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), 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) paid out a 75-cent dividend in 2012 roughly equal to its annual earnings. By contrast, Citigroup ( C) paid out roughly $120 million in 2012 dividends on $7.5 billion in earnings, and Bank of America ( BAC) 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

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