Bear Stearns
| Bear Stearns & Co Inc.
|
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|---|---|
 |
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| legal form | Incorporated |
| founding | 1923 |
| resolution | 2008 |
| Seat | New York City |
| management |
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| Number of employees | 13,566 |
| sales | $ 9.227 billion |
| Branch | Bank |
| Website | www.bearstearns.com |
| Status: 2006 | |
The Bear Stearns Companies, Inc. ( Bear Stearns for short ) was a US investment bank founded in 1923 with headquarters in New York . The financial institution was taken over by competitor JPMorgan Chase & Co. on May 30, 2008 in the wake of the US banking crisis in order to avoid bankruptcy.
Since 1985 Bear Stearns has been listed as a public company on the New York Stock Exchange and was listed on the S&P 500 stock index. The total assets amounted in May 2007 to 423.3 billion US dollars. Due to a liquidity crisis at Bear Stearns caused by the subprime crisis in 2007 , JPMorgan Chase & Co., with the support of the US Federal Reserve, submitted a takeover bid on March 16, 2008, the price improved on March 24, 2008 and May 30, 2008 was carried out.
History of the company
Bear Stearns was founded on May 1, 1923 by Joseph A. Bear, Robert B. Stearns and Harold C. Mayer. The initial capital was 500,000 US dollars, 7 employees were initially employed. The bank survived the 1929 stock market crash and did not have to fire any of its employees. The first branch was opened in Chicago in 1933, and Bear Stearns now had 75 employees and registered capital of 800,000 US dollars. That year, Salim L. ("Cy") Lewis was hired, who later became Chairman and Chief Executive. At the same time, the business was expanded to include trading in corporate bonds, after the company had previously mainly traded in government bonds. In 1955 the first international office was opened in Amsterdam. Alan ("Ace") C. Greenberg, hired in 1949, became chairman and chief executive in 1978 after Lewis died. In 1985 the company went public.
James Cayne (born 1934), employed as a stockbroker at Bear Stearns in 1969, became CEO in 1993 and also assumed the title of chairman in 2001.
He had become a major shareholder and a professional bridge player who spent days in a bridge tournament during the 2007 hedge fund crisis. In December 2007 the bank wrote the first quarterly loss in its history. In January 2008 Cayne had to resign and Alan D. Schwartz became CEO.
Bear Stearns came under fire in 1999 when the bank was sued for its role as clearing agent for AR Baron, a small brokerage firm that defrauded its clients. Bear Stearns eventually paid $ 42 million in compensation. In 1998, Bear Stearns refused to bail out the hedge fund LTCM , which had speculated into massive difficulties and threatened to topple the financial system. At that time, all other large banks agreed on an aid package for the fund, which was finally dissolved in 2000.
Companies
The company was divided into the divisions Capital Markets , Wealth Management and Global Clearing Services . Bear Stearns had US offices in New York, Atlanta, Boston, Chicago, Dallas, Denver, Los Angeles, and San Francisco and San Juan. Internationally, the bank had branches in Dublin, Hong Kong, London, Lugano, Milan, Beijing, São Paulo, Shanghai, Singapore and Tokyo. In autumn 2007 the expansion continued with the opening of the branches in Paris and Frankfurt. The European activities were mainly managed through the branch in London. Around 1,000 of the bank's 14,000 employees worked here for Bear, Stearns International Limited , a 100% subsidiary of The Bear Stearns Company . The London office was located in Canary Wharf in the One Canada Square building . This is the tallest building in Great Britain. In 2009, Bear Stearns' new building in London was due to open, also in Canary Wharf.
Bear Stearns had been represented in Germany with a branch in Frankfurt am Main since the beginning of 2007. Bear Stearns also sold retail financial products under the brand name 'best markets'. In Germany, certificates were sold through banks and savings banks. JP Morgan will continue to operate these financial products following the completed acquisition of Bear Stearns by JP Morgan.
Corporate crisis and takeover
Bear Stearns ran into trouble in the early stages of the subprime crisis in 2007 after three hedge funds launched by the company ( High Grade Structured Credit Strategies Enhanced Fund , High Grade Structured Credit Strategies Fund and Asset-Backed Securities Fund ) filed for bankruptcy. On the Cayman Islands -based liquidators applied for bankruptcy protection in New York court (US Bankruptcy Court). The latter fund suffered a loss of US $ 4.5 million, which is half a percent of the total volume of US $ 900 million.
As a result, rumors of liquidity problems at Bear Stearns rose again and again in the financial markets. On March 10, 2008, Bear Stearns described such rumors as "absolutely untrue" in a media release. Four days later, on March 14, 2008, Bear Stearns admitted a "significant deterioration in liquidity in the past 24 hours". In the opinion of Bear Stearns, this was caused, among other things, by the ongoing rumors, since the credit market was de facto no longer accessible to Bear Stearns. At the same time, JPMorgan Chase & Co. and the US Federal Reserve put together a rescue package in the form of a bridging loan. Bear Stearns' shares then plummeted over 47 percent.
On Sunday March 16, 2008, JPMorgan Chase & Co. announced an offer to acquire Bear Stearns. The takeover price was around two US dollars per share, after it closed at 30.85 US dollars on Friday and was still worth 57.00 US dollars on Thursday. The takeover price corresponded to a capitalization of 236 million US dollars. The rescue package that had been put together also stipulated that the US Federal Reserve would assume practically all of Bear Stearns' risk of loss up to a total of 29 billion US dollars, while JPMorgan Chase & Co. would assume the first billion of any losses incurred.
The acquisition price was later improved to around $ 10 per share. At the same time, JP Morgan Chase acquired 39.5 percent of the shares as part of a capital increase. The share was increased to around 49 percent by the end of April 2008. An Extraordinary General Meeting was convened for May 29, 2008 at the New York headquarters. The main item on the agenda was the approval of the acquisition of Bear Stearns by JP Morgan Chase. The takeover was completed on the following day, May 30, 2008; for one share of Bear Stearns, shareholders received 0.21753 shares in the acquiring JPMorgan Chase.
See also
Individual evidence
- Jump up ↑ The World of July 25, 2014: Alan 'Ace' Greenberg, who made the big hit with Bear Stearns, Is Dead, by Yalman Onaran , accessed July 25, 2014
- ↑ a b Bear Stearns Annual Report, November 30, 2006
- ↑ a b JPMorgan Chase press release, March 24, 2008 - JPMorgan Chase and Bear Stearns Announce Amended
- ^ N-tv: Bear Stearns in need
- ↑ Bear Stearns media release, March 10, 2008 - Bear Stearns denies liquidity rumors
- ↑ NZZ, March 14, 2008 - Bear Stearns close to collapse
- ^ Spiegel, March 14, 2008 - Bear Stearns saved at the last minute
- ↑ NZZ, March 17, 2008 - JP Morgan Chase takes over Bear Stearns
Web links
- Website of Bear Stearns (English)
- International and German web presence of best markets