Lufthansa hedges its Italian bets 28 Nov 2008 The German airline has been in the running for a 20% stake in whatever Alitalia turns into. But now Lufthansa is launching its own airline in northern Italy. It says this doesn t rule out an Alitalia investment. But the DIY approach may turn out to be the better option.
UK state will struggle to run RBS commercially 28 Nov 2008 The government will own 58% of the UK bank after investors shunned its premium priced share issue. The controlling holder says it wants to be a normal investor. That sounds impractical. For the government, a quick turn on £20bn matters less than reviving a £1.4 trillion economy.
Banks sigh over Santander rights issue 28 Nov 2008 Well capitalised rivals were frustrated when the Spanish bank announced a jumbo E7.2bn rights issue putting pressure on them to follow. It looks like the issue has gone well. Some potential issuers can sigh with relief. But there may only be enough cash for a select few.
Ping An’s woes may try Beijing’s patience 28 Nov 2008 The insurer was one of China s most successful private firms until a much touted $2.7bn bet on Fortis backfired. It s one of a string of economic misadventures by Chinese companies. Beijing may be starting to wonder if Western shareholder capitalism is worth the candle.
HSBC’s bonus from the UK commercial property crash 28 Nov 2008 The bank s looking to buy back its Canary Wharf HQ from heavily indebted Metrovacesa for 25% less than it sold it for last year. The true value may be even lower than the £838m mooted. But HSBC has another dynamic to consider: it s a lender to the Spanish property giant s owners.
Mumbai massacre creates political predicament 28 Nov 2008 Prime Minister Manmohan Singh is being pulled two ways. At home, forthcoming elections pile on pressure to blame Pakistan. But the international community would prefer softer rhetoric. It will be hard to stay in power, protect economic growth, and retain geopolitical calm.
M&A about to take deep dive 28 Nov 2008 Precrisis megadeals like BHP/Rio and the LBO of BCE are collapsing. As the funding squeeze tightens, others will follow suit. Meanwhile, new deals will be hard to finance. And with so little earnings visibility, acquirers will shy away even from shareforshare deals.
Bankers need to learn from bakers 27 Nov 2008 The baking business runs very smoothly. Bread is delivered in the desired quantities, technology advances (sliced bread was not the last word) and consumer tastes are satisfied. But add an “n” and the picture changes. As a business, banking is much less healthy.
Rio Tinto’s board deserves some slack 27 Nov 2008 BHP Billiton's failed offer for the AngloAustralian miner leaves Rio's share price in tatters, but shareholders shouldn't blame Rio s resistance. A tieup probably wasn't deliverable. If Rio's board had caved in, there could have been in a painful mess.
BlueBay fund closure a double blow to industry 27 Nov 2008 The quoted asset manager is shutting a hedge fund after dire performance and the drying up of funding for risky leveraged bets. The fund s portfolio manager also breached valuation policy . A controls failure in a listed asset manager looks really bad for hedge funds.
Irrationality rules in public pensions debate 27 Nov 2008 State workers get too good pensions deals almost everywhere and fight like mad to keep them. So while the UK opposition s call for a more reasonable arrangement makes sense for a country with stretched finances, it is likely to be in vain. Better to aim at subtler reforms.
Woolworths never really stood a chance 27 Nov 2008 Pick n mix wasn t the real problem. A heavy debt burden and leasehold financing meant the once iconic UK retail chain was hobbled from the moment of its 2001 demerger from the Kingfisher group. Adding insult to injury, as Woolworths collapses, Kingfisher beats expectations.
Spanish Tarp proves damp squib so far 27 Nov 2008 Banks had the chance to sell E5bn worth of illiquid assets to the government last week. They only managed E2.1bn. The banks balked at the prices offers and at the stigma of tapping the government for liquidity. But the next auction may have a better shot.
Mumbai attacks are wake up call for markets 27 Nov 2008 Investors have long downplayed geopolitical risk. But the Indian terrorist attacks will remind them security is a weak point in developing countries. For the first time, extremists targeted tourists and the financial district critical for India s growth.
Should Wagoner write a letter to Santa? 26 Nov 2008 The GM chief and his counterparts at Chrysler and Ford have been shunned by banks and investors. And Congress has, so far, rejected their pleas for aid. With Christmas upon us, Wagoner might consider penning a note to Saint Nick. Here s what he might ask for.
