Deeper SIV scars may cut A&L’s takeover appeal 29 Jan 2008 The UK bank has tripled its credit crunch writedowns. That s far from fatal. But it may put off any suitors, contrary to investors long cherished expectations. A&L looks even pricier, just when its chances of raising earnings fast are waning.
Should SWFs go on the board? Sometimes 29 Jan 2008 Sovereign wealth funds are now big investors in many Western companies. Yet they rarely take board seats. Sometimes they don t ask, sometimes they re not wanted. Nonparticipation isn t always the right answer. Big investors should have their say, if they are responsible.
Silver lining for BSkyB in costly ITV ruling 29 Jan 2008 The satellite TV broadcaster faces a £250m hit the loss on a forced sale of 10% of terrestrial rival ITV. It s a blow to profits, but it may pay off in the long term, if it helps Sky fend off potentially costlier regulatory intervention over its dominant position in payTV.
What bank CEOs should know 29 Jan 2008 Wall Street was hammered by repackaged subprime mortgages. SocGen took a hit on equity futures. Modern finance is about taking risk through complex instruments. Bank CEOs need to understand these products, but many don t. Here s a starter kit of questions for shareholders to ask.
Is the IMF trying to drum up new business? 28 Jan 2008 StraussKahn's call for greater fiscal deficits contradicts traditional, fiscally conservative IMF policy. However the IMF currently has run out of borrowers and is barely breaking even. Maybe StraussKahn is looking for more fiscal wrecks for the IMF body shop.
SocGen fraud: no way to run a casino 28 Jan 2008 The French bank says that Jérôme Kerviel created a fictitious E50bn hedge for a genuine E50bn punt. By the time anyone noticed, either inside or outside the bank, SocGen was on the way to losing E5bn. The carelessness makes both the bank and its counterparties look foolish.
12 steps for Eddie Lampert’s recovery 28 Jan 2008 The hedge fund supremo has recognised that Sears Holding needs an overhaul. Admitting that one has a problem is the first step on the road to recovery. We offer Lampert a 12step method to break the cycle and revive the iconic American retailer.
Sprint may back away from Wimax lottery 28 Jan 2008 The telecom group s acquisition of rival Nextel was a disaster. New boss Daniel Hess may ease a turnaround by injecting Sprint s wireless broadband assets into partner Clearwire. This would be prudent, but it precludes a jackpot payoff for Sprint.
Personal view: Suharto brought Indonesia more than theft 28 Jan 2008 The Indonesian leader, who died on Sunday, ran the country for three decades. He enriched himself, but also helped the country, argues Martin Hutchinson.
Fortis raises warning flag on bank writedowns 28 Jan 2008 The BelgoDutch bank has highlighted a sectorwide problem how to value subprime investments. It has offered two scenarios. The benign one isn t too worrying earnings would come close to forecasts. But the conservative alternative implies pain for itself and many peers.
Credibility vacuum may be next threat to markets 28 Jan 2008 If there s another shock, who will ride to the rescue? Regulators are in a twist, as demonstrated by the communication failure following the SocGen fraud. Meanwhile, the investment banking industry s own leaders lack credibility.
CME’s $11bn bid looks good for Nymex 28 Jan 2008 The Chicago futures giant offered an 11% premium for the New York energy exchange. That looks a bit generous. After all, Nymex uses CME s trading platform Globex, a hurdle for other bidders. And Nymex is largely a play on energy. But CME may make the deal pay off nonetheless.
Greece should back down in OTE dispute 25 Jan 2008 Greece recently rushed through a new law designed to prevent private equity group Marfin raising its stake in telecom operator OTE. This looks like a blatant abuse of shareholder rights and EU single market law. Brussels must not let it off the hook.
Was SocGen right to dump its E40bn portfolio? 25 Jan 2008 When the French bank discovered the positions built up by rogue trader Jerome Kerviel, they were E1.5bn in the red. By the time the rushed sale was complete, the loss had more than tripled. Selling into a falling market is expensive. But the alternative looked worse.
Diller adopts good governance…to shaft Malone 25 Jan 2008 The IAC boss known for his excessive compensation is adopting a singleshare voting structure in the spinoffs of the web conglomerate s assets. But this looks more like a tactical attempt to get John Malone off his back than an aboutface for shareholders.
