MM got it right, Temasek got it wrong

In Banks, Temasek on 17/01/2011 at 5:34 am

As this article shows, Temasek shld not have been so hasty in selling its stake in BoA, which it got after BoA bot Merrill Lynch where Temasek had a big investment. BOA is doing the things that attracted it to spend US$5.9 bn buying shares in Merill Lynch. Temasek lost US$4.6 bn, it was reported.

Shortly before Temasek sold, MM had said that S’pore Inc’s investments in Citi, UBS, and Merill Lynch had a time-frame of 30 yrs. Temasek held its ML investment for over a yr. GIC still owns shares in Citi (profitable), and UBS (big loss).

(Aside so why should the young listen to him, when Temasek doesn’t? Other instances). Neither does it seem does the local media)

Bank of America is headed for its best year [2011]advising on mergers and acquisitions in Asia-Pacific since 2005, and arranging initial public offerings since 2007, data compiled by Bloomberg show. The combined companies have generated 30 percent more revenue from traditional investment-banking businesses in the region than they did as separate entities …

is winning market share for equity underwriting at the expense of UBS AG, Citigroup Inc. and Credit Suisse Group AG after hiring almost 400 staff in Asia since early 2009 and focusing on integrating Merrill Lynch’s investment-banking business with Bank of America’s corporate-banking platform. In M&A, the company has gained market share from Citigroup and Nomura Holdings Inc.

The acquisition of Merrill Lynch helped the lender establish a global footprint in such businesses as advising on deals, sales and trading and wealth management. It also deepened corporate-client relationships by providing a wider range of products and more conduits for raising capital.

Bank of America is ranked sixth advising on M&A and fifth on IPOs in the region this year, rising from 10th place in 2008 when the merger with Merrill Lynch was announced, Bloomberg data show. The bank is trailing Zurich-based UBS, Morgan Stanley, Frankfurt-based Deutsche Bank AG, JPMorgan Chase & Co. and Goldman Sachs Group Inc. in Asia-Pacific M&A advisory work this year and the latter four in IPOs. Morgan Stanley, Goldman Sachs, JPMorgan and Citigroup are all based in New York.

But this would explain why Temasek sold. BoA’s fortunes are still tied to US economic growth. But so would have been ML’s fortunes. Remember it was US sub-prime mortgages that caused ML to lose its independence and Temasek to lose US$4.6bn out of its US$5.9bn investment.

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