Macquarie Bank Tolled off

As mentioned in a post note to For whom the MacBank Tolls, one of the MacBank Posse blinked when Toll unleashed the legal eagles against the MacBank hostile takeover of the Toll hostile takeover bid. But it is not so clear whether it was the legal fees or MacBank's fees or something altogether different that caused the capitulation.

Elizabeth Knight chalked it up to "MacGreed".

There have been rumblings about the Maquarie fee-generating model for years and they have intensified over the past six months as replicas such as Babcock & Brown have mushroomed.

The Patrick deal fell apart for a series of reasons, but significant among them was a feeling among some in the investment community that Macquarie was too heavy on fees and too light on the use of its own capital.

In other words, that the deal was inequitable. Macquarie had a get-out-of-jail-free card as it was earning fees of $200 million or more ($400 million if you believe Toll) plus a return on the $165 million capital it invested.

Some funds managers were concerned that the scales had tipped a little too far.

The Toll team would have also rattled those managing superannuation funds with an advertising campaign in yesterday's papers that played on the theme of Macquarie's excessive fees and the poor performance of its satellites on the sharemarket over the past year.

But the ramifications of such a deal falling over might raise more unwelcome question marks about how Macquarie structures these deals.