouble," said Kevin Quinn, a managing director of equity trading at Stanford Group Company, mentioning Vornado Realty Trust VNO.N as a key player. "There aren't even signs on the empty stores in the malls. They've been empty for a while, barren, tumbleweeds blowing through."

from http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN1933428520081119

With regard to Centro the balance of media opinion is that the banks will give it a stay of execution.

Not sure if you read the last link I posted, CBA seems to be determined to pull the trigger despite everyone else wanting to provide clemency.

 

[drsmith]

Thanks for the links.

Quickly reading a couple of news articles this morning it appears that Centro is trying to swap some debt for equity and CBA is trying to negotiate itself into a better position relative to the other banks. According to the SMH discussions with banks were being held late last night in New York to get all the financiers to approve the rescue package.

 

[Justthinkin]

I hold CER and am very interested in outcome of these negotiations. I find it difficult to believe that after such a long period (nigh 12 months) that CBA or any banker is holding out to the last minute... very difficult to believe. Moreover, if indeed that is how it really is (ie CBA is not yet comfortable) then the directors of CNP et al need to look long and hard at the issue of solvency... do they have adequate working capital to fund a logical / ordely liquidation... I doubt it.

Alan Kohler in an article yesterday made the observation that the CBA is walking a fine line... enjoying Federal government guarantees but potentially instigating (or maybe facilitating???... pick a word) a significant investment failure and consequential commercial property and retail malaise... Telstra got in the government's face yesterday and I think the government mentioned in no uncertain terms that it was not a good idea... CBA ought to be (and I suspect are) mindful.

Lastly, I have difficulty with banks of CBA's ilk taking equity positions ... it is a banker...if it was MacBank, I fully understand. If indeed CBA takes the equity (whatever form) then in my view it has compromised it's charter...

Whatever... I hold CER and not CBA...

Do your own research etc etc

Good luck today

 

[oldblue]

I don't have a problem with CBA or any other commercial bank taking an equity position in an equity for debt deal. There have been plenty of these in the past and they are preferable to the alternative which is normally mortgagee sale, receivership or liquidation of the borrower.
I wouldn't think that a bank would want to be a longterm shareholder in most instances and the deal would be regarded as a temporary arrangment with a view to on-selling the equity in due course.

Disc: Holding a few CNP; no CBA but a couple of other banks.

 

[cuttlefish]

I don't think retail is going to get better any time soon, so CNP's business is not going to improve. If CBA want to pull the trigger now, accept the writedowns and move on it might be better in the long run. If its cactus and everyone know's its cactus then there's not much point keeping it hanging on in some kind of corporate denial.

Currently it seems CNP have the revenue to cover interest on the debt, but with an ongoing decline in retail, how likely is this to continue? They might get a better price for their assets in a liquidation if they are still showing some reasonable yield.

I don't really see any good news in this for CBA either way, but its possible the recent selldown of CBA has already priced a lot of CNP related negativity into the price anyway.

 

[honey85]

As mentioned, I am new to shares. I did my first trading last month with CBA and got a 15% profit. Have read some bad news about CBA but don't know why I still bought CBA last week. Maybe because it gave me my first profit and emotionally I am inclined to it. This shows how amatuer I am Really hope to get out asap without a loss, not to mention any profit.

 

[cuttlefish]

As mentioned, I am new to shares. I did my first trading last month with CBA and got a 15% profit. Have read some bad news about CBA but don't know why I still bought CBA last week. Maybe because it gave me my first profit and emotionally I am inclined to it. This shows how amatuer I am Really hope to get out asap without a loss, not to mention any profit.

The market is always difficult to predict. Sometimes it will rally on bad news, fall on good news, drift sideways on horrible news, plummet or soar on mild news etc. It often depends on how widely a pending announcement has been known about and to what level a particular outcome has been priced in.

Nobody can know for certain one way or another how the CBA share price will perform over the short term (or the long term for that matter.)

Which is why you need to have your own trading plan, your own reasons for entry, your own criteria for exits, and your own money management regime that matches your appetite for risk.

 

[honey85]

Banks agreed to Centro's debt extension.

http://business.theage.com.au/business/centro-debt-deal-all-but-done-20081216-6zfy.html

How would this impact on the economy or specifically CBA? From my shallow knowledge of shares, I reckon this as a good news to CBA, isn't it? Can someone elaborate on this? I wish to learn more.

 

[cuttlefish]

Banks agreed to Centro's debt extension.

http://business.theage.com.au/business/centro-debt-deal-all-but-done-20081216-6zfy.html

How would this impact on the economy or specifically CBA? From my shallow knowledge of shares, I reckon this as a good news to CBA, isn't it? Can someone elaborate on this? I wish to learn more.

Firstly - don't believe everything you read in the newspaper - until its been announced to the ASX I would still treat it as hearsay (thats my take).

But if this news is announced, it may be good for the economy, it may be good for CBA, but that doesn't necessarily mean the share price will rise. On the other hand it may be bad for the economy and/or bad for CBA - that doesn't necessarily mean the share price will fall.

