The cost to the bank, apart from a £100m bill for underwriting the rights issue, is an extension of a year to the moment when Jenkins thinks Barclays can generate a return on equity above its cost of equity.
The firm still managed to generate a return on equity of 17percentt".
French state-owned savings banks generate a return on equity of 2%, which makes it hard for private-sector rivals to achieve their 15-18% targets.
Analysts at Citigroup think that Deutsche will generate a return on equity in 2015 of 9.3%; Barclays this week said it will be making more than 11.5%, which it reckons is its cost of equity, in 2015.
Société Générale will generate a return on equity greater than 100 percent, while the other leader in the business, Goldman, will generate a return of 52 percent, according to the JPMorgan report.
Société Générale's chairman and chief executive, Frédéric Oudéa, said in a statement that the bank's latest cost-cutting plan would help it to generate a return on equity, a measure of profitability, of 10 percent by the end of 2015, compared with 7.4 percent in the first quarter this year.
Parmigiani thinks the latter company will generate an average annual return on equity (net income expressed as a percentage of shareholders' equity) of 47% for fiscal years 2005 and 2006.
And according to his model, even small constraints on borrowing are able to generate a hefty premium on equities.From theory to practiceThese explanations are far from the only ones that economists have come up with.
So while the surplus lasts, it should not be invested largely in risk-free government securities, as it is at the moment, courtesy of the Bank of Japan, but in riskier assets, such as equities, that generate a real return.
Depending on available government subsidies and the local kilowatt-per-hour rate for electricity, installing a system to produce, supply and store solar energy, investment may generate a more stable return than equities.
