OH GREAT. SHEILA BAIR HAS DECIDED SHE CARES ABOUT SHAREHOLDERS.
Wait. When did Sheila Bair become an investment expert?
Shareholders . . . have an interest in demanding that big banks split apart. Comparing the valuation for the supersize banks (Citigroup, Bank of America, and J.P. Morgan Chase) with their simpler, leaner competitors isn’t pretty. Price/earnings per share for the supersizers averages 5.8, compared with 8.1 for smaller, more focused Wells Fargo and 8.1 for the bigger regional banks like U.S. Bancorp and PNC. More telling is the ratio of share price to tangible book value. For the supersizers, the average is 72% of book, compared with 165% for Wells and 142% for the big regionals. . . .
So you just compare P/E ratios, and major corporate decisions flow from there. Who knew? . . . There is an argument to be made for unlocking shareholder value by breaking up huge corporate behemoths. But looking at a snapshot if their valuations, and nothing else, is not one of them. . . .