Are bank firewalls a break-up by another name? 9 Sep 2010 Vince Cable, the UK minister and archproponent of splitting up the country's big banks, now says techniques such as firewalls could be used to separate lenders' retail and investment arms. This would be more sensible than a crude split, but might have a similar effect.
Sarkozy too weak to deliver needed pension reform 9 Sep 2010 The French president watered down his already modest pension reforms after unions hit the streets en masse. Modernisation is needed. But the obstacle to implementation is Sarko's shortage of political capital. As another general strike looms, the reforms risk further dilution.
Goldman-to-Glaxo move may be sign of M&A splurge 8 Sep 2010 The pharma giant has picked Simon Dingemans as its new CFO. The move gives the Goldman dealmaker an escape from the antibanker backlash, and his expertise will be useful as the drugs industry consolidates. But bankersturnedcorporate executives have a mixed track record.
Foster’s looks vulnerable to SABMiller strike 8 Sep 2010 SAB looks best placed to bid for its struggling Australian rival, and private equity has emerged as an eager buyer for the unwanted wine division. Shares in Foster's may already be pumped up. But SAB could justify offering a small premium. It shouldn't let the chance pass.
It’s 50 years since shares looked this cheap 8 Sep 2010 Successful longterm investors buy good assets when nobody wants them, and sell when the riskaverse are piling in. Bonds are considered safe havens today, after shares' lost decade. That could be about to reverse; the great bull market in government bonds is probably over.
Euro bank funding revival may leave stragglers 8 Sep 2010 European lenders have increased their issuance of longterm debt. Stress tests have lowered funding costs, while investors want a return on their idle cash. Yet weaker banks must pay far higher rates to reduce their dependence on central banks. They may struggle to compete.
U.S. banks could grab a pay rise from Congress 8 Sep 2010 Wall Street isn't waiting for Washington to figure out the fate of tax cuts due to expire at yearend. Some firms may consider moving forward annual bonuses to December to lock in lower rates for their stars. The impact would be tantamount to a pay hike at little cost to banks.
Diamond should be left to get on with the job 8 Sep 2010 The new Barclays CEO is getting brickbats from politicians because he's an investment banker who will be running a universal bank. Diamond certainly faces an operational challenge at Barclays' retail division. But the leadership of this bank shouldn't be decided by politics.
Greek bank rights issue could be a watershed 8 Sep 2010 National Bank of Greece, the country's biggest lender, is raising 1.8 bln euros in an underwritten cash call. A few months ago, it would have been hard to imagine anyone but the state investing in a Greek bank. The market's support suggests the sector may be over the worst.
Ideology helps make Obama stubborn on taxes 8 Sep 2010 Peter Orszag, Obama's exbudget chief, thinks all Bushera U.S. tax cuts should be temporarily extended. So does the goto economist of congressional Democrats. But the president still vows to let highend rates go higher again ASAP. His thinking is as much politics as economics.
Russian potash not a one-way bet 8 Sep 2010 Rio Tinto may be mulling an investment in the Russian potash group Uralkali. With 22 percent of world potash reserves and proximity to key markets, Russia is well positioned to tap rising fertiliser demand. But the changing global market structure poses risks.
Walter Hewlett could give HP its Steve Jobs moment 8 Sep 2010 The man whose name is on the tech company's door led a campaign against Carly Fiorina's troubled reign and her Compaq deal. He turned out to be right. HP's board clearly needs a wholesale shakeup after botching the Hurd affair. Why not let him lead the effort as chairman?
BP probe brings limited relief for investors 8 Sep 2010 The market has modestly welcomed BP's report into the Gulf of Mexico disaster. The subdued reaction looks about right. Nothing has emerged to make the UK oil group appear guilty of gross negligence. But BP looks like it's trying to deflect blame and it won't have the last word.
Vodafone discount won’t be erased by China exit 8 Sep 2010 The telecoms giant's sale of a 3.2 pct stake in China Mobile for $6.6 bln is good housekeeping, and there's more tidying to do in its sprawling portfolio. But Vodafone's sumoftheparts discount will persist until it finds a way of unlocking value from Verizon Wireless.
Basel’s capital buffer may turn out to be a floor 7 Sep 2010 Regulators are close to setting new minimum capital requirements for banks, including a cushion that they can dip into in bad times. But if lenders view this buffer as a minimum level that they dare not breach, the new standards could be tougher than the authorities intended.
