UK bank levy needs global following to succeed 22 Jun 2010 The new government's bank levy will raise up to 2.5 bln pounds a year. The tax rightly targets shortterm wholesale funding. Support from Germany and France means the idea may yet catch on. But if others don't follow Britain's lead, the tax will drive business offshore.
ECB shows benefits and limits of its powers 22 Jun 2010 Europe's central bank is to end its first experiment in market intervention by wrapping up 60 bln euros of covered bond purchases. Recent record issuance of this type of bank debt proves the ECB's success in reviving a moribund market. Still, this market isn't open to all comers.
European insurers adjust to new world 22 Jun 2010 Dutch insurer Aegon may sell U.S. assets and is restructuring in the UK. The move comes as Axa seeks to scale back its UK business. New capital rules are making Europe's insurers rethink exposure to lowreturn territories and products. Buyers can expect choice, if not quality.
UK capital gains taxes move in right direction 22 Jun 2010 The current rules, imposed in a panic by Labour, have been a charter for tax avoidance. The new coalition's new regime will close some loopholes and narrow the gap between income and capital gains taxes. There are still some disappointing features, but it's a lot fairer.
Russia looks for profit from U.S. policy reset 22 Jun 2010 Obama decided to make friends with Russia around the same time Russia moved its foreign policy in a more proWestern direction. President Medvedev's visit is the latest charm offensive. But to attract much needed U.S. technology, Russia will need profound domestic reforms.
UK budget impresses now – risks come later 22 Jun 2010 The coalition's first budget is tough in roughly the right places nonessential spending, welfare benefits and higher VAT. Still, some departments face huge cuts, government employment will suffer and growth forecasts are questionable. But for now, markets will be impressed.
Qatar sovereign fund not afraid of headlines 21 Jun 2010 It is trumpeting cooperation with China's AgBank and there is market talk of a spate of other large high profile deals. Unlike most sovereigns with big funds, the state still seems keen to stay in the limelight. And as the Qatari fund gets older, its decisions look savvier.
UK should worry about deflation, not inflation 21 Jun 2010 The Bank of England could appease critics of its inflation record by jacking up rates and plunging the UK into recession. Sterling, oil prices and VAT have pushed inflation up. But as fiscal policy tightens, the chief risk remains economic weakness and deflation.
Yuan-dollar rate doesn’t drive Chinese rebalancing 21 Jun 2010 Currency reform certainly didn't start with a bang on Monday. The People's Bank made no change. But while markets fixate on the dollar exchange rate, doubledigit wage hikes and higher input costs are shrinking the trade surplus. China's competitiveness is deteriorating fast.
Basel delay a bad omen for financial reform 21 Jun 2010 The global banking standardsetter has postponed rules to make lenders hold more capital against trading assets. The ninemonth delay comes after the U.S. and Europe dragged their feet. The danger is that broader Basel reforms, scheduled for 2012, will also be blown off course.
Counterpoint: BoE in denial on inflation 21 Jun 2010 UK inflation is always about to fall back below its target, but somehow never quite does. The BoE's faith in spare capacity to restrain prices looks increasingly misplaced, but it dare not raise rates. As a result, its target of 2 percent CPI inflation looks more like a floor.
Liberty should free remaining tracking stocks 21 Jun 2010 John Malone s plan to split the assets underlying Liberty s tracking stocks into one singlestock company and another with two trackers is a step forward. Untangling the remaining tracking stocks should be a priority even if it doesn t quite minimize taxes the way he likes.
Biovail sale oddly leaves its owners in control 21 Jun 2010 Specialty U.S. drug group Valeant is paying a 15 percent premium for Canadian rival Biovail yet the latter's shareholders end up with a majority of the merged group. Strategy and tax considerations may explain the deal. But Biovail s checkered past invites questions.
Landesbanken: publish or be damned 21 Jun 2010 Last year's bailouts of Germany's public sector wholesale banks may not have been big enough. Or so investors fear. Published stress tests would calm them. The regional governments might not be happy with the results, but restructuring may help give these banks a healthy future.
Security remains key for Colombia’s new president 21 Jun 2010 The country needs major foreign investment in manufacturing and services to achieve Presidentelect Santos goal of reducing appalling poverty. To make that happen, Colombia doesn t just need sound policies and lower corruption it requires physical safety.
