Hedge funds may still escape EU pay crackdown 7 Jul 2010 The European Parliament has approved tough bank bonus rules. As drafted, they could apply to larger hedge funds which would undermine the appeal of the EU, and particularly London, as a base. But national regulators should have considerable leeway to interpret the changes.
UK faces troubled autumn 7 Jul 2010 Critics of the new coalition government have jumped on the quick departure the head of the fiscal monitoring unit. But that is just a diversion. The real challenge will be the upcoming mass public sector cull. Sparing healthcare means too much blood flows elsewhere.
Political links don’t help in Russian bank default 7 Jul 2010 International Industrial Bank, a midsize lender owned by Kremlinlinked tycoon Sergei Pugachev, has defaulted on a 200 million euro bond. The episode shows good connections don't guarantee state support. It's also a rare example of bank creditors being forced to take a haircut.
Derivatives jockeying a storm in a teacup 7 Jul 2010 Businessfriendly groups fear U.S. financial reform will land nonbank derivatives users with new costs. The House language is loose. But the vagueness helps avoid loopholes and allows regulators to decide when to exempt nonbanks from added charges. That s hardly disastrous.
BT’s costly pay-TV push unlikely to hurt rivals 7 Jul 2010 The UK telecom provider, suffering from customer losses, is betting it can regain some lost ground by offering BSkyB's premium TV sports content at knockdown prices. BT has to do something, but neither BSkyB nor Virgin Media will be too frightened by this expensive tactic.
Would the ECB pass a stress test? 7 Jul 2010 The central bank has taken on a lot of dodgy assets since the crisis struck. Its balance sheet can sustain severe losses for a few years without triggering inflation. But if disaster strikes, the ECB would have to ask euro zone countries to bail it out. That would not be easy.
Tesla loses fast lane traction 7 Jul 2010 The electric sportscar maker s shares now trade below last week s IPO price and have halved from their postoffering peak. Though out of top gear, the valuation still looks punchy. GM should take note when it does refloat, it badly needs its shares not to lose momentum.
Abertis LBO would be financial engineering feat 7 Jul 2010 The Spanish infrastructure group's core shareholders could extract 3.6 billion euros while retaining control. If they pull it off still a big if it would be a neat financial trick.
China plays odd game of left-pocket right-pocket 6 Jul 2010 The biggest banks need $57 billion in equity, but over 40 percent may come from the state. It will fund that by issuing bonds to wait for it Chinese banks. This bizarre alchemy will boost capital ratios, but for China's financial system it looks like a step backwards.
KKR listing makes top brass look almost frugal 6 Jul 2010 Founders Kravis and Roberts collected a combined $44 mln last year. That s plenty but a far cry from the $611 mln Blackstone s Schwarzman and Peterson pocketed the year before their firm s 2007 IPO. KKR s relatively austere look is a silver lining to listing in weak markets.
U.S. tax hikes warrant same caution as cost cuts 6 Jul 2010 If Congress doesn t act, tax cuts from 2001 and 2003 will expire at year s end. But with unemployment high and growth sluggish and borrowing still easy for the U.S. there s a case, as with expenditure cuts, for waiting for better economic times before forcing austerity.
Euro zone rescue fund no quick fix for banks 6 Jul 2010 The EU monetary affairs commissioner says the 440 billion euro bailout fund could be used to recapitalise banks. But the fine print hasn't changed. Banks would first have to go to governments and only, if governments struggled to raise money, would they go to the bailout fund.
Double dip less likely than years of dull growth 6 Jul 2010 Growth is slowing in much of the world. The good news is that there are few signs of an imminent fall into renewed global recession. The bad news is that the financial system remains both a brake on expansion and at risk of another explosion. The crisis has turned into a morass.
GM’s innovation drive looks uphill 6 Jul 2010 The governmentowned automaker has set up a $100 mln investment fund to tap new technologies and generate profit. Corporate venture capital divisions can be a creative way to outsource research and development. The odds of spawning anything but losses, however, look steep.
Ocado’s wide IPO range provides needed flexibility 6 Jul 2010 The UK online retailer is braving choppy waters for new issues. Its mooted 1.2 bln stg valuation at the middle of the range looks punchy. Ocado hopes the promise of further sales and margin growth will lure investors. But the yawning price range signals understandable caution.
