It's a safe bet that Jamie Dimon, JPMorgan's chief executive won't be losing too much sleep after legal snags and investor opposition forced the firm to quintruple it's offer for Bear Stearns from the bargain-basement price of $2 per share to a slightly
more palatable $10 per share.
Yes, it is a bit of a climb-down, but for his $1.2 billion outlay, Dimon is getting his hands on a ready-made prime brokerage business, a market-leading correspondent clearing platform strong in institutional capabilities and reporting, and options on valuable
real estate opportunities.
What's more, the acquisition requires no new financing, thanks to a $1.3 billion windfall owing to JPMorgan from its stake in card scheme Visa, which raised $19.1 billion from its successful IPO.
In fact, the VISA IPO is helping repair the balance sheets of other banks in the troubled US sector, including Bank of America which snared $675.3 million and Citigroup which netted $324 million from the sale.
AP last week reported estimates by Citi Investment Research analyst Keith Horowitz of a $5.4 billion gain to banks' first-quarter earnings as a result of the Visa bonanza and the reversal of litigation reserves tied to their stakes in the card scheme.
With other sources of funding drying up, it wouldn't be a surprise if the banking sector was casting around for other valuable assets to replenish depleted coffers.
There is one other bank-owned payments utility that springs to mind. I wonder how much Swift would command on the open market?