ITV buys time to test advertising recovery 23 Apr 2009 Executive chairman Michael Grade is relinquishing his CEO duties just as it looks like the UK broadcaster will muddle through the advertising slump. But ITV s covfree loan and a planned disposal should be enough to dodge a rights issue and ensure ITV repays debt due in 2011.
Prudence pays off for Credit Suisse 23 Apr 2009 The Swiss group was quicker than rivals to raise capital and aggressively slash holdings of toxic assets. Foresight helped the bank post an impressive SFr2bn quarterly profit and a stunning 23% return on equity. It s not sustainable, but shows less risk can still be rewarding.
Court saves PCCW minorities from themselves 23 Apr 2009 Richard Li s $2.1bn buyout of the Hong Kong telecom he controls met a sudden death, apparently not because it was illegal, but because judges deemed it unattractive. That seems excessively kind to minority shareholders. They shouldn t be protected from their own poor judgement.
Barclays’ back us or sack us strategy pays off 23 Apr 2009 The UK bank s board looked to be toast after a bungled attempt to raise equity from Middle East investors. But six months on, it has been overwhelmingly reelected. After some dicey moments, shareholders are starting to believe in the benefits of staying free from state control.
Zuma enigma is key to South Africa’s future 23 Apr 2009 The presidentelect is from the ANC s left and has faced corruption and other charges. Yet his apparent wish to keep finance minister Manuel suggests economic rationality. South Africa can become Nigeria, Zimbabwe or a larger, richer Ghana. Zuma will get to determine which.
RBS needs to be realistic about Asia price tag 23 Apr 2009 Why is the UK bank taking so long to sell its Asian business? Maybe because the assets in question are disparate and small. RBS's preference for selling them in one go reduces the pool of buyers and increases the red tape. The $1bn pricetag look optimistic.
It’s still Ken Lewis’s fault 23 Apr 2009 Hank Paulson made me do it is no excuse for the BofA boss s disastrous Merrill deal. Despite government pressure to proceed, he could have renegotiated the price once Merrill s losses became clear. Lewis s responsibility was to shareholders who should still show him the door.
VW bailout of Porsche could be price for peace 23 Apr 2009 Luxury carmaker and financial operator Porsche is saddled with debt after building up a majority stake in rival Volkswagen. The prey, VW, could help by buying the predator s car business. But VW s minority holders may chafe at the price of tranquillity using a E8bn cash pile.
Iraqi oil recovery still a mirage 23 Apr 2009 The nation needs foreign help to meet its target of doubling production in five years. Security risks are no longer insurmountable, but the politics may be. A parliamentary committee has pledged to push Shell out before it has even arrived. Even service contracts look risky.
Chrysler’s lenders put US car tsar on the spot 22 Apr 2009 The creditors may think their offer of 35% haircut in return for equity matches what they would get in a bankruptcy filing. But Steve Rattner wants much more. He now has an unpalatable choice: reject the offer and let Chrysler go bankrupt or show weakness ahead of GM talks.
Rattner woes a blow to Obama’s Detroit strategy 22 Apr 2009 The US car tsar is embroiled in controversy over his former money management firm's use of placement agents. This could distract him from crucial negotiations with automakers. With the clock ticking and few obvious replacements, it may put the Obama administration in a fix.
Morgan Stanley Q1 shows cost of reduced risk-taking 22 Apr 2009 Strip out the accounting loss from improved debt spreads and the Wall Street firm would have made money. But its decision not to swing for the fences in trading anymore means lower revenue. That reduces risk but also makes turning a decent profit much harder to do.
Budget leaves UK at risk of financing crisis 22 Apr 2009 What should the chancellor do in the face of a deep recession? Alistair Darling took flight from reality. He resorted to unrealistically optimistic economic assumptions and the pretence that gargantuan deficits would not be a problem. Financial markets may yet change his mind.
Freddie exec’s death shows perils of vilification 22 Apr 2009 Even if David Kellermann s suicide had little to do with his job, the vitriol directed at those toiling at crisiswracked firms can t have helped. Yes, the financial meltdown has cost trillions. But public rage over it can contribute to needless human losses, too.
EU Commission is paper tiger on bank bailouts 22 Apr 2009 The EU wants to force staterescued banks to shrink their balance sheets. That's unrealistic and could push back regional integration as the Bundesbank's Weber fears. Europe deserves a stronger regulatory response to the crisis than the current commission seems able to provide.
