This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

European Banks Are Replaying U.S. Crisis, Carlyle Says

NEW YORK ( TheStreet) -- European banks face a "massive" gap in the health of their balance sheets compared with U.S. peers, according to Olivier Sarkozy, head of the financial-services group at The Carlyle Group (CG - Get Report), which has been looking to buy assets from troubled institutions in the region.

"The crisis that you saw in '08-'09 here in the United States is playing itself out frame for frame in Europe," Sarkozy told Bloomberg Television on Monday. "It's playing itself out in a calmer environment because regulators and politicians now understand what is at the heart of this issue but the math in Europe is dramatically larger and that's principally because while the economy in Europe is the same size as the economy here and the overall level of debt in Europe is the same size as it is here, in Europe the debt sits firmly on the books of the banking system and so their banking system is four times the size of the United States."

Indeed, TheStreet's Antoine Gara recently pointed to the discrepancy between European and U.S. bank balance sheets, noting that Deutsche Bank (DB - Get Report) paid out a 75-cent dividend in 2012 roughly equal to its annual earnings. By contrast, Citigroup (C - Get Report) paid out roughly $120 million in 2012 dividends on $7.5 billion in earnings, and Bank of America (BAC - Get Report) paid $400 million in dividends on $4 billion in profits.

Carlyle's Sarkozy sees a "dramatic need" for European banks to reduce leverage, as he says $55 trillion in assets is funded with just $19 trillion of deposits.

Carlyle has been looking to take advantage of this discrepancy by buying assets from Europe's banks. For example, it recently teamed up with management of TCW Group to acquire the asset manager from Societe Generale (SCGLY). Sarkozy, who is the half-brother of former French President Nicolas Sarkozy, says Carlyle will continue to look for similar opportunities driven by the deleveraging of Europe's banks as well as "the politicized re-regulation of what amounts to one of the world's most complex and second-largest industries."

-- Written by Dan Freed in New York

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SCGLY $9.83 1.32%
BAC $15.31 -0.71%
C $50.99 -0.39%
CG $26.97 2.20%
DB $34.48 0.03%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs