Mon, Mar 2, 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. Investing - Seth Klarman of Baupost outlines his investment process as major stock market indices are stretched, Myriad hedge fund sold bulk of its Alibaba stake last year[more]

    Seth Klarman of Baupost outlines his investment process as major stock market indices are stretched From Valuewalk.com: As hedge fund manager Seth Klarman, leader of the $28 billion Baupost Group, reviews 2014 performance and considers investors gained near 7 percent on the year, he cons

  2. Adamas Asset Management and Ping An Insurance to co-manage $500m debt fund[more]

    Komfie Manalo, Opalesque Asia: Hong Kong-based Adamas Asset Management and Ping An Insurance Group, one of China’s largest financial institutions, have finalized a memorandum of und

  3. Opalesque Exclusive: dbSelect’s top ten FX strategies average almost 10% in January[more]

    Benedicte Gravrand, Opalesque Geneva: In one of Deutsche Asset & Wealth Management (AWM)’s hedge fund platforms, called dbSelect, a number of FX Strategies did very well in January. dbSelect is a managed investment platform for unf

  4. Opalesque Exclusive: SEC’s Mark J. Flannery warns hedge funds against valuation misconduct[more]

    Komfie Manalo, Opalesque Asia: Securities and Exchange Commission chief economist and director of Division of Economic and Risk Analysis (DERA) Mark J. Flannery has warned of the risks posed by market misconduct, particularly in the true valuation of assets by hedge fund managers. In his

  5. Dymon Asia's $3bn macro hedge fund lost 10.45% in January[more]

    From Reuters.com: Dymon Asia's $3.1 billion macro hedge fund lost 10.45 percent in January, performance data seen by Reuters showed, a month where many peers lost heavily after a surprise rise in the Swiss franc. Singapore-based Dymon, set up by Danny Yong, a former founding partner and chie