Mittal goes to India with Sarko 25 Jan 2008 Just two years ago the French establishment fought a bitter campaign to stop the steel tycoon acquiring Arcelor. Now he s not just accompanying France s president on a mission to India; he s on the board of Eads, a strategicallyvital company for France. Vive la réalisme.
Job cuts are Wall Street’s next big guessing game 25 Jan 2008 Sure, divining the size of yet more writedowns still has some juice left in it. But investment banks have only just started shedding staff. In some cases it seems sooner than in the last downturn. But it s early days yet. These trims could turn into deeper cuts for some.
The real policy lessons from 1990s Japan 24 Jan 2008 Japanese 1990s monetary policy was not very restrictive it left room for moderate growth. But its fiscal policy increased public spending as a proportion of output, draining resources from the private sector. It's those excessive stimulus packages that are the example to avoid.
Equities focus on hope, ignore fraud 24 Jan 2008 European investors had to choose on Thursday morning. Would they worry a E5bn fraud at SocGen was the start of a grim trend? Or would they salivate that a $15bn rescue of the US monolines might possibly avert many times greater losses? They chose hope over fear for now.
Are banking accolades a curse? Ask SocGen 24 Jan 2008 Cover stories often come before a fall ask Time about its 1999 choice of Amazon.com s Jeff Bezos as person of the year as the internet boom peaked, or Business Week s Enron story in early 2001. In hindsight, SocGen s run of equity derivatives awards were ominous, too.
SocGen takes ‘rogue’ trading to new heights 24 Jan 2008 Jerome Kerviel s stunning E4.9bn of losses on equity trades gone wrong has given a different meaning to the French word rogue. It s not just a term for arrogance anymore it is a new superlative for the biggest loss of its kind in financial history.
Could SocGen’s rogue trader have fooled the Fed? 24 Jan 2008 The stock market rout on Monday may have inspired the US central bank s Tuesday rate cut. But the fall was amplified by the French bank closing out a huge unauthorised portfolio. Maybe the Fed got swept away. Still, it would probably have soon found another reason to cut.
Fine Swiss chocolate should be recession proof 24 Jan 2008 Lindt & Sprüngli has rebranded the oldfashioned unhealthy sweet as an upmarket, healthy indulgence. A US slowdown and rising raw material prices don t look like slowing its momentum. But chocolate powerhouses Nestle, Hershey and Cadbury will continue to try to catch up.
Bond insurer bailout will – and should – fail 24 Jan 2008 A regulator s plan to get banks to stump up capital to support the flagging monoline insurers is fraught with problems. And there are good reasons it should fail. Chief among them is it would repel others from entering the market and providing insurance at sensible rates.
Nokia storms ahead of Motorola – for now 24 Jan 2008 The Finnish phone giant s results sparkled, while its US competitor bombed. Handset selection explains most, but not all of the difference. Motorola sells 53% of its phones in America, while Nokia sells few. But if US troubles infect the global economy, Nokia will be vulnerable.
Toyota’s sales success is just icing on the cake 23 Jan 2008 Supplanting General Motors as the world s highestvolume carmaker would be an important milestone, but mostly symbolic. Whether by market value, profit or product mix, Toyota pulled ahead of its US rival a long time ago.
Don’t expect Fed to find followers in Europe 23 Jan 2008 The ECB and the Bank of England may share the US central bank s growing worries about slower growth and financial distress. But they are more worried about inflation, and at least the ECB can survey a healthier economy. With the Fed hyperactive, they can afford to be cautious.
Conoco’s clouds could have silver linings 23 Jan 2008 The oil major beat estimates handily, but its stock didn t pop. Investors fear its exposure to businesses like refining and natural gas where profits are being squeezed. But if oil prices take a plunge, those segments just might help it weather the storm better than its rivals.
Brady, don’t buy Bear Stearns 23 Jan 2008 The Credit Suisse boss may be tempted by Bear's low price and its toptier prime brokerage operation. But the ghost of DLJ should be heeded.
Buyout debt malaise bad news for LBO equity 23 Jan 2008 It s difficult to value buyout firms equity stakes. But the declining price of LBO debt hints at malaise in equity values too. Unless they re forced to sell, buyout shops can hope for a rebound. But credit markets appear to have little faith in their businessbuilding skills.