Journalists
George Hay writes about the banking and property sectors. He joined from Thomson Financial News, where he was a companies correspondent. Before that he worked at United Business Media, where he was news editor of Building Magazine. He has a first in English Literature from Edinburgh University, and was nominated in two categories at the 2009 Business Journalist of the Year Awards.
The UK regulator is to have new powers to restrict short selling. The prospect of the authorities directly intervening in the market is alarming. If shorting poses a threat, an intelligent disclosure regime should suffice to ensure an orderly market.
The UK commercial property group’s results are the latest evidence of the real-estate recovery. With the sector trading above book value, British Land’s sticky rental contracts make it relatively attractive. If it spends its £1bn war chest wisely, that should be reflected.
Regulations that could force European insurers to raise fresh capital to back existing annuity liabilities may be relaxed. But new annuity business could still be affected. It’s especially troubling for UK insurers. Regulators have more work to do to find a consistent approach
A 1p payout isn’t a grand gesture. The UK bank’s investors might have expected a higher initial post-crisis payout. But while Barclays hit quarterly forecasts and impairments appear to be levelling off, the outlook is still uncertain. There might be more generosity at year-end.
Regulators want to avoid the collapse of another international giant like Lehman. Turning all cross-border wholesale banks into capital federalists like HSBC is probably a non-starter. But Lord Turner’s alternative - that refuseniks should hold more capital – is worth exploring.
The UK bank’s larger degree of state support relative to rival Lloyds means the EC is giving it a much rougher ride. The threat of unanticipated disposals has knocked RBS shares. But improved terms for state-provided loan-loss insurance should limit shareholders' suffering.
UBS banker Robin Budenberg is to be investment manager for the UK's bank stakes. Top priority should be encouraging RBS to show leadership with a prudent bonus policy this year. That may make Budenberg look a political stooge. But he’ll soon have the chance to prove otherwise.
Banks often turn dud loans into equity investments. It’s a little trickier for RBS and Lloyds, which are set to become the biggest private-equity firms in the land. For shareholder value, joint ventures with pros look good. But their state investor may have different ideas.
The government plans to introduce legislation allowing the regulator to rip up employment contracts if they encourage excessive risk or involve multi-year guarantees. Bankers haven’t earned themselves any friends. But meddling with their contracts is a worrying way to go.
Investors panicked when the Dutch bancassurer agreed to sell its insurance arm. But it has four years to get a good price. Add in the repayment of state aid, and ING’s current conglomerate discount could be erased. Brussels’ intervention may turn out to be a boon.
Shareholders in the UK’s two bailed-out banks haven’t been wiped out. But their returns are being savaged by forced disposals plus mammoth, expensive and dilutive capital increases. Lloyds will recover faster. But even by 2012, RBS may be earning barely a few pence a share.
In February, the UK banks seemed as bad as each other – both were staring at state insurance and higher government ownership. This fate has indeed now befallen RBS, which has received a further smack from Brussels for good measure. But for Lloyds, the future looks brighter.
The UK bank appears to need £25bn to exit the state’s loan-loss insurance scheme, but a rights issue could probably provide only half that. Swapping hybrid debt for convertibles would plug the gap, while diluting the government’s stake. But such a plan won’t be easy to execute.
Tumbling bank share prices following ING’s EU-encouraged break-up may seem overblown. The Dutch bancassurer wanted to split itself up anyway. But bailed-out bank shares were frothy, while bank subordinated debt was trading at a discount to par. A correction was overdue.