UBS and Deutsche earnings give reason for cheer 27 Jul 2010 In a tough quarter for trading, the two Europeans did fairly well. The Swiss bank's ROE is close to 20 percent, trading was strong and asset outflows have slowed to a trickle. Deutsche also pleased the market, as recent acquisitions seem to be making earnings less volatile.
Banks 2, Basel 1 27 Jul 2010 The global banking rulesetter has agreed muchneeded standards on capital. But Basel has retreated on its toughest proposals, and liquidity and leverage reforms have been kicked out to 2018. Some easing was needed. But much more and Basel will look like it has been nobbled.
Tomkins takeover disclosure is two-part comedy 27 Jul 2010 Last week, the UK conglomerate said it was opening the books to a private equity consortium. Now the independent directors are recommending an offer with a comic twist: the execs are alongside the buyers. No wonder the bid vehicle is named after a Gilbert & Sullivan opera.
BP should give Hayward his financial dues 26 Jul 2010 There could be outcry in the U.S. at an eightfigure golden goodbye for the departing BP boss. But this is mainly accrued pension rights over Hayward's three decade career. That is Hayward's contractual entitlement. BP should have no hesitation in honouring this.
BP’s heir has right accent but not background 26 Jul 2010 American executive Bob Dudley may be a superb diplomat. But his roots at Amoco BP's 1998 acquisition and source of most of its safety problems make him a less than ideal change agent of BP's culture. A fresh hire from outside would stand a better chance of transforming BP.
Betfair can shorten the odds on a successful IPO 26 Jul 2010 Going public is dangerous for tech companies. Ocado blew it. Interactive whiteboardmaker Promethean is far below its issue price. Now another child of the internet, Betfair, is looming. Like the betting exchange's customers, the vendors will only win if they are not too greedy.
Russian law is, shall we say, flexible 26 Jul 2010 A well connected Russian firm backed out of a contract to buy out a utility's foreign minority holders. It argues the Russians were really foreigners who didn't have permission to bid. Up to now, the courts have backed the tortured logic, but a top court may uphold common sense.
Deutsche’s cross-sell plan a good idea – in theory 26 Jul 2010 The German lender wants its corporate financiers, traders and transaction bankers to work more closely together. Overcoming the cultural obstacles will be tough. But if the plan can deliver higher revenues and bonuses Deutsche's bankers will have an incentive to make it work.
No middle ground for Harbinger’s huge network bet 26 Jul 2010 Philip Falcone s hedge fund is taking a multibillion dollar punt on a new U.S. wireless network. History suggests one of two outcomes: spectacular success or abject failure. Buying precious spectrum on the cheap was a coup. Developing it will be harder.
UK bubble bashers should focus on property 26 Jul 2010 The new bipartite regime, led by the Bank of England, won't find life much easier than the old tripartite system. It will have to grapple with new tools, a new structure and possibly boredom. But if regulators remember that bubbles normally start in property, things may be OK.
Deutsche Bank’s disclosure is ham-fisted 26 Jul 2010 The German bank now says it will reveal its sovereign exposure with Q2 results on July 27. That's four days after the vast majority of banks detailed their government debt holdings in the EU stress tests. Deutsche has foolishly allowed people to suspect it has something to hide.
Spain’s cajas boosted by Flowers power 26 Jul 2010 JC Flowers is buying a 450 mln euros convertible bond in one of Spain's troubled savings banks a previously pariah sector. It's unclear how the investment will pay off for the U.S. financials boutique. But the injection of private capital into the cajas is a welcome advance.
UK’s push on banks faces stressed resistance 26 Jul 2010 The business secretary wants to get banks to lend more to good British companies. Shame his predecessors didn't think about that noble goal in the bubble years. Now bankers' response will be slowed by the need to build up capital, the weak UK economy and ingrained bad habits.
Europe’s banks really need 15.5 billion euros 26 Jul 2010 Seven banks failed the official stress tests and collectively need only 3.5 billion euros in capital. Under a Breakingviews test, which stresses banking books as well as trading books for a sovereign shock, 23 would fail and would need 15.5 billion euros of capital.
Hayward’s exit would not bring BP catharthis 25 Jul 2010 The impending departure of the UK oil major's boss removes a big obstacle to its rehabilitation. Hayward's brief tenure in the top job carries lessons for all CEOs. But his expected exit should not bring absolution for the rest of board including BP's chairman.
