Mike Mayo was on Squawk Box yesterday, checking in from CLSA’s conference in Hong Kong.
The outspoken analyst was called upon to comment on the future of banking — a topic he is more than happy to riff on. And since we know that Jamie Dimon (someone who Mayo said may have “lost his mojo” on JP Morgan’s last conference call) was at the conference too, we hoped for some fireworks.
But before we get to that let’s spend some time on Mayo alone. He said that it is imperative that Wall Street banks work on their image. The perception of the financial industry is at a 40 year low and to change that, he argues, banks need to do better for their shareholders.
Shareholders should encourage banks to “at least spin off under-performing divisions so that the valuations could increase and right now the sum of the parts of some of these banks are far about where these market values exist.”
For people who think Wall Street’s doing just fine, talk like that is just poison. That is why Mayo said that things “got heated” between him and Jamie Dimon in Hong Kong. Mayo asked Dimon if he thought it was time the banks be broken up.
“He (Dimon) didn’t say never. He said if the discount was 50% then he’d consider it. Having said that he said it was highly unlikely.”
We would love to hear a clip of Dimon’s response. Either way, Mayo went on to point out that maybe the House of Dimon is OK, but when you look at banks like Citigroup and Bank of America, the picture changes.
Of them Mayo said:
“If you don’t make it in the major leagues you should go back to the minors.”
There’s a 10%-50% chance that one bank will shrink down in the next 4 years, he added.
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