News Corp’s Sky bid gains in Cable’s Murdoch war 21 Dec 2010 Bellicose remarks by the UK minister with the power to block the deal may actually increase the chances that it's cleared especially if regulators fail to make clear recommendations. Plus the Telegraph suffers for its apparent selfcensorship of Cable's comments about a rival.
PE investors should swap new cash for lower fees 21 Dec 2010 After returning more cash in 2010, LBO firms should find investors more receptive when they go cap in hand. But even the vaunted Blackstone raised just twothirds of what it did for its last fund. It's a buyer's market, making the time ripe for a hard push to overhaul fees.
Heathrow chaos could be eased by demand management 21 Dec 2010 Investment to boost capacity is, of course, part of the solution. But inducements for those passengers and airlines that have less need to travel and extra payments from those that do should also be pushed more actively, says Hugo Dixon who spent Monday at the airport.
Moody’s Portugal warning is too soft 21 Dec 2010 The rating agency is right to see growth as a problem. But its relaxed tone on Portugal's solvency is wrong. Typically for a rating agency, it has identified a problem but been reluctant to draw the right conclusion. Lack of growth means Portugal will struggle to pay its debts.
Canadian banks go mild – not wild – for M&A 21 Dec 2010 TorontoDominion is paying $6.3 bln for Chrysler Financial. That's just a week after BMO paid $4.1 bln for Marshall & Ilsley. These certainly aren't bargain basement prices. Yet it's hardly a crazy splurge either. It's more the Canadian equivalent of loosening the tie.
Europe’s gifts from China too good to be true 21 Dec 2010 China is willing to engage in concerted action to help stabilise the euro zone, according to news reports. Measures may include the purchase of bonds of euro periphery countries. This looks like a 21st century Christmas fairy tale, complete with Chinese twist.
Murdoch mess may raise UK risk premium 21 Dec 2010 Scandal engulfs UK business minister Vince Cable as his impartiality about News Corp's full takeover of BSkyB is challenged. Cable has been the glue binding the coalition government. The crisis gives investors cause to fret about the UK's ability to fulfill its cuts agenda.
Ernst & Young already took reputational hit 21 Dec 2010 The New York case finally filed against Lehman Brothers' auditor delivers few surprises. A bankruptcy examiner laid the groundwork for the civil fraud lawsuit earlier this year. But it's noteworthy that the Big Four accounting firm didn't settle before it came to this.
RBS should pay no cash bonuses for 2010 21 Dec 2010 The UK bank plans to cap the cash portion of bonuses at possibly 50,000 stg. This will please no one. Bankers will still feel put upon, and RBS's state shareholder will still look weak. Paying bonuses entirely in shares or CoCos would make a statement and set a good example.
Opportunistic Gartmore bid could prove shrewd 20 Dec 2010 Funds group Henderson is mulling a bid for its stricken rival. With Gartmore losing staff and cash, it's a risky move, even at a discount to the current price. But Gartmore still manages 20 bln stg. And Henderson, which bought New Star in 2009, has form with distressed managers.
N. America’s gas drilling frenzy won’t end in 2011 20 Dec 2010 The shale revolution has run out of control, with leases forcing firms to step up drilling even as gas prices slump. The riot should rage on, even though many wells are moneylosers. All this should lead to more consolidation and jointventuring like Talisman's deal with Sasol.
London slides, again, because of Heathrow, again 20 Dec 2010 The snow and ice in Europe is extreme but the situation at the region's most important airport is still shocking. The logistical failings are bad, the customer service woeful even for premium travellers. London must get a grip of its gateway to the global business community.
Stars look aligned for uppity investors 20 Dec 2010 William Ackman and Carl Icahn have kept busy this year agitating the likes of JCPenney and Lions Gate. More companies around the world should brace for the activist treatment. A $4.3 trillion cash hoard and cheap and plentiful debt will make it easy to stir things up.
Sara Lee may be too big a bite for Brazil’s JBS 20 Dec 2010 The acquisitive South American meat giant is hungry and buying the Jimmy Dean sausage maker offers a chance to move further up the value chain to higher margins. Yet its existing debt load and Sara Lee's large coffee business makes this a tough stretch for JBS alone.
Madoff clean-up nearly as amazing as fraud itself 20 Dec 2010 After recouping half the $20 bln or so of actual cash lost in the Ponzi scheme, trustee Irving Picard needs about 25 cents on the dollar from remaining lawsuits to get the rest. That may still be a stretch, but Madoff's victims could recover more than losing investors often do.
