response to the australian article, page-25

worried about mac.

3.8 billion in new deposits was a from their management cash trust which they switched from investing in liquid short term debt to plugging into macquarie the bank (which then lends it out as bank and because MBL is A rated they argue its a similar exposure).

with all banks capital constrained (most major banks in australia have had to do hybrid issuances to raise capital in the last 6 months) macquarie faces big refinancing risks for its assets. credit teams in the banks are already reeling from their allco, centro and bnb disasters.

also with credit tight in the economy the demand for the assets (which has historically been strong and led to strong appreciation) will falter. With assets being much less than they were worth before it will make it even harder to refinance. Just look at the gradual softening of residential property prices over the year.

lastly the negative outlook for investment banks in general and macquaries comparables means it faces the same headwinds in the near future. investment banking dealflow is going to be much lower with less M&A activity because of the lack of debt available. they were able to strip huge fees from their satelites for work done when their SP's were strong but with all the scrutiny due to lack of performance they will be unable to do in future. and IB fees makes up the bulk of macquaries profits.

whilst they still have strong recurring revenues due to their management contracts all that needs to happen is 1 blowup in 1 fund for the whole gig to unravel and for confidence in their ability to be lost.

my 2 cents