UK should resist calls to block RBS loan to Kraft 16 Dec 2009 MPs in Cadbury's home town want the government to stop majority stateowned RBS financing Kraft's hostile bid for the confectioner. Such interference would rob the bank of credibility among its corporate customers and make a mockery of the idea that RBS is independent.
Gaidar’s legacy relevant for Russia today 16 Dec 2009 The shock therapy introduced in the early 1990s by Yegor Gaidar, who has just died, helped drag Russia from socialism into a market economy. Freeing up prices and privatising industries wasn't pretty. But the broad thrust was right. Russia could do with more Gaidar medicine.
Bernanke risks being person of the year again 16 Dec 2009 The Fed boss made the front of Time for his influence and possibly heading off a depression. But he is in no hurry to lift interest rates despite the recovering U.S. economy and signs of inflation. Through inaction, Bernanke is risking a second, less positive, turn on the cover.
IMF should call Ukraine’s bluff 15 Dec 2009 The government is dramatizing its plight to persuade the IMF to lend again. But Ukraine's problems are as much political as financial. The IMF shouldn't disburse more money until Ukraine comes up with a coherent plan. That won't happen until after January's presidential election.
Greek banker bashing won’t solve budget blues 15 Dec 2009 Slapping a 90 pct tax on bankers' bonuses may be popular. So is the government's reaffirmation that lowpaid public sector workers will get wage increases. But this is not the plan best calculated to restore investor confidence and the country's battered credit rating.
BayernLB’s future bleak despite Austrian retreat 15 Dec 2009 The troubled German lender has surrendered its stake in a struggling Austrian subsidiary to Vienna and written off debts of 825 million euros. The move marks the end of a costly saga for BayernLB. But like Germany's other regional banks, it is still struggling for direction.
Global prices may soon present cruel dilemma 15 Dec 2009 After falling early in 2009, global consumer prices have resumed rising, pushed up by commodities. If the global economy recovers, labor markets strengthen and commodity prices stay strong, inflation could quickly force monetary policymakers into a difficult choice.
Wells Fargo’s TARP exit could prove too hasty 15 Dec 2009 The U.S. lender quickly followed rival Citi to exit the government s clutches by selling $10.7 billion of shares. Its tangible common equity ratio looks in line with peers. But a rise in interest rates could hit Wells capital harder given the makeup of its mortgage book.
Deutsche’s 10 bln euro target looks a stretch 15 Dec 2009 Deutsche Bank plans to make record pretax profits of 10 billion euros in 2011 while sticking to its 25 percent return on equity target. This relies on aggressive assumptions about market growth, costs, competition, and the burden of regulation. Investors should wait and see.
Best Buy’s margin pressure brings retailers coal 15 Dec 2009 U.S. retailers basked in rosy November sales. Best Buy s margin warning throws cold water on this optimism. The wellrun firm is in the hot electronics sector and its biggest rival recently liquidated. If it can't perform, that bodes poorly for other stores.
BoE’s inflationary bias should raise concern 15 Dec 2009 UK inflation has come in above estimates again. Despite the deepest recession in half a century, consumer prices have barely fallen. The Bank of England may be pleased to have avoided deflation. But its persistent inflationary bias, evident for five years, is storing up trouble.
US loan market looks ready for leveraged buyouts 15 Dec 2009 The market has gobbled up three recent loans to fund private equitybacked deals. Lenders didn t need much enticement and one debt package was upsized. The renewed appetite will be welcome to dealstarved buyout barons. But investors should beware another bout of indigestion.
Chinese banks should cut their dividends 15 Dec 2009 Listed lenders have underperformed lately on fears they need a massive capital raising. One day they may. But for now, a 60 percent dividend cut would be better. It would save the biggest four $13 billion in 2010, enough to support growth and keep high capital ratios unchanged.
Few quick fixes for CMBS mess 15 Dec 2009 Lloyds' restructuring of property firm Ashwell is a sign that banks are grappling with distressed loans. The prepack administration made the process relatively easy. But the $200 billion European market in commercial mortgagebacked securities will be much harder to sort out.
HK wins IPO crown, but hold the ticker-tape parade 15 Dec 2009 Hong Kong is the world's IPO capital with $27bn in new issues this year. But this says more about the carry trade and excess mainland liquidity than it does about China's rise. U.S. capital markets remain far deeper. The same forces boosting Hong Kong may bring it crashing down.