Taylor Wimpey heads for debt-for-equity lite 26 Nov 2008 The UK housebuilder is close to testing banking covenants. Normally a debtforequity swap would loom. But TW's UK lenders will be loath to put shares on their books. And such a move might also annoy the banks new political masters. Equity sweeteners may square the circle.
Let us give thanks to BofA shareholders 26 Nov 2008 Assuming they approve the Merrill Lynch deal next week, they ll be taking one for the team. BofA has seen some $57bn of its value evaporate over and above the declines of its peers. But failure to follow through would issue another horrible shock to the financial system.
Telecom Italia needs a superbrand 26 Nov 2008 Nothing spells strategic confusion like a pointless profusion of brands. For that reason alone the Italian operator should consider scrapping its ragbag of names Alice, TIM, Virgilio, LA7 in favour of something simpler. TI has too much debt to waste money on marketing.
Obama hires many chefs to deal with economic stew 26 Nov 2008 Like a company with multiple M&A advisers, the presidentelect wants to hear a range of views. Octogenarian former Fed boss Paul Volcker is the latest. Considering how few economists predicted the crisis, more voices may be better than fewer. But debate could crowd out action.
Latest BCE trouble is blessing for many 26 Nov 2008 An auditor has said the Canadian telco won t be solvent if the giant buyout closes. That could scupper the deal. Most involved would be relieved. Buyout investors are strapped, banks don t want to lend, and bondholders never liked the deal. Only BCE shareholders would cry.
The best SFr22m Marcel Ospel ever spent 26 Nov 2008 The former UBS chairman will return bonuses earned at the height of boom, when the Swiss bank was amassing catastrophic subprime mortgage assets. His move has a lot to do with the mood in Switzerland. But it is still welcome pressure on other nonSwiss bankers to do the same.
China feels aftershock of Rio Tinto bid collapse 26 Nov 2008 Chinalco, the Chinese miner, is nursing huge paper losses on its stake in Rio Tinto. But China Development Bank, which lent Chinalco $8bn against assets now worth $3bn, may pick up the tab. It s bad timing for an institution central to China s economic stimulus plan.
Tata feels the weight of its trophy UK deals 26 Nov 2008 The Indian conglomerate s highly leveraged bets on Corus, the former British Steel, and carmaker Jaguar have lost their shine. The economic slowdown is likely to have left both financially stretched putting Tata under pressure to make disposals elsewhere.
Kremlin takes over at Norilsk 26 Nov 2008 The Russian government has imposed a truce and will call the shots at the world s largest nickel company, torn by a feud between two oligarchs. This should allow Norilsk to focus on shrinking markets and falling prices. But minority investors have no reason to cheer.
Governments must get banks lending again 25 Nov 2008 Authorities on both sides of the Atlantic are rightly gearing themselves up for action with new ideas unveiled on Tuesday. But governments must also say two things: that they don t mind banks charging fat margins; and they don t mind if their capital ratios fall.
BHP-Rio bid failure may be a happy mistake 25 Nov 2008 Rio s board looks remiss for not accepting an allshare offer when it had the chance. BHP s board looks foolish for its hubris. But given the problems a merger would have created among customers and lenders, these failings may be a blessing in disguise.
UK reforms on foreign dividends are incomplete 25 Nov 2008 Scrapping tax on overseas dividends looks like a historic victory for business. But the move comes without clarity on antiavoidance measures. The UK has yet to find the balance which will end the debate on competitiveness and ward off threats of exodus to lowertax climes.
Grim US banking picture has faint bright spots 25 Nov 2008 FDIC s quarterly report makes for gloomy reading. Nine banks failed in the third quarter; the danger list got longer; problems spread; and banks reserve cushions fell. Even so, the sector still made money (just). And net interest income one key to recovery edged higher.
UAE consolidation hopes are premature 25 Nov 2008 The scrunching of Dubai s struggling mortgage lenders into a UAE institution is the country s first large crossemirate deal. But this was a crisis. The notion that Dubai s more attractive assets are also about to feel Abu Dhabi s embrace is farfetched.
Redstone joins cash-strapped oligarchs club 25 Nov 2008 The 85 yearold media mogul is trying to restructure a $1.6bn loan. He may have to sell holdings in CBS and Viacom, both at low prices. In an echo of the fate of several Russian bigwigs, Redstone could lose much of his wealth because of leveraged bets on concentrated holdings.