Your Guide to SWF Bank Investments

Here’s a handy cut-out-and-keep guide to SWF bank investments, in the wake of the latest speculation about Merrill Lynch selling a stake to Singapore’s Temasek.

Date Bank Fund Country Size
March 06 Standard Chartered Temasek Singapore $4 billion
November 07 Citigroup ADIA Abu Dhabi $7.5 billion
December 07 UBS GIC Singapore $9.7 billion
December 07 UBS ? ?Oman? $1.8 billion
December 07 Morgan Stanley CIC China $5 billion
January 08? Merrill Lynch Temasek Singapore $5 billion

For in-depth analysis, I’d recommend Setser:

The irony here is immense.

A few years ago the consensus view in the US financial community was that China’s state would have to relinquish control of Chinese banks in order for China’s financial sector to develop. State ownership was generally considered an impediment to a modern financial system. But rather than selling controlling stakes in China’s state banks to Wall Street firms, China’s state is now buying (non-controlling) stakes in Wall Street firms.

Talk about a change…

Remember when the US was criticized for using the IMF to foist privatization on the world? Now both the US government and large Wall Street firms rely heavily on non-democratic governments for financing — and the US is, in a limited sense, importing other countries form of capitalism. The US government hasn’t historically owned large stakes in US banks and broker-dealers.

I’d also note that a friend of mine on Wednesday wondered whether he, too, might be able to buy some mandatory convertibles: the deals looked attractive to him, with their high coupons for a couple of years and conversion into blue-chip bank stocks. Given the reception that the banks have received from the sovereign wealth funds, why don’t they try the public markets? There might well be quite a bit of appetite for a large mandatory-convert issue: for one thing, it essentially guarantees dividends during a period when many banks must be thinking of cutting theirs.

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