Lloyds’ exposure to UK economy pays off – for now 26 Feb 2010 The UK bank's prediction that bad debts peaked in the first half of last year is coming true, and margins are improving. Lloyds also reckons it can wean itself off stateguaranteed funding. But its fortunes remain firmly linked to domestic growth and house prices.
UK soccer suffers its own credit crisis 26 Feb 2010 Portsmouth Football Club is set to go into administration the first in Britain's top league to fail. Its demise has many parallels to the banking crisis: excessive debt, reckless owners, and overpaid stars. But at least football clubs don't carry systemic risks.
Currency buyers suffer from King Lear’s problem 26 Feb 2010 Shakespeare s ruler moved from one daughter to another, trying to decide which was least awful. Traders are rightly repulsed by dollar, yen, euro and pound. Which they hate most depends where catastrophe looks most likely. The euro s time as ugliest princess could be brief.
Goldman Sachs needs to admit it made mistakes 26 Feb 2010 The investment bank still implicitly defends its controversial 2001 Greek currency swaps just as it has rebuffed other crisisrelated criticism. The deal was legal, but ethically questionable. Goldman should acknowledge it compromised the principles it s meant to hold dear.
Pudong Bank finds industrial white knight 26 Feb 2010 The bank may shore up capital by selling a 20 percent stake to China Mobile for $5.9 billion, rather than turn to current shareholder Citigroup. An industrialfinancial link would be in line with Chinese traditions. That's great for Pudong, but may do less for China Mobile.
Can Morgan Stanley stomach another 400 traders? 25 Feb 2010 The last time the Wall Street firm redoubled its trading efforts, in an attempt to match Goldman, it stumbled badly. The bank says this time it s different: the new recruits will serve clients and fill product holes. But investors would be wise to watch the balance sheet warily.
China still waiting for seat at IMF’s top table 25 Feb 2010 The International Monetary Fund chief named Zhu Min as his special adviser. The appointment is an overdue recognition of China s rising power. But Beijing would have preferred a more senior position. The compromise means China will have to wait for its voice to be fully heard.
Private equity sings a happier tune 25 Feb 2010 Earnings at KKR and Blackstone aren't great, but they're stabilizing. TPG's Bonderman the man who lost billions on WaMu sounds upbeat. And some boomtime LBOs, like Hilton Hotels, are catching a break. The industry will never regain its 2007 mojo. But the worst has passed.
Massachusetts bank plan isn’t wicked smaht 25 Feb 2010 A call to study the launch of a stateowned lender shouldn t go far. North Dakota, the model, is rural and poorly banked, while Massachusetts is more urban and already home to a major financial center. Such a venture would probably just spiral into another banking mess.
RBS detects faint light at end of the tunnel 25 Feb 2010 The UK bank s shares rose 6 pct as it reaffirmed restructuring targets and said loan losses may have peaked. The investment bank did well with flat income in Q4 and group margins were stable. But RBS s recovery still relies on a healthier economy and luck with regulatory reform.
TI investors have bigger concerns than Sparkle 25 Feb 2010 Telecom Italia is set to delay its results after tax authorities seized 300 mln euros at its wholesale unit. The sum, equivalent to 10 pct of forecast pretax profit, is significant. But investors will be more focused on M&A chatter and worries about TI's turnaround plan.
Apple’s iTunes milestone proves who’s piper 25 Feb 2010 The tech giant just sold its 10 billionth song online as the pace of downloading from its digital media service quickens. That means consumers are getting themselves increasingly locked in to Apple products. And the company s grip on the entertainment world is tightening.
Mall owner’s bankruptcy exit plan looks gimmicky 25 Feb 2010 A scheme to revive General Growth by shareholder William Ackman and Brookfield is loaded with bells and whistles. Simon Property s plainold cash offer still sounds better, especially for creditors. But Ackman s contraption may achieve one thing: getting Simon to sweeten its bid.
France Telecom gets new boss for same strategy 25 Feb 2010 France Telecom's new CEO Stephane Richard has reiterated the group's cash flow targets in spite of the challenging environment. A political appointee, he should smooth the group's strained relations with French authorities. But he's unlikely to engineer a strategic turnaround.
Coke gulps Pepsi’s backwash in strategic reversal 25 Feb 2010 The $13 bln takeover of its North American bottler makes sound financial sense. The 1980sera smokeandmirrors trick of spinning off assetheavy businesses no longer works. But Coke s CEO looks like a charlatan for dismissing the idea last year when Pepsi beat him to it.