Citi out of intensive care – now for rehab 14 Dec 2009 The US bank has made a neat deal with the government to exit the TARP trap. It's progress, and Citi will have a solidlooking capital cushion for the future. But the bank needs to wean itself off the Fed's easy money and get all its limbs working before it can claim full health.
Samuelson’s half-truth remains too influential 14 Dec 2009 The Nobel laureate s death doesn t mark the end of an era. Paul Samuelson s textbook made him the most influential economist of his generation, and his Keynesianneoclassical synthesis helped inspire current policies. But the approach glosses over the risk of Keynesian excess.
Investment bank revenues are coming back to earth 14 Dec 2009 Investment banks are facing a slowdown in the fourth quarter. Spreads are narrowing, and investors are closing their books early. Next year could see a revival in deals, equity trading and distressed debt investing. But it won't make up for lower fixed income revenues.
Striking at BA’s pension deficit 14 Dec 2009 The future beneficiaries of the pension schemes that threaten to bankrupt British Airways told the management what they think of them today. By a ninetoone margin, the employees have voted to ground the airline for what might be described as the 12 days of Christmas.
Googlephone’s influence more important than sales 14 Dec 2009 The search giant is escalating its effort to upend the mobile market by introducing its own phone. Google's interest in selling it without subsidies means the device probably won't be a huge hit. But the handset is an important showpiece for the company's mobile operating system.
Exxon’s $31 bln gas deal looks well timed 14 Dec 2009 The oil giant ticks many boxes with XTO. It gains a potentially lucrative foothold in US gas and gets a needed boost to energy reserves. The longterm bet strikes as gas recovers from historical lows. Plus, Exxon need only issue 10 pct more shares. All in, the deal seems smart.
Why hire a banker to run asset management? 14 Dec 2009 That's what Morgan Stanley is doing with the appointment of Greg Fleming to run investment management. Recruiting the banker who saved Merrill Lynch (and snookered BofA), it's reasonable to assume the firm will be on the prowl for acquisitions.
Beijing plays with an inflationary tiger 14 Dec 2009 Food prices are rising only modestly, but asset prices have rocketed. Reining them in with higher rates could upset China's investment plans for next year and attract hot money. But nursing an asset bubble is like petting a wild animal fun and games until things get nasty.
UK bonus tax punishes banks for good behaviour 14 Dec 2009 The UK's bonus supertax makes no allowance for deferred payouts that bankers have to give back. Given that regulators have pushed hard for such clawback provisions, this seems perverse. It's too late for banks to change tack. But the government should think again.
Dubai rescue doesn’t heal all wounds 14 Dec 2009 Abu Dhabi's $10 bln bailout of Dubai World will boost confidence and please Nakheel bondholders. But there are still questions over the terms of the bailout and the fate of Dubai's other debt. This volteface doesn't restore the credibility lost over recent weeks.
Guy Hands hits nuclear button in Citi debt battle 14 Dec 2009 The Terra Firma boss claims his advisor misled him in the auction for his music deal two years ago. Citi denies the charge. But the two sides are already at loggerheads over the restructuring of EMI's debt. By choosing such a drastic option, Hands risks looking desperate.
Accor split will ease shareholders’ pain 14 Dec 2009 The French hotel group's board will decide this week to spin off the company's vouchers division. The timing is right, since the hotel branch can get by without the highly profitable division's cash flow. Opponents fear this might make Accor a takeover target. So what?
What if GE could start over with GE Capital? 14 Dec 2009 Imagine CEO Jeff Immelt could remake the troubled finance unit from scratch. Ideally, he'd confine it to businesses related to GE's core industrial strengths and its size to around $360 bln. Imagining, though, shows how difficult it will be to tame GE Capital.
US financial reform still faces steep climb 14 Dec 2009 The bill that came out of the House on Friday with a slim majority is far more ambitious than what the Senate could pass on a tight vote. Those, like President Obama, who might like to see fat cat bankers suffer more will be disappointed by the diluted final result.
Protectionism won’t help China’s champions 14 Dec 2009 Steel tariffs and buy China technology policies aren't just revenge against the U.S. China once traded market access for foreign knowhow and capital. Now promoting domestic champions looks a bigger priority. It could backfire, as China is not yet ready to strike out on its own.