Santander inches towards closure on Madoff 27 May 2009 The Spanish bank is handing back $235m that it redeemed from the disgraced investment manager 90 days before his arrest. In doing so, it has made its peace with Madoff's litigious trustee. Others in the firing line won t find it easy to follow suit.
Overvalued euro weighs on fragile zone 27 May 2009 Recession in the eurozone is far deeper than in the US. Germany s GDP decline is enormous. Meanwhile, competitiveness and fiscal pressures are terrible in Ireland, Spain and other smaller economies. The strains in the zone are likely to mount.
Danone’s E3bn cash-call shows need to reposition 26 May 2009 The French water and yogurt company wants to cut debt while maintaining the flexibility to make acquisitions. It got overleveraged when it bought babyfood maker Numico two years ago, and is exposed to a shrinking mineralwater market. Danone needs to adapt to a changed world.
Ex-mortgage salesman tries rebirth as savvy buyer 26 May 2009 Stanford Kurland made a mint as the number two at lender Countrywide. Now he s looking for $750m to bankroll picking over the wreckage of the mortgage market. Sure, he should be equipped to find bargains for investors. But he and his colleagues will make the more certain return.
Don’t be fooled: Facebook’s not worth $10bn now 26 May 2009 That s the headline number for Digital Sky s $200m investment. But the Russian internet group is getting preference shares with undisclosed rights. While $10bn could be a target, DST's planned offer for common stock held by employees will say more about Facebook's value today.
Fiat still offers best option for GM Europe’s Opel 26 May 2009 German lawmakers deciding on Opel s fate should set aside politics and get real about the auto industry s terminal overcapacity. Sergio Marchionne s proposed threeway merger of FiatChryslerOpel is risky and audacious. But it is also Opel s best chance of longterm survival.
Bharti tries to get MTN on the cheap 26 May 2009 The proposed cashandshares swap between the Indian and South African telecoms groups is fearfully complex. But, on the basis of information so far released, it would give Bharti effective control in exchange for only a modest premium for MTN shareholders.
California: the four-state solution 26 May 2009 Readers responded in droves to Martin Hutchinson s provocative suggestion that California s financial problems could be eased by breaking it into four smaller states. Breakingviews presents a collection of the most noteworthy comments.
Warner debt deal kicks off EMI countdown 25 May 2009 The US music group s $1.1bn refinancing last week has shaken off pesky debt covenants and extended its maturities. It s now in pole position to pounce on debthobbled rival EMI, whose lenders at Citi would love to unload. The dance music to a deal has begun.
Korean investors too sanguine on geopolitical risk 25 May 2009 Nuclear tests to the north and the death of an expresident barely ruffled South Korea s markets. The events may not derail the nation s tentative stabilisation, but they do have some troublesome implications.
Wall Street turns its back on incentive pay 25 May 2009 Predictably, Morgan Stanley is raising the salaries for its top dogs. Rivals will surely follow. This looks to be an unfortunate byproduct of the vilification of bonuses by hipshooting legislators and regulators. Unlike incentive pay, salaries are sticky and lack incentive.
British Airways switches to survival mode 22 May 2009 The UK airline has axed its dividend following results that are as gloomy as they come. BA is burning cash. Its response cutting capacity, capex and costs will need to be brutal if it is to work. In the meantime, the hopedfor deal with Iberia looks further away than ever.
Private equity firms cash in on FDIC woes 22 May 2009 The consortium buying Florida s BankUnited will receive $12.7bn in troubled assets for a cash outlay of just $900m. The FDIC will assume much of any resulting losses. The deposit insurance agency s fiscal straits and heavy workload are forcing it to conduct fire sales.
No respite for Spanish banks 22 May 2009 A recent slowdown in the increase in bad loans looks like a blip. The true picture of nonperforming loans is worse than the headline data suggest, and the green shoots rally among Spain s domestic banks is premature.
What ever happened to the live rock album? 22 May 2009 The economics of the music industry and emergence of web video have made recorded concert albums nearly obsolete Coldplay is even giving its latest away. Rob Cox reminisces.