UK M&A watchdog wisely pre-empts political prying 25 Feb 2010 The Takeover Panel is reviewing its rules amid concern prompted by Kraft's hostile offer for Cadbury. There's a case for updating some of the rubric, chiefly regarding virtual bids. And by taking the initiative, the panel may prevent politicians trying to twist its rules.
Big business neither loves nor fears Obama 24 Feb 2010 That dilemma is a direct result of the president s more populist tone and inability to pass legislation. It s one thing to lambast banks or impose climate regulations on industry. But without followthrough, Obama may deliver the return of an old ally to the Republicans.
One big dividend U.S. taxpayers could forgo 24 Feb 2010 Freddie Mac managed to get by without any public funds in the fourth quarter. But the mortgage finance giant isn t done tapping U.S. government coffers. That makes the pound of flesh being extracted from Freddie a 10 pct annual dividend look counterproductive for now.
RAB Capital scores points with fund auction 24 Feb 2010 The hedge fund manager has put its $550 million Special Situations fund on the block. The auction allows frustrated investors, who have been locked in since late 2008, to cash out. But even if it flops, providing an exit will go some way towards rebuilding RAB's tarnished image.
Big London gold IPO presents valuation puzzle 24 Feb 2010 Barrick Gold has not set the price for the float of a quarter of its African business. It could be worth 2 bln pounds, if valued like Londonlisted Petropavlovsk, which mines gold in Russia. Or 7 bln pounds, if FTSE 100 Randgold is the model. Expect something in the middle.
Wall Street a safer career haven than you’d think 24 Feb 2010 The financial crisis was the worst in a generation except for investment bankers. Sure, some firms failed, and survivors slashed thousands of jobs. But the industry sacked more after the dotcom crash. And while bonus structures have changed, the pay is still enviably high.
Bears dodge a regulatory bullet 24 Feb 2010 Public griping aside, short sellers believe new SEC rules will do little to crimp their strategies. Curbs on shorting when a stock falls 10 pct in a day won t be hard to sidestep, meaning overvalued companies can t hide. That s not just good for bears, it s good for markets.
Where do Chinese go to avoid a bubble? Hong Kong 24 Feb 2010 Hong Kong looks ripe for a housing bubble, with low rates, easy mortgages and an overheated land auction. But Hong Kong residents, who have been there before, are likely to be cautious. Much of the money is coming from Chinese investors, to whom Hong Kong looks like a bargain.
HSBC’s Chinese visa gets $1 bln pricier 24 Feb 2010 That's how much the bank will have to pay to maintain its 19 percent stake in Bank of Communications. HSBC may never gain control of the Chinese lender and probably has better uses for its cash. But given its ambition to be China's preferred foreign bank, HSBC has little choice.
Fed can’t stop crashes but can limit their damage 24 Feb 2010 Ben Bernanke s ambition to end financial collapses forever through regulation is noble but unattainable. Still, tighter money can reduce leverage and risktaking. And imposing litmus tests and stress tests to flag pathologically risky new products and practices wouldn t hurt.
Why should anyone care about the Falklands again? 23 Feb 2010 Oil, naturally. The arrival of a rig to the islands has restoked tensions that led to the 1982 war. This time Argentina s international political position is stronger and Britain s government weaker. The driller Desire Plc may find its property rights vulnerable.
America’s small bank problem looks manageable 23 Feb 2010 True, the FDIC s list of troubled banks surged by 27 pct in Q4 to 702. But the agency looks to have sufficient cash to tackle the problem as long as toobigtofail institutions are excluded. So there s no financial excuse to dillydally over exterminating zombies.
Who likes bonuses almost as much as bankers? 23 Feb 2010 New York politicians that s who. Even a Democratic public servant like Thomas DiNapoli couldn t bring himself to lambast Wall Street excess. As New York s comptroller, he knows too well the cashstrapped state welcomed last year s 17 pct increase in banker payouts.
BoE’s willingness to print still more looks risky 23 Feb 2010 The UK central bank's governor caused a sharp fall in the pound by suggesting that a weak economy could lead to further moneyprinting. That may not do much to turn around the deleveraging private sector. But more QE could weaken the pound and put government financing at risk.
CICC goes for divide and rule 23 Feb 2010 China's top investment bank seems to have arranged to split the 34 percent stake of longtime investor Morgan Stanley between U.S. private equity giants KKR and TPG. The two may want to add exposure to China, but CICC's management will like having less powerful partners.