ECB’s Irish doubts highlights broader uncertainty 20 Dec 2010 The ECB fears Ireland's bank resolution law may hurt its 136 bln euros of loans to the country's lenders and weaken central bank independence. Dublin has dismissed the concerns. But if rushed legislation is leaving the ECB unsure of its status, other bank creditors should worry.
Norilsk war better than tentative peace dividends 20 Dec 2010 Investors are disappointed by RUSAL's rejection of a $12 billion Norilsk offer to buy its stake in the nickel group. But this may be a blessing in disguise. The shareholder dispute is not all bad. A deal would have saddled Norilsk with debt and entrenched management control.
Hurdles abound for offshore yuan IPOs 17 Dec 2010 Yuandenominated IPOs are a hot topic for Hong Kong's banks, and are a logical part of China's global currency plans. But liquidity and China's capital controls are likely to put issuers off. Whether it becomes reality is for Beijing, not the scheme's cheerleaders, to decide.
Regulators must be alert to bank liquidity wheezes 17 Dec 2010 Banks are issuing large volumes of supposedly longterm funding that could be yanked in a market panic. Regulators and investors should be able to tell the difference. But if either takes their eye off the ball, the innovation could lay the foundation for future liquidity crises.
M&A bankers can expect a busy year – like 2005 17 Dec 2010 Global deal activity grew in 2010 after halving from peak to trough. But the economy is showing more signs of life and it's usually the second year after a downturn when M&A really picks up. A recovery on par with the last two should go back to the future with $2.7 trln of deals.
Why mortgages might be Spain’s next headache 17 Dec 2010 Regulators think the country's 630 billion euro home loan market can withstand the slump, just as it did in the early 1990s. Spanish banks' biggest problem is bad loans made to real estate developers. But it may be optimistic to think that mortgages can survive unscathed.
EU clouds bailout scheme in appropriate fuzziness 17 Dec 2010 European leaders are remaining vague on the permanent bailout mechanism they have decided to set up both on how it would be triggered, and on the haircuts private creditors would take. This is partly due to their divisions. But overall they're right to keep markets guessing.
BMO shareholders shoulder agony of U.S. expansion 17 Dec 2010 The Canadian bank is giving away the entire value of promised cost cuts from the $4.1 bln purchase of M&I in the form of a hefty premium while also taking a big markdown on the Midwestern bank's assets. It's a painfully expensive way to rev up south of the border.
US tax deal, budget feud set stage for 2011 cuts 17 Dec 2010 To nations suffering austerity, it must seem as if Washington has gone mad. First, the Congress fails to agree on a 2011 budget. Then lawmakers overwhelmingly pass another giant stimulus. But both events actually provide a bit of hope for more disciplined fiscal action next year.
Companies hold off eating R&D seed corn 16 Dec 2010 Hard times hurt. One danger of a sharp recession is that companies cut back spending on innovation, as they did during the Great Depression. Luckily, only truly hard up industries did so during the last crisis. That's good news for future growth.
Activist blogger tests corporate Russia’s patience 16 Dec 2010 Russian shareholder activist Alexei Navalny is making waves with his Internet reports of government and corporate corruption. But a criminal probe against him shows that a backlash is brewing. That should sound alarm bells. Russia isn't ready to tolerate its version of WikiLeaks.
Who will regret giving insider minnows free lunch? 16 Dec 2010 Four tech firm employees earned over $400,000 moonlighting as expert consultants. That sounds too good to be true, and they are now alleged to have shared inside information with hedge funds and others. But the key question is still which bigger fish U.S. enforcers are after.
Riposte: Euro zone doesn’t need fiscal union 16 Dec 2010 A fashionable idea among both euro enthusiasts and sceptics is that a common monetary policy can't endure without a common fiscal policy. Although the single currency does make life hard, fiscal integration is neither necessary nor desirable, says Hugo Dixon.
Spain isn’t a debt basket case – at least not yet 16 Dec 2010 The country's funding costs are rising and its ratings are pressured. Still, Spain's bond market is healthier than Ireland's or Portugal and it has more domestic investors. There are many clouds on the horizon, but Spain can still hope it will avoid a bailout.
It’s official: the biggest banks are the weakest 16 Dec 2010 If Basel's new rules had been in place last year, the 94 largest lenders would have needed 577 bln euros of new capital. Delaying the standards has given banks time to rebuild their balance sheets. But the figures are a startling reminder of how far they still have to go.