News Corp board must show backbone on succession 24 Feb 2009 The exit of Peter Chernin should not make James Murdoch s elevation to the top of his father s media empire a fait accompli. He may well be the right man to follow Rupert Murdoch. But the board should consider alternatives especially after the group s recent poor performance.
Lloyds’ government freebie needs strings attached 24 Feb 2009 The UK government looks set to scrap the 12% coupon on its £4bn of preference shares in the bank. Granting financial flexibility is wise, as Lloyds also faces hefty costs to use the state s toxicasset insurance scheme. But taxpayers should demand a future quid pro quo.
French bloom won’t save art world gloom 24 Feb 2009 Record prices for Matisse and Brancusi at the Yves St Laurent auction in Paris may look reassuring for the ailing art market. But the setting, the seller, the selection and some Gulf support hardly made it a representative occasion. It s unlikely to mark a reversal of fortunes.
US looks on track to own big chunk of Citi 24 Feb 2009 The government says it doesn't want to own banks, but it wants them to be appropriately capitalised with high quality capital. Assuming that means a tangible common equitytoassets ratio of 3%, the US could end up with 59% of Citi and a 19% interest in BofA.
Uses of credit ratings should guide regulation 24 Feb 2009 Governments are itching to heighten scrutiny of ratings firms. But one problem in the past has been investors overreliance on officially sanctioned credit assessments. To set good rules rather than just more of them, authorities everywhere should consider why they need ratings.
US bank preferred stocks are still no bargain 24 Feb 2009 Prices on many banks preferreds have been tumbling as rapidly as their common shares lately, pushing yields up. But while the US plan to swap preferreds for common at distressed banks makes a wipeout appear less likely, more carnage could ensue if banks have to cut dividends.
Generali’s Alleanza deal may signal new ambition 24 Feb 2009 The Italian insurer is buying out minorities in Alleanza for a small premium. The deal mildly dilutes Generali s top shareholder, investment bank Mediobanca. It also bodes ill for Intesa Sanpaolo's joint venture with the insurer. Stalled Generali seems to be getting back in gear.
Sarkozy gets a bank that will listen 24 Feb 2009 Two big French mutual banks merge. A yawn? Not these days. The French state will have a big stake in the Caisses d EpargneBanques Populaires combination, with a key aide of President Nicolas Sarkozy in the top spot. The interventionist state could have a bank of its own.
Australia shouldn’t put up Chinese walls 24 Feb 2009 Chinalco s $19.5bn investment into Rio Tinto has sparked a row over Chinese ownership of prized mining assets. Australia might try to block the deal, or impose proAustralia restrictions. It should do neither. Shareholders should decide whether to sell to the Chinese.
Hedge funds should be regulated via prime brokers 23 Feb 2009 This weekend s European summit has called for hedge funds and other shadow banks to be brought within the regulatory net. But supervising them directly is impractical. Focusing on how they get their leverage will be much more productive.
Bigger tax on buyout gains is barn-door slamming 23 Feb 2009 Barack Obama wants to tax investment proceeds as ordinary income, rather than at the lower capital gains rate. That appears to be fairer. But with the alternative asset management business in the doldrums, the government may have missed its chance to reap substantial revenues.
Knocks to confidence keep investors on back foot 23 Feb 2009 US stocks slumped again, even before it emerged that AIG may need yet more taxpayer money. Then JPMorgan slashed its dividend. That could be sensible. Overall, though, investors can t be blamed for fearing the worst. Big guns speaking on Tuesday will struggle to ignite any greed.
US strains to avoid bank nationalisation 23 Feb 2009 Its planned capital buffer is designed to ensure banks such as Citi and BofA are well capitalised but kept out of state control. That s a noble desire. But in practice, taxpayers could end up with a raw deal.
Anti-greed snowball rolls over tax havens 23 Feb 2009 The political and popular will for more regulation isn t just targeting mainstream financial centres like New York and London. The drumbeat against offshore tax havens has become a thundering echo. If the US can score a point against Switzerland, smaller havens look vulnerable.
JPMorgan’s $5bn divvy cut puts pressure on rivals 23 Feb 2009 It s a smart move, even though boss Jamie Dimon expects the bank to turn a profit this quarter. But the decision by one of the country s few strong banks to tread a more cautious path turns the spotlight back on those that have less wriggle room to prepare for worse to come.
