Geofinancial tensions approach breaking point 3 Jul 2008 China is paying the price for keeping its exchange rate too low rampant inflation and social threats. The US is wrestling with the effects of persistently too low interest rates weak dollar, high inflation and slow economy. Monetary worlds in collision.
Venture capital needs less capital 3 Jul 2008 VC firms are stuffed with cash they can't put to work. The IPO market is the worst since 1978 and venturebacked M&A is down over 40% from last year. The flailing economy isn t solely to blame. It's time to return money to investors.
Why isn’t TNS biting off WPP’s hand? 3 Jul 2008 With media valuations tumbling, a conditional offer worth 260p a share looks superficially attractive. TNS's own nilpremium merger with GfK isn't worth nearly as much. Maybe brinkmanship can force WPP's Sorrell to pay extra. But if not, TNS could look silly.
Brazil oil-bubble darling faces challenges ahead 2 Jul 2008 Billionaire Eike Batista's oil driller OGX scooped up offshore exploration rights and a $22bn valuation in under a year. But its true test will come once new tax laws are set and prized parcel permits come to market, attracting the oil majors who held off in the last round.
Lehman switches defence tactics 2 Jul 2008 The underfire Wall Street firm has already tried to reassure shareholders by banging on about its liquidity, raising capital, buying back shares and dumping executives. Now it's hoping that giving staff an advance on this year's share bonuses will do the trick.
Turkey at political and economic cusp 2 Jul 2008 Turkey is politically at a cusp, with the legal system and the army both trying to remove the elected moderate Islamist government. It s also at an economic cusp, needing declining energy and commodity prices to avoid payments and inflation crises. It needs luck on both fronts.
Central banks have to defeat exploding inflation 2 Jul 2008 The ECB s Trichet has sounded the alarm saying there was a risk of explosion. A rate rise on Thursday is inevitable, and another may quickly follow. In the UK, higher rates may not be needed despite soaring inflation expectations. A looming, nasty recession could do the trick.
Kekst exploits personal battle of PR supremos 2 Jul 2008 Maurice Levy, who runs France s Publicis, snatched the NY public relations adviser away from his adman nemesis Martin Sorrell of WPP, the more logical owner. Getting moguls to compete has proved a lucrative affair for Kekst s 73year old founder.
Wounded banks join missing decade club 2 Jul 2008 Lehman blames rumourmongering shortsellers for investors' shortage of confidence. The firm s shares may have fallen hard in recent months, but it isn t alone in taking its shareholders back 10 years. Citigroup, WaMu, UBS and many others are firmer members of the club.
Taylor Wimpey capital fiasco creates quadruple crisis 2 Jul 2008 The UK housebuilder's failure to raise £500m doesn't just plunge it into turmoil. It deepens the crisis for the sector and for UK banks exposed to it. Finally, it exposes the flaws in the cunning new capital raising scheme pioneered with such fanfare by Barclays only last week.
TPG may have get-out clause with B&B. Oops 2 Jul 2008 If the UK mortgage bank is downgraded again and it is already on credit watch the private equity group would be able to pull out of its deal to inject capital. All the more odd that B&B allowed underwriters to renege on an earlier deal to provide equity at a higher price.
Bad tech bets hurt, wrong debt assumptions kill 2 Jul 2008 Technology dealt yellow page publishers losing hands. Until recently, RH Donnelley, Yell and Seat Pagine Gialle assumed otherwise. Tech shifts are difficult to survive building lasting capital structures upon faulty assumptions is often fatal.
M&S augurs wider retail turmoil 2 Jul 2008 The UK retailer s shares plummeted after it warned on profits. M&S's clothes and food are simply too expensive for these stagflationary times. But if things look bad at M&S, just wait until the downturn hits its more financially constrained peers.
Will the real beer synergies please stand up? 1 Jul 2008 Both Inbev and Anheuser have been slippery on potential savings. Bud seems to be saying it can slice $1bn on its own. Inbev suggests $1.4bn in a deal. It s easy to see why both are being coy. Bud doesn t want to admit it s flabby and Inbev doesn t want to look too aggressive.
