Credit Suisse gets messy asset-management deal 31 Dec 2008 The bank s swap of some of its conventional fundmanagement business for a stake in Aberdeen Asset Management is a solution of sorts for this perennial problem child. But the terms are poor and can be amended in Aberdeen s favour, and there s no clear exit route for the stake.
Madoff scandal hits near-farcical note 31 Dec 2008 The Ponzi scheme has claimed another celebrity victim: Kevin Bacon, the actor who spawned a cult game in which participants try to connect his films to any actor in Hollywood with as few links as possible. Madoff's spider web of confidence deserves its own game of Six Degrees.
Debenhams owners’ best bet may be to double down 30 Dec 2008 Banks will be wary of underwriting a rights issue to cut the UK retailer s crippling £1bn debt burden. Debenhams private equity backers, who kept a 22% stake after its IPO, have few options to protect their fallen investment aside from anchoring an equity injection themselves.
US automaker bailout skids down slippery slope 30 Dec 2008 To rescue GM, the Treasury has now ponied up $6bn for GMAC. But for the finance company to really crank up its lending, the Fed may have to take a liberal view of its capital levels. There are other signs the Treasury and Fed aren t in accord, further damaging their credibility.
Rouble faces sharp adjustment 29 Dec 2008 The Russian central bank s manageddevaluation policy is straining as foreign currency reserves become depleted. Russia may be headed to a freefloating system faster than expected. But in the meantime, a oneoff devaluation might be unavoidable.
Baltic states face severe hangover in 2009 29 Dec 2008 Latvia, Estonia and Lithuania enjoyed major benders in 200607, with 10% growth and doubledigit payments deficits. Now comes the reckoning: they must close payments deficits without devaluing. Those with stabilisation packages can usefully blame austerity on the EU and the IMF.
Rohm investors get wobbles over Dow’s Kuwait debacle 29 Dec 2008 The US specialty materials group, about to be acquired by the chemicals giant, saw its shares plunge by a fifth after Dow s Kuwaiti joint venture collapsed. But with financing lined up and a tight contract, Dow has few options but to proceed with its pricey Rohm deal.
Kuwait blemished by Dow debacle 29 Dec 2008 The oil state's scrapping of a $17bn joint venture with the US chemicals giant may be financially justifiable. But it still reflects badly on Kuwait s business acumen: after renegotiating the terms only weeks ago, Kuwait now looks capricious and beset by political infighting.
For shareholders, 2009 looks like the year of dilution 24 Dec 2008 Just ask Sirius XM Radio's owners. Like many businesses, Sirius XM has value. But overleveraged capital structures need to be unwound. This coda to the credit bubble's end will feel miserable all around, particularly for shareholders.
President Bush gets to dub recession’s W shape 24 Dec 2008 Durable goods orders showed strength, real spending was up and mortgage refinancings soared. Huge monetary and fiscal stimuli may be slowing the decline and could reverse it. Their costs will appear later, and may cause a second slide into a recession that ends up Dubyashaped.
Financial crisis turns political 23 Dec 2008 The banking meltdown has toppled an already shaky Belgium government. It s not a first. Without a recession, there might be a Presidentelect McCain. The list of fallen leaders will lengthen, as others are ensnared by terrible economic news and risky government initiatives.
European banks in no position to throw stones 23 Dec 2008 Learning how to get out of a fix is part of growing up. That s the message some of Europe s biggest banks want the countries of new Europe to learn. But eastern Europe could say the same thing to the banks after their reckless rush to grab market share in the region.
Don’t cry for 2008’s withdrawn deals 23 Dec 2008 From a bullmarket mining merger to a debtfuelled telecoms romp, these $911bn of defunct deals are better off forgotten. Bankers are working up the next crop but they may find their success rate next year isn t much better.
TPG’s investor concession will pressure other LBO shops 23 Dec 2008 It may be window dressing. But telling limited partners they don t need to pony up their full commitments, and shaving fees for those who do, should help placate grumbling investors. With the trend started by Permira now established in the US, public funds face a quandary.
Wal-Mart pays up for growth abroad 22 Dec 2008 The US retail behemoth is putting its cash pile to use with a $2.6bn bid for Chilean grocer D&S. Expansion in fastgrowing Latin America comes at a steep price, but it s a way for WalMart to keep growing outside of its saturated home turf. The shopping spree could continue.
