Diamond’s exit leaves Barclays at a crossroads 3 Jul 2012 The UK bank’s CEO has resigned. In replacing him, the board faces a critical strategic decision. Picking an investment banker would be less disruptive. Going for a retail banker may show that Barclays thinks the universal model is past its sell-by date.
UK bank probe could lift lid on political ties 3 Jul 2012 The government and the opposition are already arguing over the nature of an inquiry into banking standards after the Libor scandal. It could embarrass both: the Conservatives because of their close ties with the City; Labour because it was in power when the rigging took place.
France arrives early to austerity rendezvous 3 Jul 2012 Francois Hollande seems to have opted for a pre-emptive strike to make sure France meets its deficit targets this year and next. In spite of likely union uproar, this will be the easier part. Restoring competitiveness will be harder.
Qatar evolves into active not activist investor 3 Jul 2012 The Gulf state has sent a message with its Glencore-Xstrata intervention: it won’t shy from demanding value when shareholders are put on the spot. But for all the noise, Qatar probably isn’t ready to become a genuine activist targeting underperforming companies in need of a kick.
Chinese IP awareness, sown by West, bruises Apple 3 Jul 2012 The gadget maker can easily afford the $60 mln it’s paying for the iPad name in China. And a lawsuit over Snow Leopard poses little threat. Still, the Middle Kingdom is increasingly alert to trademarks, patents and so on. Western multinationals wanted that, but it cuts both ways.
Indispensability of Chesapeake CEO is exaggerated 2 Jul 2012 Embattled CEO Aubrey McClendon owes his survival largely to a myth of unsackability. Despite numerous abuses, supporters contend his talent makes him indispensable to the energy group. This puts too high a value on the CEO and too little on Chesapeake’s vast asset portfolio.
How does a $670 mln deal spark a $400 bln battle? 2 Jul 2012 When Brazil’s largest credit card processor goes on the hunt. Cielo is buying U.S. e-commerce shop Merchant e-Solutions hoping to defend its lead in a highly competitive market. With industry profits expected to fall, Cielo, Redecard and others are all fighting for an edge.
Libor lying is defensible in a crisis 2 Jul 2012 Barclays’ deception on Libor rates during the financial crisis failed the test of St Augustine, who said it was better to be raped or murdered than utter the least falsehood. But his standard may be too high. There is a good case sometimes to play loose with financial truth.
Counterpoint: Libor lying is indefensible 2 Jul 2012 Does fiddling with the numbers ease panic? No. Because honest measures are the basis of trust in all transactions and alarming readings help prompt curative action. Mistrust feeds fear and paralysis. Restoring trust is the key to healing.
Bristol-Myers and Astra make fat bet on obesity 2 Jul 2012 The U.S. and UK drug giants are teaming up in the $7 bln purchase of Amylin. Seven times estimated sales is a hefty price for a biotech whose main drugs face stiff potential competition. But Amylin’s focus on diabetes, a sadly expanding market, makes this a healthier endeavor.
Upstart EverBank zigs while GE Capital zags 2 Jul 2012 The industrial giant is shedding financial assets and trying to reduce dependence on wholesale funding. The newly public EverBank is taking the opposite tack, spending almost double its $1.3 bln market cap on GE’s Business Property unit, leaving it with more loans than deposits.
Hugo Dixon: Nonviolent struggles need leadership 2 Jul 2012 Immediately after the Arab Spring, the romantic idea emerged that velvet revolutions could emerge spontaneously via Facebook and Twitter. But Syria’s civil war and Egypt’s continuing power struggle show how revolutions need leadership to get both to first base and beyond.
Barclays’ buck shouldn’t stop with Agius 2 Jul 2012 The bank chairman’s resignation is appropriate because he didn’t act as a strong counterweight to CEO Bob Diamond. But the CEO was responsible for the culture at Barclays Capital, where the interest rate rigging took place, as well as other lapses which have made him a liability.
Banker backlash will go on and on 2 Jul 2012 The Libor rigging scandal is just the latest example of immoral or risky behaviour that has brought the industry into disrepute. The fact that bankers are still overpaid and need further bailouts at a time when Western economies are struggling makes the public’s blood boil.
Gas giant Linde expands to fill healthy space 2 Jul 2012 The German company will pay $4.6 billion including debt for Lincare, a specialist in respiratory gases. That is a full-looking 9.3 times EBITDA and synergies will be limited. But Linde boosts its U.S. footprint - and secures a route to growth outside its consolidated core market.
Hugo Dixon: Successful summit didn’t solve crisis 2 Jul 2012 Euro leaders took important steps to stop the immediate panic. But the big economies of Italy and Spain are still shrinking and their debts are rising. Until that stops, the crisis won’t be over.
ECB summit win may come back to haunt it 2 Jul 2012 The central bank is the true winner of last week’s euro summit. It may get more powers as the zone’s bank supervisor, has successfully pushed back attempts to force it into action, and got what it wanted on bank recaps. But with its larger powers will come increased scrutiny.
Deteriorating asset quality strains Indian banks 2 Jul 2012 As India’s growth fades, its lenders are developing bad habits. Debt restructuring has increased 156 percent in a year. And Indian banks have the lowest bad debt reserves in the Asia-Pacific region. Without an improvement, the pressure to fudge the numbers will only increase.
Euro cup boost could be brief for triumphant Spain 2 Jul 2012 The country’s soccer triumph over Italy provides some welcome relief in the economic gloom. It shores up Spain’s image when it is at its lowest ebb, due to the country’s euro travails. But if history is any guide, the boost from this victory will be short-lived.