UK bank insurance plan must be sold properly 20 Feb 2009 Most public sector bank bailouts have thus far foundered on poor communication. As the UK government prepares to divulge details of its Asset Protection Scheme , George Hay argues that the state must properly highlight the benefits of its bank insurance plan.
Markets drown in dreadful news 20 Feb 2009 The omens are worsening from Europe, Japan and the US. The spiral of economic decline is accelerating, the financial sector needs more life support and demands on governments are increasing. No wonder the stock market rally that started last November has been reversed.
Gatwick auction may face hard landing 20 Feb 2009 Two out of five bidders have withdrawn from the bidding for the UK airport, whose sale may be demanded by antitrust authorities. With finance sparse, other bidders may also withdraw. If that happens, Ferrovial, Gatwick s Spanish owner, will hope the regulators show some mercy.
Malone’s Sirius deal looks like valuable spoiler 19 Feb 2009 The mogul can t buy more than 49.9% of Sirius XM s stock for three years. That looks odd after all, he looks to have swooped on its debt as a way toward ownership. But like his previous deals, he can use it as a bargaining chip. It might even help his end game with DirecTV.
BNP Paribas works the government line 19 Feb 2009 The French bank is suffering with markets and the economy, but says it is adequately funded. Still, it is the first in line to take the French state's money. BNP has played the politics well in the crisis. Perhaps that will help it get away with paying E1bn in dividends.
Indonesia sheltered from global slump 19 Feb 2009 With growth of 6% in 2008 and an expected 3.5% in 2009 Indonesia is suffering only mildly from the downturn. Elections this year seem likely to result in the continuation of current policies. Economically and politically, Indonesia is a good partner worth having.
Rights issues: a new fee pool for commercial banks 19 Feb 2009 Conventional sources of underwriting investment banks and hedge funds are drying up. But in the UK, commercial banks are picking up the slack. It s a way of squeezing more out of existing lending relationships. The trend has further to run.
Sprint and Palm may yet prop each other up 19 Feb 2009 The alliance between shrinking US wireless carrier Sprint and hasbeen handset maker Palm looks like two drunks offering each other support. Intriguingly, both show signs of simultaneously sobering up.
Crisis is no reason to abandon cosmopolitanism 19 Feb 2009 Governments are turning populist and some companies seem to be firing foreigners first. The global nature of business is under threat. That s bad for the economy and for culture. Peter Mandelson s four letterword antiStarbucks outburst isn t just bad manners, it is bad policy.
Restructuring boom augurs more toil for fewer fees 19 Feb 2009 Investment banks are redeploying otherwise redundant leveraged finance bankers into restructuring. Some of the skills from boomtime dealmaking may be transferable, but the economics aren t. The return on effort in a complex restructuring is less than in a jumbo buyout.
UBS $780m surrender will not end Swiss tax battle 19 Feb 2009 The giant wealth manager has waved the white flag, admitting criminal behaviour and disclosing client names a big breach in Swiss bank secrecy. But the US isn t done with the case and other countries will be inspired to squeeze the Swiss. This defeat could be the first of many.
BNP confirms purgatory status of fund management 19 Feb 2009 The French lender has moved Alain Papiasse, a star banker at Credit Lyonnais before he joined BNP in 2005, to steer the restructuring of its investment bank. His predecessor, Jacques D Estais, is heading off to what is rapidly becoming banking's bleak outpost: asset management.
UK economy deserves Starbucks’ knocks 19 Feb 2009 Three views on the UK economy: the boss of a coffee shop chain said things were bad, Lord Mandelson swore at him and an ECB board member accused the British of malicious devaluation. The government debt numbers show who was right the man from Starbucks.
Yahoo’s search gains strengthen its hand 19 Feb 2009 New data shows Yahoo gaining search market share for five months running. And it just added video and image advertisements to its listings. It s becoming a tastier morsel for Microsoft and showing search king Google that its dominance has limits.
Erste’s eastern European exposure scares investors 18 Feb 2009 Shareholders aren t taking comfort from the Austrian bank s strong retail deposit base. The shares are tumbling as holders fret over exposure to eurodenominated mortgages in crumbling noneuro economies. Erste has been promised E2.7bn in state capital and could need more.
