RBS bonuses put state ownership to tough test 2 Dec 2009 The arm'slength UKFI entity is supposed to reconcile the government's political needs and the board's shareholder value goals. But the two sides are now at each other's throats over pay at RBS. UKFI failure could lead to the bank's board storming off and even nationalisation.
City shouldn’t panic over Brussels 2 Dec 2009 Britain has been outmanoeuvred over the new European Commission, but those anticipating the City's emasculation by a French former agriculture minister might reflect that rescuing the banks has condemned the UK to higher taxes for worse services. A little humility is in order.
Tax the wrong tool for pricking housing bubbles 2 Dec 2009 A Bank of England interestrate setter wants to tax housing to stop future booms. Adam Posen is right that monetary policy alone won't work. But it is naïve to expect politicians to cede control of taxes. Regulators should instead focus on reining in mortgage lending.
RUSAL deal won’t end Russian debt woes 2 Dec 2009 The aluminium group has agreed to restructure $7.4 billion in foreign debt, paving the way for an IPO. That will be a relief to western lenders and controlling shareholder Oleg Deripaska. But foreign banks may struggle to reach similar deals with other Russian borrowers.
Irish banks face perverse state-aid twist 2 Dec 2009 European authorities are blocking Allied Irish from paying out bond coupons and dividends to investors. But this bailout stick could boomerang painfully by giving Ireland an even bigger stake in its banks. The EU should be more flexible to prevent this unwanted result.
Record gold price isn’t only about insecurity 2 Dec 2009 Sure, the huge uncertainties in financial markets help. But hedge funds, retail investors, retirement funds and even central banks are rediscovering the yellow metal. If gold is regaining its lost status as a key portfolio component, that should up to a point support prices.
CoCos ride again in Chelsea rescue 2 Dec 2009 Hot on the heels of their use in recapitalising Lloyds Banking Group, contingent convertibles are featuring in the merger of Chelsea and Yorkshire Building Societies. Both are special cases. But the more examples there are, the higher the chance of a market developing.
Are Fannie and Freddie America’s Dubai Worlds? 2 Dec 2009 Not yet. But creditors of the two housing giants shouldn't forget that, like Dubai World, they have only implicit backing from their government. It may seem farfetched that the US would cut Fannie and Freddie loose. Even so, longterm investors shouldn't ignore the possibility.
Obama jobs summit may not help US labor market 2 Dec 2009 The president's heart may be in the right place. But no hiring will come of this initiative if it adds yet another layer of policy uncertainty. From healthcare to energy to taxes, Washington is delivering plenty of that right now with loads more on the horizon.
Station bankruptcy shapes up as bare-knuckle brawl 1 Dec 2009 The US casino operator run by the Fertitta family, also owner of Ultimate Fighting Championship, is restructuring. Rival Boyd Gaming wants to buy it and could offer a good price. But the Fertittas look poised to block a deal. Station s creditors shouldn t let them play rough.
China’s banks don’t spook world – but might yet 1 Dec 2009 A list of 30 financial institutions subject to new crossborder supervision includes expected heavyweights from the U.S., Europe and Japan. Missing are Chinese lenders which include three of the world s biggest by market cap. But not interconnected doesn t mean insulated.
Anglo might shine brighter without De Beers 1 Dec 2009 The mining giant's 45 percent stake of the diamond producer is largely a financial investment and De Beers' cash needs are eating into Anglo's capital. An Anglo spinoff might be good for De Beers, and correct a valuation gap for Anglo, killing two birds with one sparkly stone.
GM needs to explain why it’s replacing its driver 1 Dec 2009 Removing Fritz Henderson as CEO may be a good thing. He was part of the old guard who drove the company into bankruptcy. As Fiat and Ford have shown, new blood from outside the industry helps power a turnaround. But the lack of an explanation from GM sends a worrying signal.
Dubai guilty of encouraging sovereign confusion 1 Dec 2009 Until falling on hard times, the emirate rarely distinguished between the $26bln of sovereign debt, equal to only 40% of GDP, and the much riskier $50bln owed by government entities such as Dubai World. Investors should have been more careful, but Dubai should have been clearer.