China’s AgBank looks strategically challenged 7 Jun 2010 The Chinese lender's IPO may raise $17 bln, barely half the figure originally whispered. That may reflect its unattractive mandate. Lending to China's 800 million farmers isn't terribly profitable. AgBank may be more suited to a life away from the public markets.
A little eBay fairy dust couldn’t hurt California 7 Jun 2010 As Jon Corzine can attest, a business background hardly guarantees political success. Though California is no startup website, former eBay CEO Meg Whitman, poised to become the GOP nominee for governor, might have the right skillset to tackle its fiscal challenges.
Mark Tucker’s second coming not right for Pru 7 Jun 2010 Some of the UK insurer's investors want to reinstate its former CEO. But having resigned last time, he might lack the longterm commitment needed in the role, and he could be too interfering to be chairman. Either way, Tucker would not solve Pru's real problem its weak board.
Hungary reminds banks of their eastern forex woes 7 Jun 2010 Analysts say Hungary is not as bad as Greece. But its problems are different. The government has caused alarm. And euro zone banks in Hungary and other east European countries have lent in euros and Swiss francs and are dangerously exposed.
Markets are back in control – and in a bad mood 7 Jun 2010 A year ago, governments looked like the true masters of the universe rescuing banks and economies and vowing to humble financiers. But it's once again investors who are calling the tune, which has rapidly shifted from a stimulusallegro to a cacophony of fear.
Kroll deal rolls private dicks into private equity 7 Jun 2010 The security and snooping firm is being sold for $1.1 bln to Providence Equity portfolio company Altegrity. Kroll s former CEO should be able to sniff out cost cuts. As buyout firms try to squeeze out returns in a lowgrowth economy, such rollups are apt to gain popularity.
Did Goldman sabotage BP’s blowout preventer? 7 Jun 2010 Of course not. But the British oil giant s troubles in the Gulf have handed the Wall Street firm a valuable public relations reprieve, as Goldman s did for Toyota. It seems the court of public opinion or at least politicians can only handle one villain at a time.
China is learning the Henry Ford lesson 7 Jun 2010 When Ford doubled workers' wages to $5 a day in 1914, he was accused of reckless socialism. But he was only recognising and sharing the power of productivity. Chinese wages are rising fast, and have a lot further to go. Almost everyone should be grateful.
Debt crisis helps smother plans for bank levies 4 Jun 2010 A big lender tax looked like a tempting idea just after the first banking crisis. But bad debts are a rising challenge in the current sovereign mess, and governments are cooling on bankbashing. Anyway they can't agree on how it would work. The G20 will likely shelve the idea.
Prudential chairman tempts fate 4 Jun 2010 Despite dropping $650 mln in fees and making silly mistakes during its hubristic $35 bln AIA bid, the UK insurer's chairman is signaling no change at the top. Shareholders who resisted the pressure and killed off this bad deal should point out that after hubris comes nemesis.
Deutsche investment bank changes aren’t sinister 4 Jun 2010 Investors might be unsettled by the retirement of Michael Cohrs as cohead of the German bank's biggest business. But Cohrs has nothing left to prove. And the ambitious Anshu Jain, who takes sole charge, is well placed to defend the franchise from internal and external critics.
Doubling Nielsen numbers not a cinch for LBO kings 4 Jun 2010 Nielsen s $1.75 bln IPO will be keenly watched by its core demo: buyout barons. Yet despite many improvements to the former VNU, attracting similar audience ratings among investors won t be easy given big shifts in media. And private equity has a lot riding on the outcome.
Blackstone turns back the clock at Center Parcs 4 Jun 2010 The buyout firm may carve out the UK holiday park's real estate and sell a majority stake for 1 bln stg. That sounds like the structure Blackstone unwound when it bought Center Parcs in 2006. Such deals tend to appear when property values are high, and investors too optimistic.
U.S. should spike $35 bln newspaper bailout idea 4 Jun 2010 It s almost as dodgy a notion as nuking BP s gusher. The U.S. Federal Trade Commission is mulling ways to subsidize the flailing news industry. Paying for it could involve headscratchers like taxing sales of iPads. What the media industry needs is innovation, not intervention.
Hungary’s Grecian parallels set off global alarms 4 Jun 2010 The new government is unhelpfully drawing parallels between the country and Greece. A falling forint is hammering Hungarians with foreign currency loans. Hungary appears to want to renegotiate its painful IMF rescue package. It has no choice but to keep taking the medicine.