Markets should fear crippled EU leaders 6 Jul 2010 France's Nicolas Sarkozy and Italy's Silvio Berlusconi are hit by scandals. German chancellor Angela Merkel's governing coalition is shaken by its divisions. Europe's governments lose their authority just when they need it most, to deliver the deficit cuts they have promised.
Prop traders don’t die, they just serve clients 6 Jul 2010 Investment banks are preparing to shift prop traders to roles trading for clients, even before new U.S. regulation kicks in to curb proprietary risktaking. It's one of those predictable, but unintended, consequences of reform. But client trading isn't riskfree either.
China looks healthier when it slows 6 Jul 2010 China's growth is slipping, but from the heady 12 pct to the new normal of 89 pct. Rebalancing away from investment and trade will hurt growth, though the pain is necessary to reduce financial risks. Financial stalemate is a concern, but the marathon runner looks in good shape.
Russia rightly attacks a murky corporate practice 6 Jul 2010 The parliament has proposed a ban on voting quasitreasury stock, shares that a subsidiary owns in its parent. That would make it harder for managers and controlling oligarchs to ignore outside shareholders. A pity, then, but no surprise, that the plan has powerful opponents.
PT share price reflects a genuine dilemma 5 Jul 2010 The Portuguese operator's shares discount a 50 pct chance that Lisbon's veto will permanently block the sale of its stake in a Brazilian mobile venture to Telefónica. That looks about right. The EU might try to invalidate the veto, but PT won't rush to irritate its government.
Spanish funding freeze shows signs of a thaw 5 Jul 2010 Caja Madrid has become one of the first Spanish banks to join an international clearing house for interbank borrowing. The move should help channel foreign funds to Spain's lenders, allowing them to reduce their dependence on the ECB. Others may follow suit, but it's no panacea.
Market prices might be almost meaningless 5 Jul 2010 That's one way to interpret the analysis of derivatives expert and philosopher Elie Ayache. If the economic estimate of a fair price relies on an unknowable distribution of future values, that calculation isn't worth much. Better to think about moods and the flow of money.
Art dealers may merit more UK help than bankers 5 Jul 2010 British art dealers are starting to whinge like bankers, warning that London's market will lose out to nonEU rivals unless the government blocks a European Union resale levy. Similar pleas from financiers were ignored. But the art market has a better case for special treatment.
Abertis 25 bln euro buyout talk calls up memories 5 Jul 2010 The two largest shareholders in the already leveraged motorway operator Abertis are reportedly studying a possible LBO with buyout house CVC. Just like old times? Well, wait to see if the group manages to raise piles of debt in Spain. This won't be an easy deal to pull off.
EU bank cash calls won’t mean i-bank fee bonanza 5 Jul 2010 Equity underwriters had a bumper pay day last year after U.S. bank stress tests led to a spate of private capital raisings. But many of the euro zone banks that could require capital after their own forthcoming stress tests are not quoted. A similar fee splurge looks unlikely.
How to square the circle on EU bank stress tests 2 Jul 2010 Financial markets are worried about European banks' exposure to sovereign debt. But governments carrying out stress tests on lenders don't want to admit that some countries may default. With a bit of skill, regulators should be able to design a test that keeps both sides happy.
Sanofi considers 15 billion dollar question 2 Jul 2010 The French drug maker faces a wall of patent expirations so though the company isn t saying, news that it may shell out for a U.S. biotech to replenish its pipeline makes sense. Among potential targets, Allergan or Genzyme would make a good fit, but Biogen Idec has more warts.
GE’s Immelt tells some hard half-truths 2 Jul 2010 When the head of a leading U.S. company moans privately about China and Obama, it's news. And Jeff Immelt is right: China is selfinterested and the president isn't businessfriendly. But he should remember that both Beijing and Washington have good reasons for their policies.
Miners win, government loses in Aussie tax fight 2 Jul 2010 The miners have clearly come out on top. They will still pay more taxes than before, but the new prime minister has retreated across the board rates, terms and reach. The government says tax revenue won't be badly hit, but probably only because it now expects higher prices.
Tepid U.S. jobs report spares Congress – for now 2 Jul 2010 Friday s data indicate anemic growth at best. That will keep austerity advocates quiet. But with prudence in vogue, there s also little ammo for proponents of a fresh stimulus. Lawmakers will have to wait and see but they may get antsy as November s elections approach.