Clarins minority holders should take buy-out offer 1 Jul 2008 The French cosmetics group s controlling family has offered to buy out the minority holders at a 30% premium. This is still far from last year s peak, but the industry s prospects aren t bright as the slump deepens. This looks like an offer that s hard to refuse.
Bank of America may need to raise more capital 1 Jul 2008 Buying Countrywide for less than a quarter of book value might look cheap. But the mortgage lender could saddle BofA with as much as $30bn in losses and more in legal costs. That would easily wipe out the buffer, and force BofA boss Ken Lewis to shore up the balance sheet again.
Wrong man looks set to exit Fortis 1 Jul 2008 The CEO is said to be on his way out. He deserves to share in the blame for the BelgoDutch group s woes, but Maurice Lippens, the chairman, was behind the valuedestructive ABN Amro deal. After 28 years on the board of Fortis and its predecessor firms, he should go first.
UK insurers should sort out surplus assets mess 1 Jul 2008 Hopes for a solution to this longdrawn out problem have been dashed after the Prudential abandoned a scheme to sort out the use of funds that companies retain, supposedly to smooth out returns. This shillyshallying isn't good enough. The regulator should crunch heads together.
Norilsk Nickel could benefit from oligarch stand-off 1 Jul 2008 Vladimir Potanin and Oleg Deripaska, who are fighting for control of the world s largest nickel producer, have placed their candidates on the company s board. But Norilsk s two independent directors will determine its future provided one of them becomes chairman.
The problems with air-mile IPOs 1 Jul 2008 Airlines can make more money from loyalty programmes than from actually flying. That fact might explain why Qantas is considering an IPO of its frequent flier scheme. But separating the businesses out carries risks. And now is hardly the ideal time for a sale.
Moody’s mea culpa doesn’t restore confidence 1 Jul 2008 The rating firm s admission that employees glossed over CPDO rating errors is no surprise. It is acting to prevent a recurrence. But when ratings have broad implications or, as with CPDOs, when they are in the spotlight, executives are bound to feel pressure to finesse errors.
JPMorgan defection a coup for Canary Wharf 1 Jul 2008 When the US investment bank decided last year to locate its European HQ in the City it was considered a shot in the arm for London s historic Square Mile. Now it is defecting to Canary Wharf. With office rents now falling, it s a setback the City didn t need.
UBS should say, No thank you, Paine Webber 1 Jul 2008 The troubled Swiss bank has good reasons to dump its US wealth management arm. UBS might still need more capital and should be looking to shed distractions. Of course, selling could result in a loss, and locating a buyer in these markets won t exactly be easy. But it can be done.
UK Treasury nobbled by the banks – again 1 Jul 2008 The UK Treasury has bowed to pressure from banks by not making the new, overgenerous deposit protection scheme prefunded. That s a copout. Combined with plans for a halfbaked Special Resolution Regime, it s another blow to free market banking.
Barclays’ new investors prepare for fuller helping 1 Jul 2008 The UK bank s shares briefly fell below the agreed price for the £4.5bn placement. If it happens again, existing investors won t have any reason to claw back shares from the underwriting investors, who would end up buying at a premium. It looks like forced smiles all round.
UBS expunges more of Ospel’s legacy 1 Jul 2008 The Swiss bank is dismantling the cloistered office structure its former chairman used to keep a tight grip. The welcome governance overhaul includes parting ways with four directors from the old regime. But yet another expected quarterly loss shows the past still haunts UBS.
Inflation fight will hurt global growth 1 Jul 2008 Central banks from Frankfurt to Mumbai are faced with inflation rates way above any reasonable target. Interest rates are set to rise, with the notable and lamentable exception of the US. A global slowdown seems certain, with negative implications for bonds and stocks.
Feuding Ambani brothers need to settle on Reliance-MTN 1 Jul 2008 The exclusivity period for talks between the telecom operators expires Tuesday. MTN will extend the deadline only if the Reliance brothers show signs of settling the legal spat obstructing the $80bn tieup. As it stands, the family risks hurting India s investment reputation.