U.S. recovery is jobless – so far 4 Jun 2010 The 431,000 new jobs in May included only 41,000 in the private sector. That looks anemic, perhaps due to huge federal deficits and a steep yield curve. But it s too early to write off job creation altogether. Normally it takes more than a year after the bottom to gather steam.
China’s labour market becomes more complicated 4 Jun 2010 Suicides and strikes are signs that the days of an unlimited army of unbelievably cheap and pliant labour are over. If the shrinking pool of employees gets too powerful, the country's competitiveness could be hurt. As workers get less flexible, managers have to get more so.
Kan will struggle to change Japan’s fiscal course 3 Jun 2010 The likely new prime minister may personally be in favour of lower spending and higher taxes. It may even be politically possible to make a first step, a return to Koizumi's more modest borrowing limits. But elections loom. Kan will probably follow the big deficit tradition.
Gulf fiasco should give new life to US carbon tax 3 Jun 2010 Thanks to twisted Capitol Hill politics the BP oil spill has been a disaster for efforts to lessen U.S. oil dependence. A capandtrade bill to cut carbon emissions now seems unlikely. But the BP crisis should energize prospects for a better alternative: a carbon tax.
Geithner stress test sermons lack moral force 3 Jun 2010 The U.S. Treasury chief is right to want G20 countries to put banks through tough scenario analyses, disclose the results and require capitalraising. But his credibility falls short: future tests are absent from U.S. reforms and some of what s there is unilateral, too.
UK emergency budget may strain coalition 3 Jun 2010 Britain's new coalition which has already lost one promisingly hawkish member has three weeks to come up with a budget, working with a new independent body which may force it to cut more than it wants. The challenge looks enormous and potentially divisive.
UK governance code fails at BP and Prudential 3 Jun 2010 Two highly respected companies have suffered catastrophic failures. Both are fully compliant with best practice on corporate governance. A fat lot of good it did them. Unfortunately, chairmen and chief executives who are men for all seasons don't yet exist.
Putin’s reformers look back in sorrow 3 Jun 2010 A decade ago, Russia adopted a bold 10year reform agenda. The plan's authors have not lost influence, but now say only 40 percent of the goals have been reached. The failures reflect Russia's chaotic government, strong vested interests and complacency bred by high oil prices.
BP belatedly starts to admit its weaknesses 3 Jun 2010 When oil started to spew into the Gulf of Mexico, the UK oil group was confident, even arrogant, about the drilling arrangements and its ability to cope with the blowout. Boss Tony Hayward is now sounding humbler. The company may finally have stopped believing its own hype.
JPMorgan’s good name blemished by record UK fine 3 Jun 2010 The esteemed Wall Street firm has got a $49 mln penalty for mingling up to $23 bln of client funds with its own over seven years. But JPM probably isn't alone in committing the breach. The regulator, which is almost as culpable, wants to be seen to be making an example of it.
Is Zipcar the next Netflix or is it TiVo? 3 Jun 2010 The bythehour urban car rental firm is losing money but still growing as it prepares an IPO. Like the movie renting and TV recording pioneers before it, Zipcar has shaken up its industry and built a great brand. But as their divergent fates show, that doesn t guarantee success.
China should use yuan, not SDR, as political tool 3 Jun 2010 China would like to avoid losses on its gigantic foreign currency portfolio and increase its global clout. It has hopes the IMF's Special Drawing Rights could do both, but the plan looks unrealistic. Beijing should focus on making the yuan an effective politicalfinancial tool.
Emerging market telco M&A in a frenzy 2 Jun 2010 Abu Dhabi's Etisalat is eyeing a stake in an Indian rival, while South Africa's MTN is hoping to seal a deal with Egypt's Orascom. The dash is on as operators scramble to secure a broader footprint in Africa and Asia. With decent targets scarce, it looks like a sellers' market.
ECB struggles to buck the markets 2 Jun 2010 The European Central Bank's bondbuying programme is having little success in supporting government debt markets. Italian and Spanish bonds are still being hit, and peripheral governments are becoming more dependent on domestic savers. The ECB may have to step up its purchases.
Help Vikram Pandit rename Citi’s subprime lender 2 Jun 2010 The boss of the shrinking megabank is reorganizing and rechristening CitiFinancial. Saving millions in branding fees would be a plus. So as a public service to the partU.S.owned bank, Breakingviews offers some suggestions and encourages readers to submit their own.