Eight isn’t China’s economic unlucky number 22 Dec 2008 Urban legend has it that if growth falls below 8%, China s masses get restless. In reality, things aren't so simple. But rising unemployment is a real danger. Managing that is China s biggest challenge and has nothing to do with luck.
Japan is the least sick rich economy 22 Dec 2008 Neither November's export slide, nor Toyota's profit woes, are what they seem. Corrected for yen appreciation, exports were down 8.9%, imports up 6.9%. Japan's recession is mild and its fiscal stimulus modest. The yen's strength is a sign currency markets see underlying health.
Risky finance: the pursuit of happiness 22 Dec 2008 Financiers claimed that they were good at measuring monetary value and estimating risks at least until recently. Could measuring happiness bring about a rehabilitation of risk management? Nicholas Dunbar reports
Irish banks get short-term fix 22 Dec 2008 The government had to move fast to minimize the fallout from last week s unraveling of AngloIrish Bank. But E5.5bn on fairly lenient terms won t be enough to right the sector. The banks will need further funds in the New Year. The government hopes the private sector will help.
US shouldn’t bail out commercial property barons 22 Dec 2008 The Fed plans to finance the purchase of securities backed by credit card, auto, student and small business loans. That should help unfreeze retail credit. Now commercial property owners want in. But that won t unleash consumer spending which is the real key to a recovery.
Greater Depression could last 20 years 22 Dec 2008 Absent huge policy mistakes, the current downturn won t rival the Great Depression s 27% drop in GDP. But globalisation could create a longer term decline, if poor countries start to grow at the expense of the rich. And the rich seem tempted by growthunfriendly policies.
Oil price slump removes slack from Gulf budgets 19 Dec 2008 Once seen as the world s financial saviours, Gulf nations now face budget deficits next year amid weaker oil prices. With pressure to maintain domestic spending, foreign investments like Kuwait s aborted venture with Dow Chemical will drop further down the agenda.
Bush’s Detroit bailout looks like path to bankruptcy 19 Dec 2008 The government is lending GM and Chrysler $17.4bn that they must pay back if they don t meet high hurdles by the end of March. That ll be tough. The carmakers should use the time to cut deals with workers, creditors and dealers they ll need to get out of bankruptcy fast.
How does a PR firm handle its own bad PR? 19 Dec 2008 Brunswick, a top financial PR firm, is about to demonstrate. A New York employee s spouse faces charges of handing inside M&A info to traders, and a Playboy bunny, who made millions. Brunswick isn t part of the charges. But how it handles the mess will test its PR credentials.
Unicredit loses more ground, Intesa gains 19 Dec 2008 Italy s secondlargest bank has suffered yet another setback. Unicredit unsurprisingly has said it may not be able to get away a property deal. That failure could cut its profits by a quarter. It's another blow to the reputation of Profumo, Unicredit's once celebrated boss.
Paulson’s bazooka reload may need different shot 19 Dec 2008 The US Treasury secretary now wants the other half of the $700bn Tarp funds. It's reasonable to want the ammunition at hand. But a frustrated Congress may well want more done for cashstrapped homeowners. They should also call for Paulson to lay out a clearer longterm strategy.
Anglo Irish Bank scandal strikes at worst possible time 19 Dec 2008 Investors have been wary about the bank s ability to endure the downturn. Now the chairman has revealed hidden personal loans with the bank going back 8 years. The shareprice fall underscores the hit to confidence, and makes it tougher for the bank to raise capital privately.
Markets struggle to comprehend the Zirp world 18 Dec 2008 The US is swallowing the Japanese cocktail of Zero Interest Rate Policy mixed with huge deficits. The UK and eurozone could follow. Investors are responding by selling dollars and buying Treasuries as a safe haven. It sounds illogical. But in a Zirp world, nothing stacks up.
Share free fall puts BNP Paribas in Fortis bind 18 Dec 2008 The French bank must either improve the terms of its deal with the Belgian state to convince reluctant minorities or walk away. After a profit warning erased a quarter of its market capitalisation in two days, BNP won t like the dilution that a sweeter offer would require.
Government will take more control of UK banks 18 Dec 2008 Lending is still too tight for the government s comfort, despite the injection of £37bn. With the wholesale market still squeezed and the recession promising big losses, banks still lack the firepower to do the job. So the state is likely to provide another huge slug of capital.