Assuming that he had nothing to do with creating the credit crunch problems at Fifth Third Bancorp, new CEO Kevin Kabat is certainly dealing with them. A young face that looks nothing like Mozzillo at the helm since April 2007, the media makes sure to include his picture in every piece:
“I’ve been in banking for 28 years … and in all that time I’ve never seen a more challenging operating environment than what we’re seeing today,” Kabat told donors Tuesday during a speech for Junior Achievement of the Michigan Great Lakes.
“My wife tells me every day, ‘You could have picked a better time to become CEO,’ ” he said.
Well of course thats the point - he is the perfect patsy, if you can even call him that. Kabat is at least straight forward about not knowing where the bottom of the housing market is.
It’s one of the questions Kevin Kabat hears most often: When’s the housing market going to turn around?
His standard reply: He doesn’t know.
“No banker can answer that,” said Kabat, CEO of Cincinnati, Ohio-based Fifth Third Bancorp who’s just as eager as others for a turnaround.
The housing downturn has left a large stock of inventory on the market that will elongate the problem, Kabat said.
The elongated problem Kabat refers to includes, among other things, being completely dumped by Macquarie Group and slashing the interest rate it gives depositors:
Fifth Third, Ohio’s second-largest lender, was the most aggressive at passing on interest rate cuts to its deposit base, dropping rates across nearly every market and product. The bank offered the second-lowest yield on interest-bearing deposits in the second quarter, down from the second-highest just five quarters ago.
However, Mr Horowitz said the benefits for the bank of cutting such rates could be short-lived, as sharply lowering rates could reduce Fifth Third’s ability to attract new deposits.
Being cut by Fitch before life support,
Fitch Ratings has downgraded ratings for Cincinnati, Ohio-based Fifth Third Bancorp (FITB) and its principal bank subsidiaries. The long-term Issuer Default Rating (IDR) and the short-term IDR have been lowered to ‘A+’ and ‘F1′ from ‘AA-’ and ‘F1+’, respectively. Following these rating actions, the Rating Outlook is Stable. A complete list of ratings is provided at the end of this release.
While slashing its own dividend and raising $2B in fresh cash,
Regional bank Fifth Third Bancorp, trying to shore up its capital base, said Wednesday it will slash its dividend by nearly two-thirds, raise $1 billion through a preferred stock offering and another $1 billion through the sale of noncore businesses.
So after that litany of disasters, the bank still has to report Q2 earnings with all the write-downs it will bring. At least they fessed up to raising $2B in cash. Even that will get harder as banks go back to the well again and again. Nothing’s easy in the credit crunch.
For Kabat, the young man with the nice wife and his picture all over the business sections, well, he “has been named chairman of the board of directors.” How nice. CEO and chairman of the board, all coming into the teeth of the credit crunch. That’s a lot of power at a very critical juncture in the bank’s struggle to survive. That nice wife of his was absolutely right!
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