Bobbing in uncertain subprime waters
Fallout from the U.S. subprime mortgage crisis has raised doubts about dozens of multi-billion dollar deals struck earlier this summer. Some analysts now say the biggest-ever banking takeover bid could be affected. Stephen Beard reports.
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Doug Krizner: The global stock markets continue to debate the possibility for recession, not just here in the U.S., but in Japan too. Overnight in Tokyo, the Nikkei slipped. But in Europe, banking stocks are leading the major markets higher. The CEO of Deutsche Bank believes the markets are stabilizing after the turbulence in August. That may be so, but there's a big European banking merger that could be affected by the problems in the credit markets. We have more from London and Stephen Beard.
Stephen Beard: A consortium led by the Royal Bank of Scotland has been battling to take over the Dutch bank ABN Amro.
It's offered some $95 billion, mostly in cash, but some observers reckon the RBS consortium could now lower its bid citing the turmoil in financial markets.
Acquiring companies can legally do this, but they must first prove that something dramatic has happened, that the target company is suddenly worth less than before.
Mark Durling of stockbrokers Brewin Dolphin thinks that RBS will press ahead and get the Dutch bank at a better price.
Mark Durling: I still think RBS is in a commanding position. If the volatility persists in the global financial markets then you can say that RBS will win the deal and also maybe cut the offer.
The British bank Barclays is also bidding for ABN, but it's mainly offering its own shares and they have fallen sharply since the subprime crisis began.
In London, this is Stephen Beard for Marketplace.
