S&P bank capital study could fill global gap 24 Nov 2009 The ratings agency looked too kindly on structured credit dross during the boom. But it is still global and basically impartial. The new S&P analysis of banks capital adequacy could give investors a single worldwide standard and help the agency s battered reputation.
Dubai needs to do more than play musical chairs 23 Nov 2009 Several of the architects of the debtladen emirate s hapless financial expansion have been replaced. The display of accountability is welcome. But the changes appear to mark a return of the old guard. To restore confidence, Dubai really needs to bring in more outside voices.
BBVA faces pay-to-play dilemma in China 23 Nov 2009 The Spanish bank has little choice about exercising a E1.1 bln option on more shares in partner China Citic. A larger holding should ensure continued goodwill. Such warm feelings may be more worthy than worthwhile. As these investments mount, so will the pressure for returns.
News Corp launches search-revenue trial balloon 23 Nov 2009 Rupert Murdoch wants search engines to pay for News Corp content. Microsoft's Bing, which recently also agreed to pay Twitter, might oblige. But Murdoch needs other publishers on board. With Google's traffic still alluring, that won't be easy.
Obama should dine with Singh more often 23 Nov 2009 The first state dinner hosted by the US president is for the Indian PM. China, America's second largest trade partner after Canada, usually gets the higher profile. But USIndia trade is more balanced. The US should ensure it doesn't neglect the world's most populous democracy.
China’s banks ready for grown-up capital rules 23 Nov 2009 The regulator may start to focus on Tier1 capital ratios, and ask banks to raise them. That sounds promising especially if it means an end to heavyhanded and not very effective lending quotas. Besides, most lenders would already pass all but the most onerous tests.
What’s on boom-time Wall Street bosses’ minds? 23 Nov 2009 Sure, pay is right up there. And the ability to sell their stock holdings might fuel excessive risktaking, as a Harvard study suggests. But investment banking bosses are also driven by power, prestige and, in bubbles, a belief that they know best. That is hard to guard against.
BoE misses trick on pricking bubbles 23 Nov 2009 The UK central bank has fallen into an alltoocommon trap of focussing on capital surcharges as a way of preventing future financial parties getting too rowdy. Capital buffers certainly need strengthening. But so does liquidity. Yet again, funding is being virtually ignored.
ECB trims a few extremes of cheap money 23 Nov 2009 The eurozone s central bank has tightened the rules for banks using assetbacked securities to tap clean funds. It may also stop offering cheap oneyear money next year. The goal is to ease back on some exceptional liquidity provision. But a real exit strategy isn t coming soon.
Hershey’s advantage over Kraft: irrational owner 22 Nov 2009 With fewer resources and synergies from a deal, Hershey would need to stretch so precariously to buy Cadbury it could risk its controlling trust s raison d être. Still, never underestimate a shareholder whose priorities differ from those of, say, Kraft holder Warren Buffett.
Treasury readies market solution for TARP warrants 22 Nov 2009 So far, the US has negotiated privately to sell back them back to banks. Now it is starting an auction process to bring in a market price for other warrants, including JPMorgan s, it got when it injected funds. It s a sensible move but the Treasury could still get flak.
CDS market looks forward to renaissance 20 Nov 2009 George Soros, for one, reckons credit derivatives should be banned. But despite powerful enemies, structural imperfections and a role in AIG's downfall, CDS trading has survived the crisis. Market reforms are on the way. Along with history, that suggests a comeback is likely.
New EU president must act fast to assert himself 20 Nov 2009 Herman Van Rompuy lacks the star power that other candidates for the first president of the EU Council may have had. But the former Belgian PM has a chance to make the job an effective one, if he wastes no time showing he can stand up to the FrancoGerman entente.
American could be more immediate prize for BA 20 Nov 2009 British Airways may hear before Christmas what it will need to do to get a deal with American Airlines approved. That could bring more shortterm benefits than the Iberia deal provided regulators on both sides of the ocean don t force BA to give up too many slots at Heathrow.
Lower overdraft fees aren’t a free gift 20 Nov 2009 U.S. bank regulators and politicians are forcing banks to rein in this big source of profits. Consumers should be pleased but not excited. Financial institutions are likely to find other ways to charge customers or lend less. UK customers will have to live with the status quo.
