Fred Goodwin’s title clawback sets bad precedent 31 Jan 2012 The disgraced former Royal Bank of Scotland chief executive has been stripped of his knighthood. The politically motivated move may stoke rather than sate anti-banker anger. Moreover, it devalues one of the few non-financial rewards that could be used to motivate bankers.
Gingrich makes Goldman 4-letter word – to no avail 31 Jan 2012 The former House speaker is set to lose Florida despite labeling rival Mitt Romney an agent of the Wall Street firm. But Romney’s similar conflation of Gingrich’s work with Freddie Mac to the housing bust seems to have hit further home. It’s a small victory for Goldman’s image.
Apple’s creative destruction claims another scalp 31 Jan 2012 RadioShack is the latest victim. The U.S. electronics retailer plunged 30 pct as Apple’s gadgets snaffle up a bigger chunk of the mobile market. RadioShack is largely a bet upon Android - and lesser carrier Sprint. With Apple keeping more of the spoils, that bet has now gone bad.
China can be rich or neutral – not both 31 Jan 2012 The kidnapping of Chinese workers in Sudan shows the “don’t intervene” policy is under strain. Growing foreign investment and reliance on global markets are why. China may find a softer alternative to the Pax Americana, but the odds aren’t good. With power comes aggression.
Barclays bonus could reignite UK political furore 31 Jan 2012 Royal Bank of Scotland’s boss waived his payout after Britain’s opposition Labour party threatened a parliamentary vote. Barclays CEO Bob Diamond may feel his bank’s independence from state control will spare him the same fate. But he may still make a tempting political target.
Santander has unfinished business in Spain 31 Jan 2012 Extra provisions for bad loans knocked the Spanish bank’s earnings by 35 pct in 2011. The new government will require an even bigger buffer this year, while European regulators are forcing it to maintain high capital ratios. The balancing act may come at shareholders’ expense.
Exxon slow and steady in race back from gas to oil 31 Jan 2012 The energy giant went big on gas with a $31 bln acquisition in 2010. With oil now almost seven times more precious than U.S. gas in energy terms, the company has been slower than rivals to move back toward crude. But there may be method to Exxon’s avoidance of a dash to liquids.
U.S. companies can do good without new legal fad 31 Jan 2012 So-called benefit corporations are coming to California and New York. The structure establishes social goals alongside the profit motive. But directors can already use business judgment to justify, say, saving the whales. The new form is mostly a solution in search of a problem.
Gulf stock markets head for lost half-decade 31 Jan 2012 Four years of tough times look set to turn into five. Indices are down as much as 80 pct since 2008 and volumes are desperately thin. Good dividend yields and low valuations are failing to stir investors. Without big changes, Gulf equity markets will remain a lost cause.
Euro zone ill-suited for long-term economic task 31 Jan 2012 Yesterday’s problem - fiscal insouciance - has been addressed. Now euro zone leaders need to find ways to boost their economies, and keep Greece and Portugal from turning into economic deserts. That calls for long-term thinking from governments obsessed by the next election.
Asian borrowers squeezed by foreign pullback 31 Jan 2012 British and U.S. banks have joined European rivals in repatriating credit. New data shows they sucked $87 billion in credit out of the region in the third quarter. That has sent Asian corporate borrowing costs to mid-2009 levels. More bad news from the EU could send them higher.
China needs a major real estate reshuffle 31 Jan 2012 Weak sales suggest that China’s real estate sector is hanging in the balance and a correction could knock the wind out of the economy. Yet China doesn’t have too many homes – just too many expensive ones in the wrong places. Fixes could be messy but need not be disastrous.
Carmakers show Indian manufacturers can compete 31 Jan 2012 So far, India’s economic growth has looked more to services than manufacturing. But balance is needed and carmakers may provide a blueprint. With low barriers to foreign capital, India is set to become the third largest car maker in the world and could become a major exporter.
Nigeria’s hopes may face quasi-Andean struggle 31 Jan 2012 After decades mired in corruption and poverty, the oil-rich nation now has better government. But violence could derail its economic progress. One parallel is Colombia, which suffered 50 years of stagnation before stability sparked growth. Nigeria’s leaders need quicker results.
Swiss banking rocked to its core by tax row 30 Jan 2012 U.S. authorities aren’t content to chase only giants like UBS. The country’s oldest bank, Wegelin, fell victim to the crackdown and broke itself up. Though the Swiss have tried to preserve a semblance of their financial system, the anti-haven snowball looks set to keep rolling.