UK green budget looks bad value for taxpayer money 22 Apr 2009 The government s £1.4bn green budget is meant to help reduce carbon emissions and create a low carbon economy. Taxpayer money may have been better spent giving indirect support to existing hightech industries that are less speculative.
Japan should forgo $500bn equity crash-mat 22 Apr 2009 A planned emergency fund for buying shares would pad out the market but reinforce banks bad habits. History has left lenders groaning under $200bn of stock, which they don t seem keen to sell. The taxpayers money would be better spent buying shares directly from the banks.
Asian trade figures suggest global decline slowing 22 Apr 2009 Japan s March exports were down 46%, but that still beat February. Overall, Asian trade figures have bounced somewhat, suggesting their previous drop resulted from inventories and finance, not a deeper problem. This is not the end of recession, but maybe the end of its beginning.
Darling understates cost of bank bailout 22 Apr 2009 The UK chancellor says he s being conservative in setting aside £50bn for keeping the banks afloat. But he s not counting the full cost of all the official guarantees and aid especially if the recession deepens. The IMF s £130bn estimate looks more plausible.
PCCW chooses favourable moment to get out the red ink 22 Apr 2009 Oneoffs and unexplained impairments led to a 15% drop in reported earnings at the Hong Kong telecoms firm. While the underlying business held up well, Chairman Richard Li is playing down the good news. But then, he is trying to push an unpopular buyout through the courts.
Inefficient financial regulation has its charms 22 Apr 2009 That s the position of US state insurance watchdogs, who oppose the federal government s attempt to gain oversight of the industry. The feds say the state system is outdated and hampers innovation. Experience suggests that s not entirely bad, argues Dwight Cass.
UK likely to regret soaking the rich 22 Apr 2009 The Budget is a hammer blow to the City of London, landing multiple punches on high earners. The measures are likely deter foreigners from working in UK financial services. And in removing incentives to make more money, they may reduce the country s taxable revenue base.
UK snubs Mervyn King by rejecting Glass-Steagall 22 Apr 2009 The Bank of England boss had called for a debate over whether banks should be split into utilities and casinos. The government has now closed the debate. The lesson for King: if he wants to influence such matters in future, he had better state clearly what he thinks.
Consumer defaults bring risk of financial relapse 21 Apr 2009 Anyone seeing the green shoots of recovery shouldn't lose sight of soaring defaults on US consumer debt. The level of such debt is far higher than in 198082 or in the Depression, and credit losses much exceeding banks' profits could deal the financial system another blow.
US earnings highlight breadth of downturn 21 Apr 2009 Caterpillar is a heartland manufacturer. BlackRock is a New York money manager. Both saw quarterly revenues and adjusted profits slump to a similar extent. That underlines the scarcity of shelter from global economic trouble and raises questions for policymakers, too.
Questions Cuomo should be asking Carlyle 21 Apr 2009 The New York attorney general has alleged the state pension fund's former CIO and a political adviser were part of a kickback scandal. Now the state has banned the use of finders, or placement agents, when investment firms seek funds. But the buyout shops aren t out of the woods.
UK boost to securitisation no cause for panic 21 Apr 2009 State plans to aid the mortgagebacked security market may raise fears of a return to the originateanddistribute model that sank the financial system. But securitisation, in proportion, has its place and temporary subsidy of the market may be a necessary evil to boost lending.
Spain’s central bank makes independence pay 21 Apr 2009 The Banco de España didn t prevent a housing bubble, but it did keep Spanish banks out of foreign debt sludge. Now its governor is taking flack for speaking out on pension and labour reform. He should be praised and more independent central bankers should follow his example.
Tesco’s allure is still firmly in the future 21 Apr 2009 Right now, the UK retail behemoth mostly faces problems: strong rivals in the core UK grocery market and a bungled US launch. But UK nonfood is growing, Asia is coming along and global rival Carrefour is struggling. Investors aren t paying much for Tesco s tantalising prospects.
Shipping industry adrift in global slowdown 21 Apr 2009 The global shipping fleet is still growing at a record pace. But world trade is set to decline 9%. The excess supply will last for years. Shippers and their financiers may benefit from lower costs once trade recovers. But in the meantime, it's all about survival.