Peace in UBS case could cost Swiss dearly 31 Jul 2009 Details are scarce on the accord reached in the longrunning US prosecution, but the expectation is many more names will be turned over. UBS will be happy to have the case behind it, even if there s an extra hit. For Switzerland, it starts a new era of less profitable banking.
Ferrovial still on better side of improved Cintra deal 31 Jul 2009 The Spanish infrastructure group is absorbing Cintra, its 68%owned motorway subsidiary, on terms that are better for minority investors than had been expected. The merger has some logic. But Cintra needs the deal less than its parent. The minorities will have to lump it.
US economy could languish at bottom of deep hole 31 Jul 2009 The 1% drop in Q2 GDP makes the 3.7% drop in the last six quarters the worst recession since World War II. Government stimulus helped, but personal savings are still depressed and the federal deficit is huge. Correcting those imbalances could make for a very slow recovery.
Anglo American bolsters defences 31 Jul 2009 Facing unwanted merger interest from rival Xstrata, the miner needed a boost. Its interim update was never going to be stellar. But it shows hard progress on cost cuts and growth projects. That gives credence to Anglo s claim to be entering a period of enhanced value creation.
Beer wars open a new front in Africa 31 Jul 2009 A legal skirmish between SABMiller and Diageo could presage allout warfare for Africa s beer drinkers. A forecast 4% economic growth rate and fat margins have executives salivating. The old Africa hands at SAB may not like it, but competition should eventually help everyone.
Cash for clunkers shows how stimulus should work 31 Jul 2009 The US programme to boost car sales may have burned through its $1bn budget after a week. That s a welcome change compared to the slowcooked pork that characterises most government pumppriming plans.
Schaeffler alienates as it takes power at Conti 31 Jul 2009 Usually majority shareholders get their way without too much complaint. But Schaeffler s decision to oust the top man at Continental was delayed by board resistance. The fight between the two overindebted German car part makers is making it harder to find a durable solution.
BofA top brass face stark Merrill bonus choice 31 Jul 2009 New York s attorney general put numbers on a known divide: Merrill had four times as many milliondollar earners last year as its new parent. The two pay cultures won t be easy to combine. BofA could impose its thrift on investment banking or make some older staff very happy.
US needs to choose a privatisation model 30 Jul 2009 Lawmakers defeated a bill to distribute GM and Chrysler shares to taxpayers. But the US still needs a strategy for unloading its stakes. Russia and East Europe s experiences suggest two ways: give shares to the public or employees. Or better, sell them cheap to big investors.
GE Capital may need bigger loan-loss buffer 30 Jul 2009 The conglomerate says its $650bn finance arm has adequate provisions against defaults. But a look into one slice of its portfolio, leveraged loans, raises questions about whether it will need to squirrel away more cash.
League-table obsession scales new heights in Asia 30 Jul 2009 Bankers pretend to be blasé about rankings but secretly watch them with zeal. The fixation is most intense in Asia, where the advisory business is less mature. But so long as league tables are the only tangible measure of success, profits in the region will probably suffer.
Darling’s bank-bashing is muddled but necessary 30 Jul 2009 The UK finance minister wants banks to do the impossible to lend more and shrink at the same time. Banks have many reasons, not all of them good, to cut back on lending. Darling's position may sound contradictory. But a bit of sabrerattling should help keep banks honest.
China’s lending spree could create zombie banks 30 Jul 2009 Beijing wants $1.3 trillion of bank loans channelled into public works rather than stocks and property. But for lenders, such worthy projects can be a recipe for bad debts. China s big banks are unlikely to blow up but deadend loans could weigh on earnings for years to come.
Exxon Q2 stumble highlights long-term challenges 30 Jul 2009 The West s top company missed expectations. The halving of oil doesn t fully account for a 66% decline in profit. Decreasing production and sustained capital spending do. They also point to Exxon s conundrum: oil is getting harder to find and costlier to extract.
Derivatives rules should target low-hanging fruit 30 Jul 2009 Key US lawmakers want standardised derivatives to be centrally cleared and traded on exchanges. But there s little consensus over what standardised means. If the rules try to cast the net too wide, it could bog legislation down or backfire by increasing risk.