Too-big-to-fail U.S. banks collecting free money 30 Jan 2012 Jamie Dimon decries red tape, yet small print in the rules may explain why JPMorgan saw a $100 bln-plus surge last year in interest-free deposits. The FDIC fully backs such accounts without limit. Big accounts tend to go to big banks, so it’s another boost for the giants.
One head at Merrill is better than three 30 Jan 2012 BofA’s investment bank is shaking things up, making Christian Meissner solo boss and redeploying two others who had shared the role with him. Merrill must still contend with the woes inside BofA and tough conditions outside. But at least it’s a cleaner structure for leaner times.
Brazil’s oil plutocracy flexes its muscles 30 Jan 2012 A foreign offshore driller has put off its IPO to appease corporate concerns of state-owned giant Petrobras. Meantime, the country’s richest man, Eike Batista, is set to extract his first barrel after navigating the bureaucracy in record time. Brazil’s oil winners keep winning.
Apple’s cash is key to unlocking suppressed value 30 Jan 2012 Though it’s the world’s most valuable company, the iPhone maker doesn’t get full credit for its near-$100 bln cash hoard or its growth. A huge special dividend could be close to a free lunch. And regularly paying out half its earnings could show why Apple may be worth $1 trln.
Expect less from corporate bosses – and pay less 30 Jan 2012 The head man at Carrefour failed to rescue the retailer. The chief at NYSE-Euronext “misjudged” regulators. Both were asked to do the impossible. It’s a Faustian deal - unreasonable expectations for excessive pay. Many bosses end up looking both greedy and foolish.
Catalan airline succumbs to predictable collapse 30 Jan 2012 Spain’s fourth largest carrier couldn’t compete in today’s ruthless aviation market without help from Catalonia’s regional government. Spanair could hardly expect to survive on handouts long term. Other second-tier European airlines will have to rely on self help or mergers.
Revamped U.S. mortgage plan too little, too late 30 Jan 2012 The Obama administration is using the last $21 bln rattling around from TARP to cajole investors to cut struggling homeowner loans. Some may bite. But the new program won’t help enough borrowers to put housing back on track and may not entice Fannie and Freddie to participate.
RBS crisis is chance to write lasting pay policy 30 Jan 2012 The mess surrounding the RBS chief’s bonus leaves none of the parties involved looking very clever. Achieving consensus on executive pay at the UK’s state-owned banks will be tough. But the fuss provides a good opportunity to put the pay regime on a sustainable footing.
Hugo Dixon: Three bad fairies at euro feast 30 Jan 2012 The Super Mario Bros - Draghi and Monti - have started well; and a deal for building a bigger firewall to stop contagion as well as a short-term fix for Greece may be in the works. But new worries are emerging about Spain and France - and of course Greece is still a mess.
Facebook IPO will put public markets to shame 30 Jan 2012 Unlike Google’s 2004 stock sale, everyone who’s anyone has already made a killing on the social network, from sharp VCs to Chinese and Russian billionaires to Goldman’s top clients. Hell, even Microsoft is up big. At $100 bln, it’s hard to imagine much is left for the hoi polloi.
EU must learn to cope with new German leadership 30 Jan 2012 Berlin will get the euro fiscal treaty it wants, and even Nicolas Sarkozy is using Germany as an example for French reforms. The euro zone has to get used to the new regime. The shock over the tough German line on Greece shows adjustments are needed - from both sides.
ABB’s $4bln low-voltage charge stacks up 30 Jan 2012 Buying Thomas & Betts, a U.S. maker of low-voltage kit, boosts the Swiss group’s most profitable business in the world’s biggest market. The deal looks decently priced, despite a run-up in T&B stock. And it’s grounded in good opportunities to cross-sell and cut costs.
Asian stocks yield gems in rough global economy 30 Jan 2012 The days of easy returns from broad bets on regional equities may be over. With Europe in crisis and the US anaemic, exports and investment inflows may ease. Asia is still the best of a bad lot, but avoiding global risk means sifting for stocks that will shine under pressure.
U.S. private sector emerges from government shadow 27 Jan 2012 Headline annualized U.S. GDP growth of 2.8 pct in the fourth quarter looks more anemic when inventory growth is netted out. But private sector output expanded at a more robust 4.5 pct. The government retreated in 2011 as a whole, but private enterprise is regaining strength.
A Van Winkle return to Davos and to real problems 27 Jan 2012 When this columnist last attended the World Economic Forum in 2000, everything was wine and roses. The biggest M&A deals ever were popping, the Nasdaq had another 20 pct to climb and everything looked rosy. Jump 12 years forward and it’s a different, more difficult world.