Spanish tests alone won’t solve financial woes 23 Jul 2010 Five of the country's savings banks need an extra 2 bln euros in capital. That seems low given recent funding strains. The commercial banks look robust, and investors have more detailed information. But confidence may be scarce until there are signs the economy is growing again.
UK’s encouraging GDP leap looks like the last 23 Jul 2010 Suddenly it's boom time UK. The 1.1 percent growth in the second quarter seems encouragingly strong. But the best news construction jumping out of recession and rising government spending looks temporary. From here on, sharp fiscal cuts are set to bring meagre growth.
Amazon investors have only themselves to blame 23 Jul 2010 The online retailer's shares fell 13 percent after it reported sparkling growth. Shareholders grumbled about costs and margins but investing heavily in the business makes sense. What doesn't is the overly generous multiple the market attached to the stock.
European banks may face harsher tests from market 23 Jul 2010 Only seven of 91 EU lenders failed, partly because continental regulators undermined the exercise by not imagining a sovereign default. Forcing banks to disclose their government bond portfolios, however, gives investors the power to conduct their own more rigorous stress tests.
U.S. lawmakers need a dose of what’s good for Ford 23 Jul 2010 Alan Mulally, the automaker's CEO, has turned a firm that had middling products, crippling debt and huge employee liabilities into a popular brand with better U.S. earnings than a decade ago. Politicians in DC and Michigan can only wish for similar success fixing their problems.
Fake degrees give China investors new worry 23 Jul 2010 China's bestpaid executive stands accused of faking his academic credentials. Banks who bring companies to market are supposed to ask tough questions about management but with intense rivalry and big fees at stake, that may not always be easy to do.
Hawkish Trichet should be heeded 23 Jul 2010 The ECB head is calling for fiscal austerity now. His worry about nonlinearity a sudden loss of confidence is all too justified. Now that the worst of the financial crisis and the recession has passed, it's time to abandon radical fiscal and monetary experiments.
Bernanke to Geithner: extend Bush tax cuts 23 Jul 2010 The Fed chairman doesn t want tax rates to reset higher, even for the rich, because the U.S. economy is still struggling. The White House and the Treasury think differently. Here s how an offtherecord Bernanke might try to talk the Treasury boss around.
EU banks must come clean on sovereign debt 22 Jul 2010 The 91 lenders subject to Europe's stress tests have been asked for detailed information on their government bond holdings. The body overseeing the exercise has promised not to publish it. But if some banks come clean, others will face immense pressure to follow suit.
Weak fixed income mars Credit Suisse’s solid Q2 22 Jul 2010 The Swiss group's private bank and equities division coped well with choppy markets, but revenue in FICC tumbled 46 percent, lagging rivals. Still, its strong capital base and healthy ROE mean Credit Suisse is wellpositioned for the financial and regulatory challenges to come.
GM walks tightrope on $3.5 bln AmeriCredit buy 22 Jul 2010 The U.S. automaker is jumping back into captive lending while trying not to upset the government or overburden its balance sheet. AmeriCredit fills gaps in leasing and subprime finance. But GM is paying a punchy price for the lender and needs to stay focused. It's a fine line.
U.S. ABS standoff exposes rating contradictions 22 Jul 2010 Ford Motor Credit and others have decided against selling bonds because credit raters are refusing to let bankers quote ratings in prospectuses. Sure, wires are crossed between old and new rules. But the kerfuffle also highlights the complexities of regulating ratings at all.
Deft City lobbying could reduce UK bank levy 22 Jul 2010 The government has decided to cap its bank tax at 2.5 billion pounds after strong lobbying. The actual levy on affected banks' balance sheets will depend on the size of their taxable liabilities. But it could reduce the planned 7 basis point charge to 56.
Brazil’s monetary and fiscal policies square off 22 Jul 2010 With a further rate hike to 10.75 pct, money is tight in Latin America's biggest economy by global standards. However, Brazil still has big spending plans through state companies and loan grants. After the October election, the country faces a fiscal clampdown or high inflation.
UK needs to embrace nuclear energy 22 Jul 2010 The new coalition's energy secretary may be opposed to subsidising nuclear power. But there could be ways of spinning various policies that help nuclear energy without calling them subsidies.