Tee hee!

In the cosy world of The City of London, the top boys just shovel piles of (shareholders') cash at each other, e.g. when banks are issuing shares, they even appoint other banks as 'advisors'. There is a practice called 'underwriting new issues', whereby Big Investment Bank is promised oodles of issuing shareholders' readies in exchange for a vague promise to pick up any shares than the issuer can't sell in the market. And Big Investment Bank uses that cash to pay eye-watering boni to its senior employees; shareholders in Big Investment Bank don't see much of it.

Without going into technicalities, it looks as if Morgan Stanley and Dresdner Kleinwort have finally been hoodwinked by HBOS. For the first time in ages, underwriters might actually made a loss on a deal. In which case, the shareholders in Morgan Stanley and Dresdner Kleinwort's parent, Dresdner Bank AG are the ones being robbed.

Nice one, Andy Hornby!

H/t Fubar at HPC.