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Saturday, December 20, 2008

Current Value of Banks

]ust a year ago, Royal Bank of Scotland (RBS) paid US$100 billion to acquire Dutch ABN Amro. Temasek Holdings and Barclays jointly contested for ABN Amro too but lost to RBS eventually. Discussions were made just before the current sub-prime bubble blew up.

Today, this sum could effectively buy many banks with discounts:

Citibank US$22.5 billion (-74%)
Morgan Stanley US$10.5 billion (-72%)
Goldman Sachs US$21 billion (-67%)
Merril Lynch US$12.3 billion (-77%)
Deutsche Bank US$13 billion (-71%)
Barclays US$12.7 billion (-71%)

With the above acquisitions, we are still left with a balance of US$8 billion.

This is reality.

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