Sat, Apr 25, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Hedge funds step in to provide capital as banks become utilities

Wednesday, April 30, 2014

Bailey McCann, Opalesque New York:

Hedge funds may see new opportunities as capital providers and non-bank financiers as regulation turns traditional banks into a utility, according to panelists at the Milken Global Conference currently underway in Beverly Hills, California. Managers from EJF Capital, CQS, LWPartners and Pharos Capital Group all noted big changes ahead for the banking sector which will change how banks respond. Both big banks and community banks are now faced with Dodd-Frank and will have to increase capital on the books while likely ending whole lines of business because of balance sheet impact.

"One of the big themes we see are banks becoming utilities," said Emanuel Friedman CEO EJF Capital. "Financing companies like BDCs are stepping in to fill the gap now that banks aren't providing capital like they used to."

Under Dodd-Frank rules, banks will have to have 10-12% in tangible cash on hand, Friedman explains. He says this makes buying up CDOs and other loans like TRuPs are promising opportunities. EJF is one of the largest holders of both products in the US. They have also expanded this to a global opportunity by buying $3bn in European debt paper to date.

"Once you get the banks or the gorilla out of the room you need an operator who can securitize. From there you have options," Friedman says noting that he is looking at BDCs which are filling the capital gap along with monoline insurers as related opportunities.

Others on the pane......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. U.S. does not want hedge funds to invest in offshore re-insurers for tax purposes[more]

    Komfie Manalo, Opalesque Asia: The U.S. Treasury Department on Thursday introduced a new rule aimed at limiting hedge funds’ ability to reduce their tax bills by investing in insurance companies in offshore tax havens. As a general rule, the U.S. tax laws does not allow hedge funds to use off

  2. Ruling: Hedge funds suing Argentina can have access to bond offering[more]

    Komfie Manalo, Opalesque Asia: U.S. District Judge Thomas Griesa in Manhattan ruled yesterday that hedge funds are entitled to details of a recent bond offering by Buenos Aires, reports

  3. Hedge funds looking to continue their rally in Q2[more]

    Komfie Manalo, Opalesque Asia: Hedge funds finished the first quarter on a strong note and are looking to continue the rally in the second quarter, said Lyxor Asset Management in its Weekly Brief. The Lyxor Hedge Fund Index is up 0.4% over the week

  4. Hedge funds down -0.17% in March (+1.23%YTD)[more]

    Bailey McCann, Opalesque New York: The hedge fund industry produced an aggregate return of –0.17% in March to end Q1 2015 up 1.23%, compared to the S&P 500 which increased 0.96%, according to the latest data from eVestment. Hedge fund performance returns were mixed in March amid increased equity

  5. Fund managers express concern of overvaluation in both equity and bond markets[more]

    Komfie Manalo, Opalesque Asia: According to the BofA Merrill Lynch Fund Manager Survey, investors see growing overvaluations in both

 

banner