Shell keeps dividend, cuts investment 30 Jul 2009 The energy major s new boss faces an old problem the sums don t work for many key projects with oil around $60, and falling natural gas prices make it harder. Voser s response is to axe jobs, cut capex and increase debt, but maintain the dividend. That may not be sustainable.
Andrew Cuomo provides roadmap to Wall Street riches 30 Jul 2009 The NY attorney general s Heads I win, Tails You Lose report adds little to the debate over bonuses with one exception. His aggregation of individual compensation provides a tip sheet on which bank is most likely to make you a millionaire.
Reed Elsevier finds capital raising costly 30 Jul 2009 The publishing group is adding 10% to its share count through a cash box placing avoiding preemption rights. The new cash should preserve its credit rating. But this first big move from a new boss irritated already disgruntled shareholders. The shares plunged 15%.
Rail woes give UK chance to rethink privatisation 29 Jul 2009 The crisis hasn t done any favours to the old private good, government bad thinking. The return of one big privatised rail franchise to the UK government provides a good opportunity for a privatestate comparison. Who knows, the Tories might end up the party of nationalisation.
Wall Street-Washington divide is grey and messy 29 Jul 2009 BlackRock and Goldman courted a US government pension official, perhaps too eagerly. He sought their help, perhaps too freely. But the former PBGC boss s contacts presumably helped qualify him for the job. Rules can t outlaw human nature or substitute for judgment.
Bear case for BBVA and Santander harder to justify 29 Jul 2009 Spain s biggest lenders are the latest banks to beat expectations with their results. Cost control and wider margins are offsetting rising loanloss provisions. While conditions in Spain will only worsen, the prospects for other markets especially Latin America are improving.
Yahoo’s retreat in search makes it look like AOL 29 Jul 2009 The internet company has agreed to let Microsoft handle its users web search queries in exchange for a big cut of revenue. Handing over the keys to its rival will boost margins. But Yahoo s new business strategy is unsettlingly like that of internet alsoran AOL.
Is the bond market bonanza a blip? 29 Jul 2009 JPMorgan and Moody s think it may be. The $600bnplus of US corporate bonds floated in the first half gave underwriters something to celebrate after a painful drought. But although market conditions remain attractive, the festivities may not last.
Fidelity and Deutsche try marriage of convenience 29 Jul 2009 The US fund manager is teaming up with the German bank to channel IPOs to investors. Both operate in competitive markets that are recovering from upheaval, and the deal gives the two parties extra selling points. But it probably doesn't involve much love or even money.
Dollar General IPO a rare bright spot for KKR 29 Jul 2009 Those who buy shares in the US retailer, which prices all its wares at $1, could be pleased too. It has proved a great countercyclical investment for KKR and the buyout shop s operating fixes boosted the company s earnings. Henry Kravis may be in for a muchneeded windfall.
Nomura enjoys Lehman boost – but how to keep it? 29 Jul 2009 The Japanese bank clocked up a $1.3bn trading gain as its Lehman acquisition kicked in at last. But Nomura risks a brain drain when retention bonuses are paid in October. And away from the trading floor, investmentbanking profits and big deals remain elusive outside of Japan.
Eads should stop backing insider-trading suspects 29 Jul 2009 A report for French regulators says the European aerospace group s former CEO and other executives should be fined for their controversial sale of Eads shares in 2006. Eads has always defended its employees actions. Continuing to do so will damage its reputation.
Should tax breaks on corporate debt be abolished? 29 Jul 2009 And should banks face a hot money tax to deter them from becoming too reliant on wholesale funding? Would it be wise to fold the UK s FSA into the Bank of England? Find out the views of the audience at Wednesday s Breakingviews.com seminar on how to fix the financial system.
No easy way to deflate China’s new-issues bubble 28 Jul 2009 When a tollroad operator s share price triples on the first day of trading, you know China s IPO market isn t working right. The problem is not unscrupulous underwriters or careless regulators. It s foolish investors with too much money. They probably have to learn the hard way.
Will Webster be Warburg Pincus’ next MBIA? 28 Jul 2009 The private equity firm has lost some $600m on its bet on the bond insurer. Now it s dipping its toe back into financial services with a modest investment in a Connecticut bank. Some aspects of the deals are similar. But its new target is stronger and its timing appears better.