Funding crunch now Spanish banks’ biggest problem 21 Jun 2010 Faced with falling deposits and frozen wholesale markets, the banks are stepping up business at the ECB. There is still room to borrow more, but the situation isn't sustainable. Spain is already forcing weaker banks to merge. The government needs to do more to restore confidence.
Lehman will struggle to make Barclays’ case stick 21 Jun 2010 When Barclays bought Lehman's carcass in 2008, it was feted. Now it is accused of cheating creditors out of $11 bln and its top brass including John Varley and Bob Diamond are in court. While Barclays may have sailed close to the wind, it will probably get away with it.
Yuan hasn’t shifted enough yet to mollify Congress 21 Jun 2010 Beijing's currency concession might just defuse Capitol Hill critics. But with U.S. unemployment high and congressional elections just months away, China is a convenient economic scapegoat. An upwarddrifting yuan won't be enough to take the tension out of trade relations.
Blackstone’s Merlin wizardry has its limits 21 Jun 2010 The buyout firm is looking to sell some of its stake in the UK leisure group to rival CVC in lieu of an IPO. Blackstone can show investors some gains. But the sale leaves a refinancing challenge and a chunk of equity to offload later.
BP’s Hayward is CEO in name only 21 Jun 2010 The boss of the UK oil major has lost the authority to lead BP when the Gulf disaster is over. The fact that he's handed over a lot of the cleanup effort shows the board realises this. But that's no excuse for a sailing jaunt. Hayward must still conduct himself like a CEO.
Anadarko is binary option on BP incompetence 21 Jun 2010 If BP is proven grossly negligent in the Gulf, its minority partner in the Macondo well is absolved of liability and a resumption of Gulf drilling by other majors would probably become more likely. But if that doesn t happen, Anadarko could face crippling blows on both counts.
China currency reform more word than deed 19 Jun 2010 The People's Bank says it will be more flexible over its dollarpegged currency, but won't revalue strongly. That should placate the US ahead of G20 talks. But it's mostly a return to China's precrisis regime, and unlikely to presage big changes in the yuan's shortterm trading.
Russia goes wrong way on infrastructure investment 18 Jun 2010 After years of neglect, the country desperately needs to upgrade roads, railways, ports and utilities. But the government is slashing spending, because social programmes are a higher priority. That choice forces Russians to rely too much on the threadbare Soviet capital stock.
Since when is an IPO a Wall Street loss leader? 18 Jun 2010 Usually it s the other way round. But not in the General Motors stock sale. The 0.75 pct underwriting fee leaves little room for error and is less than the banks can earn on the automaker s loans or bonds. Luckily for Wall Street, GM s topsyturvy deal is probably a oneoff.
Merkel and Sarkozy try to find unity in populism 18 Jun 2010 The French and German leaders say they will push for a global financial transaction tax at next weekend's G20 summit. They know it won't fly. But they're desperate to display a united front after months of profound differences over the management of the euro zone debt crisis.
StanChart needs to justify planned AgBank deal 18 Jun 2010 Buying a stake in China's latest IPO may look like a poor use of capital. Although the mooted arrangement looks more logical than past IPO bank partnerships, StanChart must avoid vague talk of strategic partnership and explain how it creates value.
Merrill’s ambitions rightly humbled online 18 Jun 2010 Anguish and great hopes jointly accompanied Merrill Lynch s decision to compete with Charles Schwab by offering cheap stock trades in 1999. The firm s newest tweak on discount brokerage, linking it with Bank of America s branch network, has more limited and achievable aims.
BP teaches governance lesson: don’t trust formulas 18 Jun 2010 The crippled oil giant once had a chairman and a CEO perceived to be strong. Now it has two relative weaklings. Both combinations helped spawn a gigantic corporate disaster. The British governance model is flawed, but so are others. No system can work always and everywhere.
Calpers move shows U.S. activism going mainstream 18 Jun 2010 The California pension giant is recruiting potential directors in anticipation of new rules making it easier to nominate them. Traditional activists motives aren t always clear. But in Calpers, Main Street investors may finally have a champion to help shake up clubby boards.
Hayward testimony is potential accident for BP 17 Jun 2010 Coming after the chairman's small people slip, the appearance of BP's gaffeprone CEO before Congress means another nailbiting day for investors. Congressman Waxman wants to show BP cut corners in its leaking Gulf well. Hayward will struggle to find a persuasive response.