Trying to apply this sort of basic logic to short term price movements tends not to work - more often than not the market will do the opposite of what 'logic' would dictate - nobody knows for sure what will happen.

And thats enough from me on the topic, I'm no expert either.

 

[oldblue]

Yes, one would expect this to be good news for all concerned when (if) it's confirmed but as cuttlefish says, the market will not necessarily boost CBA's SP as a consequence. That depends largely to what degree this news has been anticipated and already built into the SP - and we have no idea of that!

 

[honey85]

Capital raise is announced.

http://asx.com.au/asxpdf/20081216/pdf/31f6zkrhv1hlmj.pdf

From what I saw on Westpac last week or two, capital raising will force the share down to around the published price of $27. I thought CBA might have a quick short rally due to Centro (rose $1.10 today) but with this news, it seems like it wont. Any thoughts from anyone? Thanks.

 

[gfresh]

Somebody made a little boo-boo by forgetting to tell the institutionals that they've also had to raise their bad debt provisions to 0.6% of total loans Merrill walks out in embarrassment it seems...

http://business.theage.com.au/business/cba-stuffs-up-capital-raising-20081217-7046.html

Looks like a right **** up!

 

[Justthinkin]

Honey85... I don't think you are going to have a good day.

Old Blue... that is why banks (sheltered by the infamous four pillars policy under which they develop egos and ambitions way beyond there abilitys) should not take equity positions in stressed companies. They are credit risk assessors and managers... not equity traders or capital providers... they just don't have those skills. It seems today they cannot even value their own equity... hmmmm!

For the rest of us... compliments of the CBA (who have just discovered that bad debts might be an issue during this difficult financial crisis) I suspect we'll all take a hit on the all ords...bugger. My greatest concern is that this public display of incompetence just spills everywhere...bugger bugger bugger

Don't mind me

DYOR

 

[Sean K]

I suppose the CEO can still take his $10m bonus for steering the ship in a straight line.

Don't need to make any blunders in this environment.

Of course, he's worth the $10m to get that caliber of talent.

 

[prawn_86]

I suppose the CEO can still take his $10m bonus for steering the ship in a straight line.

Don't need to make any blunders in this environment.

Of course, he's worth the $10m to get that caliber of talent.

Nice job if you can get it

Where do i sign up? Or arn't i in the boys club cause i didnt go to private school?

 

[honey85]

When I woke up, I thought CBA will have at least a decent day from DJ and Centro and the capital raising. At 9.45 the news of the blunder came out, I was like... what the ****? But these uncertainties are what makes the market interesting, isn't it?

 

[cuttlefish]

Firstly - don't believe everything you read in the newspaper - until its been announced to the ASX I would still treat it as hearsay (thats my take).

Well it looks like even if it has been announced to the ASX it isn't necessarily so (i.e. I'm referring to the announcement last night regarding the cap raising, not the CNP stuff this comment was originally directed about).

Gee the market seems like a minefield at the moment, and it doesn't seem like any of the banks are winning any friends at the moment between the various debacles going on (or that have gone on) this year.

 

[michael_selway]

When I woke up, I thought CBA will have at least a decent day from DJ and Centro and the capital raising. At 9.45 the news of the blunder came out, I was like... what the ****? But these uncertainties are what makes the market interesting, isn't it?

hehe its called a true Bear Market

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 344.4 320.2 334.5 388.7
DPS 266.0 266.0 266.0 285.0

Date: 16/12/2008
Author: Tanya Powley; Jane Searle
Source: The Australian Financial Review --- Page: 46
A weakening economy has caused mortgage lenders to review their lending criteriaand risk exposures. Low-documentation loans have virtually disappeared. Themortgage broker changes have also affected the approach of banks in lateDecember 2008, who rarely offer no-deposit loans any more. Some say that thefailure of some non-bank lenders has reduced competition in this sector

Date: 12/12/2008
Author: Richard Gluyas
Source: The Australian --- Page: 21
The share price of Commonwealth Bank of Australia slid another 14.2% inmid-December 2008. The decline started in October 2008 with the acquisition ofBankWest. Investors are considering various manoeuvres by the bank to improveits position, including lifting the tier-one capital ratio to eight per cent

Date: 11/12/2008
Author: Richard Gluyas
Source: The Australian --- Page: 19
Merrill Lynch will conduct a $A750m scrip issue for Commonwealth Bank ofAustralia (CBA), as the latter seeks to boost its tier-one capital ratio toabove 8% in order to compete with its major Australian bank rivals. CBA willthen offer small investors a share purchase plan to source an additional $A500m.However, on 10 December 2008 the stock closed $A1.50 lower at $A28.50

Date: 11/12/2008
Author: Eric Johnston
Source: The Age --- Page: B3
The Commonwealth Bank's takeover of BankWest has been cleared by the ACCC,which noted that the smaller bank's expansion plans had been affected bythe global financial crisis. Meanwhile, the Commonwealth Bank will undertake a$A750m capital raising, which will increase its Tier-1 capital ratio to around7.8 per cent

Thx

MS

 

[Aussiejeff]

Oh dear.

CBA's NetBank Login & Home Pages won't load. Must be a few CBA server hits going on..

Clowns.