Dubai gets apparently cheap partial rescue 23 Feb 2009 The UAE is to lend the troubled emirate $10bn at a bargain 4% rate. That leaves $5bn of refinancing this year, plus lots of bad property developments to work through. The quid pro quo for UAE? It keeps its own reputation intact and gains political leverage over Dubai.
Deripaska makes himself hostage to fortune 23 Feb 2009 The Russian oligarch says he s not worried about his home country s refusal to help Rusal, the cornerstone of his empire, with its $14bn debt burden. But a vanmaker under his control is looking for a mere $45m of UK state aid. Deripaska s optimism is hard to fathom.
RBS takes first step to de-nationalisation 23 Feb 2009 The statecontrolled UK bank is restructuring around three pillars a core bank, a disposal portfolio and an insured asset pool. The tidyup won t create value by itself. But it s the start of a new strategy. And that paves the way for a future sale of the government s shares.
Private equity split on prospects 23 Feb 2009 Guy Hands sees opportunities. He will buy out the commitments of struggling investors in his Terra Firma. But rival Candover is taking a darker view, returning much of the E3bn raised for its latest fund. Hands dawn may come, but for now the night is still pitch black.
IMF help and euro dreams won’t save central Europe 23 Feb 2009 The prospect that the IMF s emergency fund will be raised to $500bn has provoked a rally in central European markets. But the problems of Poland, Hungary and the Czech Republic will take years to solve. And each country must consider whether the euro offers salvation.
AIG looks like Geithner’s next big headache 23 Feb 2009 The struggling insurer could report a $60bn loss, and need a new load of US government support. Geithner was involved in the original bailout. He probably won t pull the plug now, for fear of risking another market meltdown. Expect more cash to disappear into this money pit.
China and US should row in different directions 23 Feb 2009 Hillary Clinton's claim that the two nations are in the same boat is wrong. True, China's $1.4 trillion in loans to the US give them a common interest in a healthy Uncle Sam. But unwinding an unsustainable codependency, not deepening it through fear, should be the priority.
Obama’s deficit plan could conflict with stimulus 23 Feb 2009 His proposal to reduce the US government deficit to $533bn by 2013 won t work unless there has been a strong recovery in good time. Otherwise, tax increases and spending cuts will provide the opposite of stimulus . That could prolong or revive the recession.
GM, Citi, RBS add to rising tide of economic nationalism 20 Feb 2009 All three need to prove their government aid is being put to work at home. That left GM s Saab unit, Citi s Danish consumer lending business and RBS s Asia ops out in the cold. The moves may be driven more by necessity than preference, but the implications are just as worrisome.
Austria looks anxiously at eastern mess 20 Feb 2009 The country is the most heavily exposed to the crisis in eastern Europe. If its banks suffer large losses, the government may be forced to support them. With Germany as a backstop, actual default is unlikely. But there may be a big tab for taxpayers to pay.
Welcome back Arpe: let the rivalry begin 20 Feb 2009 Italian banking s enfant terrible Matteo Arpe is back. In buying a Milan boutique, he returns to the scene for the first time since quitting Capitalia after a bust up with chairman Cesare Geronzi. His nemesis this time may be Gerardo Braggiotti, Italy s top private banker.
Anglo American right to scrap dividend 20 Feb 2009 The market was stung by the miner s decision not to pay a final dividend. But this isn t the time for financial brinkmanship, and traditionally cautious Anglo isn t the company to try. It still has too much debt for comfort, but fast action may keep it from a forced rights issue.
US casts wider net in UBS tax case 20 Feb 2009 The US government has embarked on a fishing expedition for 54,000 of the Swiss bank s account holders, just one day after UBS agreed to give up 250 names. The US is unlikely to hook Swiss authorities for this big a haul. But some scared American customers could bite.
Lafarge, Saint-Gobain put market to E3bn test 20 Feb 2009 The French companies managed to stay profitable in 2008, despite severe slumps in both cement and building materials. But the two are bracing for even tougher times. They're cutting costs and reducing debts and asking holders to stump up for deeplydiscounted rights issues.
Credit clearing delay worsens bank stock woes 20 Feb 2009 Citi and BofA shares have plummeted and their credit default swap spreads ballooned. Investors are spooked by the threat of nationalisation, but the stock and CDS markets are also driving each other down. If a CDS clearinghouse had launched on time, there might be less carnage.