Merrill-style bonus heist foiled by Commerz 18 Feb 2009 BofA lamely tolerated bonuses at hapless Merrill after agreeing to rescue the firm. But Commerz has killed Dresdner Kleinwort s pretakeover E400m bonus pledge. It s a raw deal for bankers who stuck around for a payday. But they should know best how cutthroat the business is.
US to build express train to perdition 18 Feb 2009 Fast trains are a good idea, but why is the US spending $8bn of US taxpayer money to speed gamblers journey from California to Las Vegas? The clear answer: politics. The subtler answer: bad economics. It s all too typical of how the US economy has been and is being run.
Russian cash crisis offers China great oil deal 18 Feb 2009 China s $25bn oil purchase agreement with Russia trades cash for bargainpriced oil over 20 years. That solves a chunk of China s longterm oil supply problem. Russia may be unreliable, but the deal s advantages make it well worth the risk.
US mortgage plan is well-designed 18 Feb 2009 Obama s proposed plan to reduce foreclosures pulls off a neat trick. Subsidising servicers and lenders to reduce mortgage payments minimises moral hazard and is an efficient form of intervention. This may be the best spent of all the bailout monies.
General Motors employs mother of all scare tactics 18 Feb 2009 The ailing carmaker reckons bankruptcy would require a stonking $100bn or more making the extra $16bn of taxpayers money it wants look like chicken feed. GM s logic is untested. But if it jolts all stakeholders to take the necessary haircuts, it may yet serve a purpose.
Stanford scandal creates another alpha nightmare 18 Feb 2009 Investors crave positive alpha more return than risk. Madoff and now Allen Stanford are accused of providing it the easy way just make up the numbers. The alleged frauds raise legitimate doubts about all wouldbe superior investors. Is alpha just an alphamale fantasy?
Recession favours fashion’s outsize models 18 Feb 2009 As the biannual catwalk season gets underway in the midst of global downturn, the fashion houses with the best strut are Xlarge. LVMH, Gucci Group and Richemont can still catch the shopper's eye even in this market. Lesser brands risk getting squished.
Commerz’s E3m net profit not as neat as it looks 18 Feb 2009 The German bank ended 2008 just in the black and with a 10% Tier 1 ratio, partly thanks to negligible bonuses. It s a tidy close to a terrible year. But Commerz is warning of hefty provisions this year. Further pain for shareholders lies ahead.
SocGen sees eastern Europe as glass half-full 18 Feb 2009 The French bank survived the E5bn Kerviel fraud to make E2bn in profits last year. Its domestic retail business is countering weakness in investment banking and fund management. But SocGen may regret paying such a juicy dividend if its eastern European business weakens further.
Sirius throws itself on the mercy of Malone 17 Feb 2009 The US satellite radio firm seems to have avoided bankruptcy and maintained control thanks to a $530m loan from cable magnate John Malone. But with a tsunami of maturing debt on the way and not enough cash, its independence is probably illusory.
L’Oréal finds blemishes that no makeup can cover 17 Feb 2009 Years of doubledigit earnings growth at the cosmetics giant came to a brutal end in 2008. Sales plunged in the US and customers around the world turned away from highend products. Downbeat consumers are disproving the theory that everyday luxury goods are recessionproof.
FSA looks wary of forcing insurance rights issues 17 Feb 2009 A plunging share price has bounced Legal & General into early disclosure of moves to strengthen its reserves. The UK life insurer is preparing to withstand a savage recession. But the absence of a rights issue suggests that the regulator for one is comfortable.
Investors, regulators miss the obvious on Stanford 17 Feb 2009 Regulators looked into the alleged fraud for months but only acted when Madoffspooked investors realized doubledigit safe returns on $8bn of certificates of deposit were too good to be true. Watchdogs and investors should have tripped over red flags far sooner.
Lenders should draw up naughty borrower lists now 17 Feb 2009 Trump's casino company just filed for bankruptcy for the third time. During the boom, banks overlooked big borrowers track records. They should make a list of who to shun and stick to it next time. It could also include Zell, Macklowe and a lot of US consumers.
L’Oréal finds blemishes that no makeup can cover 17 Feb 2009 Years of doubledigit earnings growth at the cosmetics giant came to a brutal end in 2008. Sales plunged in the US and customers around the world turned away from highend products. Downbeat consumers are disproving the theory that everyday luxury goods are recessionproof.