Obama’s offensive may not charm business or GOP 7 Sep 2010 The president's plans to spend $50 bln on roads and railways and grant businesses $300 bln of investment tax credits have merit. But they don't look enough to sway disillusioned executives. And Republicans are in no rush to pass a second stimulus before midterm elections.
Gillard win turns thumbscrews on miners 7 Sep 2010 The Australian PM hung on to power by her fingernails, making her tax on miners' profits more likely. How hard and widely it hits hinges on yet more horsetrading. But Rio Tinto and BHP Billiton can probably forget hopes of returning to the superprofitable status quo.
Ocado stock still too expensive 7 Sep 2010 The UK online grocer hopes to shed its lossmaking label next year. Sales are still growing rapidly, nothing is going wrong with its business model but, aside from its band of believers, investors are unconvinced. That's not surprising: this remains a highrisk venture.
Europeans stumble on the way to fiscal discipline 7 Sep 2010 EU governments are still far from agreeing on serious ways to reform the stability pact and ensure that budget deficits will be contained within 3 percent of GDP. They're quicker to tax and regulate banks. This is the wrong message to send if they want to avoid another crisis.
Air Products goes for points victory, not knockout 7 Sep 2010 Despite a key vote next week at target Airgas, Air Products is keeping its head. Its latest $5.5 bln offer doesn't even match the rise in share prices in the sector. It's a disciplined approach in a highly tactical game. The risk, though, is not doing enough to win over the arbs.
Barclays’ Diamond choice spices up strategy debate 7 Sep 2010 The selection of investment bank head Bob Diamond as CEO is not a surprise. But it adds a twist to Barclays' debate on its future structure. If UK regulators make universal banking harder, the bank could be less motivated to keep its UK retail bank or even stay in London.
HSBC’s vacant chair creates a dilemma 7 Sep 2010 Both obvious choices to replace Stephen Green, who is to become UK trade minister, have problems. Elevating CEO Michael Geoghegan may antagonise investors who want an outsider. Appointing John Thornton, a nonexecutive who is based in China, could worry the UK regulator.
Shielding savings should be Afghan banks’ top goal 7 Sep 2010 Kabulbank's crisis seems to stem from dodgy loans on Dubai mansions. But even domestically, longterm real estate lending isn't desirable. Contrary to some international advice, banks in poor countries like Afghanistan need to protect savings and make only safe, shortterm loans.
Oracle shows off art of war by hiring Mark Hurd 7 Sep 2010 Sun Tzu admirer Larry Ellison roundly mocked the HewlettPackard board when it forced out its CEO last month. By hiring Hurd, the Oracle boss backed up his words. He not only gains a wellregarded operations guru, he follows the Chinese general's dictum Know your enemy.
European buyouts investors have upper hand on fees 7 Sep 2010 BC Partners has offered a fee cut to lure investors to a new 6 bln euro fund. The private equity group's seemingly small concession has big symbolic significance. In Europe at least, buyout firms can no longer dictate terms. Others will have to follow and possibly go further.
Bid talk is welcome boost for C&W Worldwide shares 6 Sep 2010 Takeover talk is providing some muchneeded support for the UK telecoms group's depressed shares. C&W has hardly impressed since its demerger earlier this year, issuing a profit warning in July. Shareholders must hope a bid from AT&T or SingTel becomes more than just a rumour.
New Rosneft CEO cements political control 6 Sep 2010 While investors may welcome the end of uncertainty, the replacement of independentminded Sergei Bogdanchikov with career bureaucrat Eduard Khudainatov shows that Russia's largest oil company is more politicised than ever. This should temper enthusiasm about privatisation plans.
BHP’s Kloppers can afford Potash Corp failure 6 Sep 2010 The miner's CEO has put his reputation on the line by launching one of the industry's biggest takeovers in a decade. His two previous M&A attempts haven't come to much. But aborted tieups are common in the sector. Kloppers could survive a failed deal more easily than overpaying.
UK deficit doves should be ignored 6 Sep 2010 It's not just the five Labour leadership candidates who are arguing that the coalition is going in too hard with cuts. Boris Johnson, the Conservative mayor of London, has joined the chorus. While the economic case for the hair shirt isn't watertight, the political case is.
When should investors sell their Apple stock? 6 Sep 2010 Not yet. The group's push overseas and into the business market not to mention new gadgets means growth should continue for some time. At some point, though, it will inevitably slow. Here are a few possible warnings signs for when that day may arrive.