First biggish Spanish construction firm goes bust 19 Mar 2008 Seop filed for creditor protection after its clients, mostly property developers, fell behind on payments. The bigger construction companies are more diversified and so on safer ground. But with financing increasingly hard to come by, Seop may not be the last to bite the dust.
The crisis probably isn’t over 19 Mar 2008 The Fed wants to protect the core of the financial system without bailing out too many fringe players. But shoring up the core won't be easy given the momentum of deleveraging. The Fed could end up with yet more dodgy assets on its balance sheet and a dollar crisis.
Could Bear shareholders sue? Count the ways 19 Mar 2008 Even with JPMorgan's new higher price for Bear Stearns, some aggrieved shareholders could still head to court. They could challenge the price, the merger agreement, apparent pay imbalances, and statements made by executives. They may have most luck with the last.
Technology doesn’t make Sony Ericsson king 19 Mar 2008 These days having an edge on technology is typically a winning strategy. Yet a profitwarning from this handset maker proves that s not always the case. Weak highend sales are dragging it down. Consumer preferences are a problem, and a global economic slowdown won t help.
Morgan Stanley’s earnings reduce pressure on Mack 19 Mar 2008 The Wall Street firm posted a 20% return on equity, better than either Lehman or Goldman. True, it s just one quarter, but it s a handy fillip for chief John Mack, whose strategy of aggressively increasing risk turned into an $11bn debacle last year.
Japan can get along without a central bank chief 19 Mar 2008 In most countries, that would precipitate a big crisis. But Japan's opposition is right not to want a central bank boss too closely tied to the Ministry of Finance. Interest rates need to be raised, and the next governor needs to be powerful enough to do so.
SocGen off BNP’s agenda – for now 19 Mar 2008 France s largest bank says it won t bid for its troubled French rival because conditions for value creation aren't met. BNP would have to go hostile in a volatile market, with SocGen s investment bank still a black hole. But BNP can return to the table in six months.
Regulators must act against market manipulation 19 Mar 2008 Dangerous market volatility has stirred watchdogs worldwide to make noises about cracking down on short selling. Tough talk about rumourmongering is welcome, if overdue. But if some hardnosed action doesn t follow, freewheeling traders will call their bluff.
SocGen looks inside for likely new boss 18 Mar 2008 The French bank has named finance director Frederic Oudea as cochief executive, making him the likely successor to embattled chairman Daniel Bouton. Oudea isn t likely to change the bank s arrogant risk culture. But at least he should get along with Sarkozy.
Exxon should settle with Venezuela 18 Mar 2008 A UK court freed billions of Venezuelan assets frozen last month over its row with Exxon. The Texan titan now as a decision: apply more pressure or settle the dispute quietly. While Exxon is in the right, it has little to gain by digging in its heels.
Bank turmoil dangerous sign for UK property 18 Mar 2008 To strike deals and halt the slide in UK property prices, investors need banks to lend to them. But debt is increasingly elusive, due to a double squeeze from worldwide liquidity worries and highly leveraged borrowers. This unholy mix could keep real estate prices heading south.
US economic pig now Fed and watered 18 Mar 2008 Bernanke is slopping nearly $450bn of new liquidity into the market's trough and is watering it with a 0.75% rate cut. But the US economic pig needs a diet and exercise, not more truffles. Until real interest rates are positive, the economy will remain in poor shape.
Bear shareholders have little leverage, should be realistic 18 Mar 2008 Some shareholders are indignant about JPMorgan s $2 a share purchase. But they have little leverage. Bear was rescued from insolvency, and its businesses are already winding down. Potential bidders will be wary of upsetting regulators. JPMorgan holds almost all the cards.
Visa blowout won’t unblock battered IPO market 18 Mar 2008 The credit card giant s megaIPO priced above its target range amid heavy demand. But those hoping the largestever US debut will unblock the moribund new issue market may be disappointed. Wall Street woes and investor risk aversion will weigh on the market for some time.
Commodity bubble could be next to burst 18 Mar 2008 Until now, most commodity prices have defied or even benefited from the liquidity squeeze. That could now be changing.