Citi keeps shareholder dilution crown 22 May 2009 Shares in Fifth Third and Regions Financial took a pounding as the two troubled US regional banks filled their stress testmandated capital needs. GMAC s owners are on the ropes, too. But Citi, which is more than quadrupling its share count, leaves them all in its wake.
UK would benefit from a snap election 21 May 2009 With both the IMF and S&P warning about the country s finances, the UK needs to get a grip on the situation. Gordon Brown says calling an election in a recession would cause chaos. The truth is nobody is likely to take tough decisions before an election is out of the way.
Chinalco’s softening on Rio deal is small progress 21 May 2009 The Chinese aluminium group is reportedly willing to rejig its $19.5bn tieup with miner Rio Tinto. This reflects the fact that Rio s shares have shot up since the deal was proposed, and shareholders are unhappy with the transaction. But the mooted concessions are unimpressive.
Turning hedge fund tide is fuel for stocks 21 May 2009 Net outflows are dwindling, and the rally in equities could mean investors cancel redemptions or put new money to work this quarter. It s a fragile upturn that could easily reverse. But for now, the turn in hedge funds fortunes could be an accelerant for rising stocks.
Libor’s plunge could trap banks 21 May 2009 Bulging net interest margins borrowing cheaply and lending at higher rates help banks to earn their way out of problems. Trouble is, interbank rates are low largely because of government backstops. When they rise to market levels, it could crimp bank earnings.
UK commercial property slump yet to hit bottom 21 May 2009 The battered realestate market has already fallen over 40% since its peak. But rents are still sliding, and problems refinancing £40bn of debt due this year could spark forced sales. Peaktotrough values could be more than 50%.
Panmure parcel passed to the Gulf 21 May 2009 A scrum for the storied London broker has been won by a Qatari investment bank, which is taking a 44% stake in a recap. Previous owners include NationsBank, WestLB and Lazard. Panmure s tortured past doesn t bode well for its latest sugardaddy.
Dollar’s ugly decline may be short-lived 21 May 2009 A currency which pays no interest is unappealing when investors are regaining an appetite for risky assets, and the Chinese are unhappy with US money printing. Yet the dollar s decline could reverse if risk aversion returns and Europe follows the US to the printing presses.
Rio Tinto should line up mega rights issue 21 May 2009 The miner s value is up nearly 50% since a $19bn cash injection with Chinalco was agreed in February. A $12bn rights issue, plus asset sales or a dividend cut, is now clearly preferable to the deal with the Chinese group. Regulators may even hand Rio an excuse to change tack.
After Shell, investors should pick harder fights 20 May 2009 The 59% vote against bonuses for Shell execs is a watershed moment for shareholder protest. But directors pay is typically a large, slowmoving target. Will emboldened holders now engage with management on more knotty strategic questions? That would be a much bigger revolution.
AIG’s Asian IPO poses underwriter’s dilemma 20 May 2009 The prospect of fees on a $20bn IPO will have banks jostling for position. But finding a buyer to derail the float would be even more profitable. UBS and Credit Suisse advised bidders in AIG s failed auction earlier this year. The potential conflict may be a blessing in disguise.
More to mini-boom in US IPOs than meets the eye 20 May 2009 Three companies raising half a billion bucks sounds like a drop in the bucket. But strong demand and robust pricing for riskier companies suggest a latent desire by investors to put money to work. That's a critical component in any economic recovery.
Healthy corporates exploit debt investor woes 20 May 2009 Alliance Boots bought back some of its debt at almost half of face value. Boots may have been Europe s largest leveraged deal. But it still has the financial resources to exploit pennypinched debt investors. The window for other corporates to follow suit won t be open forever.
Trading and drinking: an expensive cocktail 20 May 2009 A threehour lunch has turned into a twoyear ban for a Morgan Stanley oil trader who took out a big alcoholinduced short position. Unable to explain the outsized risk, he was eventually dismissed. He may have made money but it s still a sobering tale for traders everywhere.