Gartmore price range sounds aggressive 20 Nov 2009 The UK fund manager is worth 800 million pounds at the midpoint of the mooted price range for its forthcoming IPO. This sounds reasonable if the recent strong performance can be repeated. But that's a big ask. Investors should push for a conservative valuation.
Bank shareholders finally grumble for more pie 20 Nov 2009 Until now, they ve largely shrugged at how much of revenue firms pay staff. At last, some Goldman investors are carping for lower bonuses and higher retained earnings to drive up the share price. The added political storm makes it a perfect time for banks to revisit the model.
BA pension trustees face dilemma in Iberia tie-up 19 Nov 2009 Contrary to popular belief, the UK airline s pension scheme is not ringfenced and could pose a threat to Iberia s cashpile in their proposed merger. The pension fund trustees will have to play current negotiations with BA carefully if they do not want to scare Iberia away.
State-held UK banks become private-equity stars 19 Nov 2009 Banks often turn dud loans into equity investments. It s a little trickier for RBS and Lloyds, which are set to become the biggest privateequity firms in the land. For shareholder value, joint ventures with pros look good. But their state investor may have different ideas.
Manure ménage à trois is gift that keeps on giving 19 Nov 2009 It s hard for investors or the media to do more than turn their noses up at the threeway scrum between North American fertilizer groups. But the $9bnworth of bids has helped Wall Street banks, lawyers and PR firms keep the lights on. Its passing will leave a fee void.
Shorting needs sensible disclosure not prohibition 19 Nov 2009 The UK regulator is to have new powers to restrict short selling. The prospect of the authorities directly intervening in the market is alarming. If shorting poses a threat, an intelligent disclosure regime should suffice to ensure an orderly market.
Russian support wouldn’t help Rusal IPO much 19 Nov 2009 A Russian lender chaired by Vladimir Putin may take a stake in Rusal when the metals giant floats. With Rusal owing E4.5bn to the state bank, this would amount to a partial debtforequity swap. But Kremlin involvement could also make the IPO a tougher sell.
Cazenove puts bygone UK brokers to shame 19 Nov 2009 The £2bn value JPMorgan is placing on their joint venture implies the storied UK firm s bankers are worth £3m each. That s far more than those at Warburg, Schroders or Fleming commanded. The Cazenove name will survive for now but this generous deal may not preserve its legacy.
Is Barney Frank turning into a bull-market banker? 19 Nov 2009 The influential US congressman wants to keep on standby the FDIC s bank debt guarantee programme, saying it made a profit for the federal government . With FDIC still on the hook, that sounds a bit like the book profits now, worry later attitude on Wall Street before the crisis.
M&S CEO choice heralds more adventurous era 18 Nov 2009 Marc Bolland wasn t hired because he helped turn around a troubled retailer, although Marks & Spencer might still need help in the recovery department. The exHeineken executive s main goal is to push the UK retailer s brand at home and abroad exciting but risky for investors.
Cadbury carve-up looks a long shot 18 Nov 2009 Hershey of the US is reportedly mulling a joint bid for the UK confectioner with Italy s Ferrero. Incumbent bidder Kraft should not feel too threatened and Cadbury shareholders should not start pricing in an auction.
US inflation risk now outweighs fear of deflation 18 Nov 2009 The headline CPI rose more than expected in October. Prices are within 1% of their 2008 peak. Stripping out food, energy and housing costs, inflation is running close to 3%. As the deflation menace now is remote for the US, monetary policy should be adjusted accordingly.
Celebrity investors no guarantee of future results 18 Nov 2009 Every Asian IPO candidate wants a Goldman Sachs or a George Soros on the register. China s Minsheng Bank, Sands Macau and Longfor all boast famous names. Such endorsements may help bankers and firstday investors, but do less for the companies themselves, and for the markets.
Are US regulators now racing to the top? 18 Nov 2009 That's one interpretation of a spike in enforcement actions and ballyhooed initiatives by the likes of the SEC, the OCC and the Fed. With legislation in Congress that could gut their authority, they seem to be trying to outregulate one another.
Leon Black should prepare for limp public debut 18 Nov 2009 His buyout firm Apollo plans to leave the shadowy confines of GSTrue for the bright lights of the NYSE. That may grant Black greater liquidity and access to capital. But given Apollo's challenges, he should expect a lowlier rating than Henry Kravis and Steve Schwarzman command.