Mitch Caplan, the beleaguered chief executive of E*Trade Financial Corp that saw its shares halved on Monday in a day following sub prime shocks, has categorically ruled out the possibility of bankruptcy
Caplan was quoted by business news channel CNBC as saying, "We''''re here to stay", a week after Citigroup financial services analyst Prashant Bhatia said a bankruptcy filing could not be ruled out if customers lost confidence in E*Trade and withdrew their deposits.
The company has $29 billion in customer deposits, around half of which are over the $100,000 threshold covered by federal deposit insurance.
Caplan, who is reported to have cancelled a scheduled presentation at a Merrill Lynch banking conference yesterday, said that E*Trade still has "real" balance sheet issues, but its retail franchise remains in "phenomenal" shape.
Calling the bankruptcy speculation "sensational" Caplan told CNBC that the suggestion that there may be a run on the bank by Bhatia was irresponsible "to our customers, our employees."
Bhatia estimated that E*Trade could lose up to $5 billion if it tried to sell its mortgage portfolio.
While admitting candidly that the company''''s balance sheet was likely to shrink, he said that it would have no impact on downsizing the business, as it continued to be well capitalised and would be able to resolve its problems, either through a partnership or relationship, Caplan said.
He said he remains "bearish" and sees a broader market downturn for the next 12 to 18 months.