Hoare Govett lives to fight another day 30 Nov 2007 Over the last few years, the corporate broker has survived an onslaught by US banks, attempts to poach its top staff, and a lengthy takeover battle for parent ABN. But in new owner RBS, this distinguished City franchise looks to have found an ideal home.
Snooty bankers are learning some humility 30 Nov 2007 Stuckup bankers who thought they knew it all are to blame for the current credit squeeze, according to German finance minister Steinbrück. He may have a case. But the market has a way of teaching the proud a lesson or two. Meek bankers are now begging for yearend help.
Motorola’s new chief has luxury of low expectations 30 Nov 2007 Its top job may look like a poisoned chalice. Sales are declining, its handsets look tired and Carl Icahn is hovering. But the post may be more palatable than it appears. Motorola s balance sheet is strong. And the group has a long history of unveiling surprise hits.
Gazprom $5 trillion ambitions suffer from Putin’s diktats 30 Nov 2007 The Russian oil giant wanted to be the world s first $1 trillion company. But PetroChina beat it handily. Now its chairman jokes it should aim for the $5tr mark. Even this will remain a pipe dream as long as the Kremlin, and not shareholders, call the shots.
US housing: worse than in 1991, and still falling 30 Nov 2007 US house prices have already declined more than during the last housing crisis. But too many used homes are still up for sale. The average price is down 8% from the peak. A sharper fall will be needed to get the market back into balance. The means more mortgage pain.
Morgan Stanley plans for life without Mack 30 Nov 2007 To this end, Zoe Cruz is leaving the firm and Walid Chammah and James Gorman take over as copresidents. The investment bank deserves praise for proper succession planning even as Mack still struggles to prove he was the right man for the job.
Flowers tries dressing as Branson to get back in on Rock 30 Nov 2007 The private equity boss isn t taking his defeat in the first round of the UK bank s auction quietly. He has revamped his bid to more like that of the Virgin entrepreneur. That may be better news for shareholders than taxpayers.
Early-reporting banks get a New Year gift 30 Nov 2007 November ends the financial year at Morgan, Goldman, Lehman and Bear. Despite continuing balance sheet and economic worries, starting a new year a month ahead of rivals could be an advantage. The four banks get a jump start on fresh risktaking and new ibanking business.
Paulson’s subprime bailout faces long odds 30 Nov 2007 His new scheme to head off defaults on resetting adjustable rate subprime mortgages makes more sense than his SuperSIV project. That only addressed a symptom of the mess; the new effort tackles a cause. But it s far more complex than the SIV bailout and faces longer odds.
Federal Reserve rate cuts have become irrelevant 29 Nov 2007 The Dow rose 331 points on expectations of another quarterpoint Fed rate cut on December 11. But conditions in the interbank market suggest the Federal Funds rate has become irrelevant to the financial market crisis. Liquidity and credit risk are what matter now.
Subprime spooks Sunshine State 29 Nov 2007 Florida school boards and local governments yanked money out of a staterun money market fund with some subprime exposure. In every financial crisis, there s a moment when Main Street realises it could suffer a lot from Wall Street s mangled esoterica. That may have arrived.
Sarko-Romano show likely to involve too much meddling 29 Nov 2007 Friday's FrancoItalian summit will be a great opportunity for the country's leaders to stick their fingers into multiple industrial dossiers energy, banking, airlines, insurance and motorways. It would be far better if the Alps were not be a border and politicians stayed out of business.
Fortis pays for Chinese big brother 29 Nov 2007 The battered BelgoDutch bank is giving Ping An a board seat even though it isn't injecting new capital. That said, the Chinese insurer's purchase of E1.8bn of shares in the market probably helped stop Fortis stock falling even further after its badly received carveup of ABN Amro.
Could Citadel’s $2.5bn bailout of E*Trade go beyond bottom-fishing? 29 Nov 2007 The $16bn hedge fund group is buying problem CDOs from E*Trade at firesale prices. It s also injecting lifesaving funds into the troubled online broker. The deal looks canny. But with Citadel s big electronic trading business, there might even be a strategic rationale one day.
Can sovereign funds rescue Western banks? 29 Nov 2007 China says it wants to follow Abu Dhabi s lead and act as a market stabiliser to financial institutions. If all big funds took the same asset allocation as Singapore s Temasek, there could be $300bn to deploy. In theory, that might do the trick.
