Bank crisis plans strike discordant note 10 Dec 2012 U.S. and UK regulators are sensibly singing from the same hymn-sheet on how to deal with failing global banks. Yet they sound out of tune with other regulatory calls for subsidiarisation. More global conducting is needed to create workable cross-border resolution schemes.
Hugo Dixon: Dos and Don’ts of EU banking union 10 Dec 2012 The conventional wisdom holds that the euro zone needs banking union to solve its crisis. That’s wrong. There are alternatives. What’s more, centralisation will undermine sovereignty. That said, if merged banking regulation is the goal, the euro zone needs more than a fudge.
Banking union will revive pan-EU bank M&A 7 Dec 2012 The euro crisis has balkanised the continent’s banks, with national authorities protecting their own turf and forcing domestic mergers. A single regulator and central bailout fund will lift these barriers. And it might also make EU banks more attractive to non-euro competitors.
Barclays bet lives up to rich billing for Qatar 6 Dec 2012 Qatar has earned a 19 pct IRR on its complex 3.4 billion punt on Barclays at the height of the crisis. That’s a decent return for the then huge risk. But an ongoing probe into fees related to the capital-raising marks an unanticipated, non-financial cost.
Deutsche spat reopens mark-to-model/myth debate 6 Dec 2012 Former employees of the German bank allege it hid $12 bln of losses during the crisis. Banks valued the structured credit assets in question with their own models. This raises the question of whose interests would have been served by a more robust approach.
China shadow bank shakeout would be welcome 6 Dec 2012 A wealth product goes wrong; a small Chinese bank blames a rogue employee. It sounds trivial. But if Hua Xia’s crisis shakes confidence in China’s shadow banks, it could jeopardise $2 trillion of loans. Sorting it out might be painful, but produce a healthier financial system.
Citi’s new boss wields his predecessor’s machete 5 Dec 2012 Mike Corbat is picking up where Vikram Pandit left off. The bank will cut 11,000 jobs, reaping savings of $1.1 billion a year. It won’t endear the new boss to his staff. But it’s not a radical move, hitting back-offices hardest. Corbat’s merely tweaking Pandit’s strategy.
British bank levy hike even sillier than feared 5 Dec 2012 The coalition again upped its charge on bank balance sheets to cancel out the gift of lower corporation tax. But the levy will now raise more than the 2.5 bln stg originally sought. That looks gratuitous and short-sighted given that banks are meant to be growing domestic lending.
Banking union is on the way. Resistance, too 5 Dec 2012 All the differences between France and Germany on the euro zone common banking regulator can be surmounted by compromises. The main questions are how long it will take to find them, and whether the ECB will be energetic enough to overcome the inertia of 17 national regulators.
Greek banking governance is a gamble 3 Dec 2012 The euro zone and IMF are putting nearly 50 billion euros into the country’s banks. But they don’t want to take control of the lenders themselves or let Greek politicians meddle in the industry. So they’ve concocted a scheme which may leave too much power with existing owners.
Logic won’t topple London from euro perch 3 Dec 2012 The French central bank governor wants euro trading to be done in the euro zone, not in offshore London. The argument is sound. But Christian Noyer should know that finance doesn’t work that way. After all, he is pushing Paris as an offshore currency market - and good luck to him.
UK bank steroids are working for the wrong reason 3 Dec 2012 Net lending by domestic banks rose only a bit in Q3. That’s a disappointment given the Bank of England is offering super-cheap funding to boost lending to the real economy. But the central bank support is probably having a benign side-effect - the softening of painful deleveraging.
UK bank capital probe puts heat on RBS 3 Dec 2012 The Bank of England has publicly questioned whether domestic lenders are adequately provisioned against future losses. Making definitive judgments about who this affects isn’t easy. But RBS’s 66 bln pound commercial property book is one place to start asking questions.
Unnamed UK banks shamed into capital action 29 Nov 2012 In June, the Swiss central bank publicly told Credit Suisse it was undercapitalised. The ploy worked. The Bank of England now says UK banks need capital but has stopped short of naming names. The doubts expressed by the BoE on risk-weighting, however, are reassuring.
Spain’s bank rescue is part bail-in, part bail-out 29 Nov 2012 Madrid has lopped 10 bln euros off its bank rescue tab by cutting the value of its worst lenders’ hybrid debt. Ireland’s 2011 haircuts were steeper. Politics means Spain had to balance burden-sharing with ways to soften the blow for the retail punters who must share the pain.
Ackermann jibe evokes ghost of Deutsche past 27 Nov 2012 Deutsche Bank has erred by choosing not to send co-CEO Anshu Jain to a parliamentary hearing on Libor. Jain wasn’t directly called, but it still looks evasive. And it has given ex-boss Josef Ackermann the chance to revive an unseemly Deutsche custom of undermining new leadership.
Lehman’s Archstone saga twists till the end 27 Nov 2012 The U.S. apartment empire that buckled the investment bank is being sold to two rivals for $6.5 bln. Accounting changes and poor disclosure muddle the valuation. Lehman creditors also will be left investing in the real estate. It’s a perfectly confounding denouement.
EU must ensure Basel III is delayed not derailed 27 Nov 2012 Brussels is set to follow the U.S and push back the start of vital global bank reforms. While not ideal, a delay of months rather than years would be bearable. The danger is that Basel III haters and self-serving banks use the confusion to water down what remain worthy reforms.
Pay bankers in CoCos to manage moral hazard 27 Nov 2012 Bond investors are worried that banks could deliberately run down capital to trigger a bail-in of their contingent convertibles. Checks and balances mean the risk is small. But it’s still real. Banks could address it by aligning bonuses with CoCos.
UK should resist yet another bank levy hike 26 Nov 2012 The coalition’s annual tax on lenders’ balance sheets started life as a smart way to raise cash while geeing banks to slash risky short-term funding. But bankers now expect the rate to be raised for the third time. That undermines incentives. Better to focus on stimulating lending.