17 Mar, 2008
Nicholas Paler | 12:36:12 | 17 March 2008
Star's AAA-rated financials fund manager has warned that the
interests of shareholders in Bear Stearns will now be put on the
backburner following the Fed-backed takeover by JPMorgan Chase.
Guy de Blonay, who runs the New Star Global Financials Fund, warned
shareholders in the stricken bank that Bear Stearns' first and
foremost obligation would now be to its new owner which had taken
on responsibility for the investment bank's various businesses.
He said: 'The belief is that JPMorgan is acting as the stability
agent for the Fed in this transaction, and that the concern for the
$2.5 trillion in notional counterparty exposure trumps the interest
of the existing Bear Stearns shareholder.'
De Blonay said the debacle had been caused by a crisis of
confidence exacerbated by a run on the bank, and was not a risk
He added that there could be further problems going forward for
financials in both the US and elsewhere.
'The problem is that Bear Stearns and other financials face a great
unwind of leverage,' he said.