A long-awaited plan to protect bank savings could have strange effects in a system where citizens believe the state stands behind almost everything. Those with wealth above the guaranteed limit may abandon small banks. The benefits will only kick when assurances are tested.
Sliding energy prices could make already-low Asian inflation vanish. That’s bad news for heavily indebted economies like China, South Korea, Thailand, Malaysia and Singapore. If prices and wages don’t rise, borrowers will curb spending. Slowing GDP growth could stumble.
Traders are testing the central bank’s franc ceiling and using options to bet the currency will break through. The wager is inspired by euro weakness and a looming referendum on whether the SNB should buy more gold. This is one monetary authority the market is unwise to take on.
A state-appointed British commission says income tax-raising should be devolved to Edinburgh, along with some powers to borrow. That raises the tricky question of whether London will underwrite Scottish debt. If so, there’s moral hazard; if not, it pushes Scots towards secession.
The Japanese group has set aside $660 mln to replace car parts linked to at least five deaths. Regulatory demands for a US-wide recall could double the bill. Lawsuits and fines will mean more pain. Takata’s survival may depend on the support of its customers – or the government.
The $1.6 trln lender secured a provisional stamp of approval from regulators for its living will. Less credible plans from 11 other titans suggest size isn’t the issue. Wells ranks fourth in assets and first in market cap. The real problems are complexity and interconnectedness.
If the former British Telecom buys Telefonica’s UK mobile business, it will regain a unit demerged in 2001. The round-trip is unusual but forgivable. 02’s demerger delivered good returns for BT investors who kept their stock. BT refocused, and its re-entry to UK mobile is timely.
The oil cartel, led by Saudi Arabia, is either willing to sacrifice profit or unable to agree on production cuts. Either way, lower prices challenge U.S. shale oil producers, but that industry may still thrive. In the OPEC fog, one thing is clear: weaker members will suffer.
Splitting European lenders’ market-making from their other activities could cost 21 bln euros, research suggests. Yet global resolution reforms are reducing the need for structural separation. And the proposals, as drafted, could hinder the nascent capital markets union.
The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.
A Citi analyst settlement and a probe into an HSBC hedge fund leak aren’t about grey areas. The alleged transgressions break clear rules. As in a recent experiment reported by Nature, they betray bankers’ tendency to eschew what they should do for what they can get away with.
The EC president is pushing a 315 bln euro infrastructure project, using a sliver of taxpayer-funded equity. Europe’s economy needs the stimulus, but this one relies on old money and financial engineering. Investing the funds as quickly as the region needs will prove a challenge.
Not long ago an overheating housing market was seen by many as the big UK danger. Now mortgage approvals are dropping and house inflation is easing – even though mortgages are getting cheaper. Tighter home-loan regulation is a factor. Workers’ low earnings are the main restraint.