Eddie Lampert needs to spell out his Sears strategy 29 Nov 2007 Sears is either a struggling secondtier retailer or a hedge fund in disguise. Today's disappointing results make it look more like the former. Of course, Eddie Lampert may have a few tricks up his sleeve. If he does, it's time to let shareholders know.
Forget a BofA/Citi merger – bring on JP/Citi 28 Nov 2007 If mega US bank mergers are really back on the menu, why not consider one that could actually tick most of the boxes Citi needs? A merged JPMorganCiti would call for fewer, easier, divestitures; would bring Jamie Dimon and his band of former Citibankers in to run the place; and could create some $80bn of value.
Is now the time to buy bank stocks? 28 Nov 2007 Only if the credit crunch turns out to be no more debilitating than 1998 or 2002. But today s financial crisis is starting to feel more like the one in the early 1990s. If that s the case, bank stocks on both sides of the Atlantic could have further to fall.
UK listed property stock sell-off has gone far enough 28 Nov 2007 Sure, the UK commercial property market is in bad shape. As the hot money exits the sector, the spectre of firesales is depressing prices and activity. But current share prices are discounting up to 25% falls in asset values and 6%plus yields. That looks too gloomy.
Even Sarko can’t buck the market 28 Nov 2007 The new French president thought he had some bright ideas to restructure French industry. But the ThalesSafran merger is rightly dead in the water and he s thinking twice about his plans to combine Areva with Alstom. Market realities are sinking in after all.
Is Google turning into a sovereign wealth fund? 28 Nov 2007 The search group is gushing cash like an Abu Dhabi oil well. Its latest effort to redeploy this bounty is a push into green energy. Ambition is the fuel of Silicon Valley, but Google is in danger of flooding its engine by investing in everything from personalised biotech to space flight.
BHP should pay for Rio’s Aussification 28 Nov 2007 BHP doesn't just want to take Rio over it wants to take it down under. There's no real harm in that. But Rio should be able to extract better terms given the huge political kudos to BHP in creating an even bigger Australian resources champion.
Opec could come to regret a production hike 28 Nov 2007 The oil cartel is under pressure to push up production quotas by 2%. But this highly speculative market is already wellstocked. Additional supply could push the price down sharply, as happened a decade ago. A repeat would cripple some Opec members oildependent economies.
Credit crunch is perfect excuse for profit warnings 28 Nov 2007 A rash of companies not just banks like Citi but also the likes of Ericsson, Starbucks and Wolseley are coming out with profit warnings. Most are blaming the crunch. In some cases, that's valid. But it may also be ideal cover for ordinary bad performance.
Italian motorway fiasco descends into farce 28 Nov 2007 The Italian government behaved disgracefully last year when it blocked a merger between Autostrade and Spain's Abertis by throwing the tariffs up in the air. After pressure from Brussels, the Prodi government has finally agreed new tariffs with Autostrade only for them to be damned by its own advisory body.
Brown’s political woes add to risks to UK economy 28 Nov 2007 The UK Prime Minister s credibility has taken a hammering just when he needs all the authority he can muster to cope with a downturn. Worse, he is boxed in by his own macro economic rules. Relaxing these may be the right thing to do but it would also torpedo what remains of his reputation.
Ackman’s charity boon may get lost in a monoline crash 28 Nov 2007 The Pershing Square boss says he ll donate to charity the $500m he ll make if, as he expects, bond insurers fail. But with $1.3 trillion of municipal debt guaranteed by the monolines, his generosity might be a minor footnote in the carnage that would ensue.
IKB is becoming Germany’s Northern Rock 28 Nov 2007 The cost of the quasistate bailout of the German lender has doubled to E4.8bn. IKB shareholders deserve nothing but they are likely to be bought out. As a result, they are still sitting on equity with a market value of E750m curiously almost exactly what Rock is worth.
Candover deal ends well for Stork shareholders 28 Nov 2007 Candover has finally got Stork, at a small premium to its previous unsuccessful bid. That's great news for the Dutch firm's shareholders, who faced having no bid at all. What sealed the deal was Marel, the Icelandic firm, paying a full price for Stork's food systems arm.
US investors deserve their rights (issues) 28 Nov 2007 The rush by strapped US financial institutions to raise capital exposes a weakness of American capitalism. New investors often get stakes at bargain prices. The UK rights system is preferable. It partially compensates existing shareholders for dilution and loss of control.