Markets too eager to celebrate over mortgage giants’ plan 18 Mar 2008 That s the only way to read the positive reaction to regulator Ofheo s relaxing Fannie and Freddie s capital constraints. Ofheo seems to be hoping that promises from the agencies not to gear up will encourage investors to pony up more capital. That seems a tad optimistic.
Goldman, Lehman results provide welcome relief 18 Mar 2008 Goldman traders continue to mint money, while Lehman reaffirmed its strong liquidity position. Combined with newfound access to Fed funding, and tightening CMBX, CDS and swap spreads, Wall Street finally seems to be getting some good news.
Air France offer for Alitalia looks generous 17 Mar 2008 The FrancoDutch carrier s offer for its Italian rival values it at a fifth of its market capitalisation. That s generous, considering Alitalia is nearly bankrupt. The deal depends on approval from the unions and the next Italian government. These are tricky obstacles.
Wolseley’s strategy goes wrong 17 Mar 2008 The building materials group has two problems a big exposure to US housing and high leverage. It s trying to tough it out by cutting capex, while increasing the dividend. But it might do better to swallow some pride, raise equity and buy while assets are cheap.
Fed draws a line in the sand 17 Mar 2008 Bear Stearns descent towards insolvency forced the US central bank to take drastic action: $30bn of support for JPMorgan s rescue of the Wall Street firm and discount window access for brokers to prop up the securitisation market. The Fed has rarely been this handson.
Allianz finally has the right idea for Dresdner 17 Mar 2008 The German insurer is dividing its bank, a long overdue decision that will enable it to exit investment banking. But the timing couldn t be worse and expanding in retail banking doesn t make much sense for Allianz either.
The Fed’s alphabet soup 17 Mar 2008 The US central bank has expanded its financing menu for banks and brokers. Dwight Cass explains how the TAF, TSLF and PDCF programmes work.
Bear shareholders may still have some wriggle room 17 Mar 2008 JPMorgan s $2ashare offer might seem pretty final. But it relies on rapidly made assumptions that could swing either way. While Bear s shareholders shouldn t expect anything like stated book value of $80 a share, they have little to lose by cleverly pushing for a bit more.
Beijing dodged the Bear 17 Mar 2008 Citic Securities almost got suckered into a $1bn crossshare swap with Bear. Thankfully, CIC s Blackstone adventure hangs over the Chinese capital like its smog as a warning for firms expanding beyond their core competence. Citic should consider a JV with a firm like Lehman.
UK mortgages go crunch in the fright 17 Mar 2008 UK mortgage lenders are less willing to lend and are raising sharply the average spread they charge borrowers. The gloomy implications for the housing market, consumer finances and UK growth are clear including, no doubt, to the Bank of England.
Equity take-unders show investors in denial 17 Mar 2008 Bear Stearns and Alitalia both got takeover offers far below their last share prices. Why were equity holders so optimistic? Ignorance, hope and belief in nuisance value all play a role. And when governments are paying, shareholders may have to expect less.
Buyout firms look toothless over M&B 17 Mar 2008 The UK pubs group, its share price laid low by a busted property punt, would once have been the ideal private equity target. But buyout firms are deprived of their traditional supply of cheap debt, so even such cashgenerative, propertyrich companies look rather hard to get.
Siemens turns over rock – finds worms 17 Mar 2008 Just three months ago, the German conglomerate was giving bullish guidance on growth and margins. Now it has discovered that it was too optimistic about some long term contracts and given an E900m profit warning. That casts doubts on Siemens' management credibility.
Did the Fed put a safety net under bank default swaps? 17 Mar 2008 JPMorgan s governmentassisted purchase of Bear Stearns slashed the prices of default swap insurance on Bear s debt. Yet the cost of insuring against other bank defaults continues to rise. Investors should sell protection if they think the Fed really won t let banks to go bust.
No Market for Old Men: the Bear disaster movie 17 Mar 2008 The stock was in freefall, and insolvency was hours away. Could freshfaced Tim Geithner (Michael Keaton) save the financial system by persuading Jamie Dimon (Alec Baldwin) of his place in history, even as Bear chairman Jimmy Cayne (Keith Richards), sat playing cards?