Ackermann jibe evokes ghost of Deutsche past 27 Nov 2012 Deutsche Bank has erred by choosing not to send co-CEO Anshu Jain to a parliamentary hearing on Libor. Jain wasn’t directly called, but it still looks evasive. And it has given ex-boss Josef Ackermann the chance to revive an unseemly Deutsche custom of undermining new leadership.
Fiscal target fetishism is hurting the euro zone 27 Nov 2012 Growth prospects are grimmer than the monetary union’s governments currently assume, the OECD points out. Crisis countries are on track to miss their consolidation targets by a wide margin. They must be allowed to let this happen. More austerity would only make things worse.
Lehman’s Archstone saga twists till the end 27 Nov 2012 The U.S. apartment empire that buckled the investment bank is being sold to two rivals for $6.5 bln. Accounting changes and poor disclosure muddle the valuation. Lehman creditors also will be left investing in the real estate. It’s a perfectly confounding denouement.
$5 bln of delayed gratification better than none 27 Nov 2012 Boardroom egos often hamper deals that can benefit investors. Ralcorp flipped suitor ConAgra the bird a year ago. With the formerly reluctant chairman running a spin-off, the food producer is now selling at a price it could have negotiated before. At least it got a second chance.
Euro zone gives Greece almost a good deal 27 Nov 2012 The stand-off between Greece’s lenders has ended - sort of. The IMF has extracted debt relief from the euro zone, and Germany has avoided a haircut for now. Private creditors will have to agree to take more losses. But at least the deal paves the way for further debt relief.
EU must ensure Basel III is delayed not derailed 27 Nov 2012 Brussels is set to follow the U.S and push back the start of vital global bank reforms. While not ideal, a delay of months rather than years would be bearable. The danger is that Basel III haters and self-serving banks use the confusion to water down what remain worthy reforms.
Pay bankers in CoCos to manage moral hazard 27 Nov 2012 Bond investors are worried that banks could deliberately run down capital to trigger a bail-in of their contingent convertibles. Checks and balances mean the risk is small. But it’s still real. Banks could address it by aligning bonuses with CoCos.
Hong Kong offers refuge for China’s orphan stocks 27 Nov 2012 Transport firm CIMC plans to swap its foreign currency “B shares” from Shenzhen to Hong Kong. Capital controls mean it’s not simple. But this offers investors a way out of an illiquid and low-valued investment, and helps tie up a loose end in China’s capital markets.
Australia can’t pin its growth hopes on property 27 Nov 2012 As the mining boom sputters, property is being tipped as the country’s new economic engine. Falling interest rates and rising rents suggest a decade-long slide in housing investment may soon be over. But giving up some growth may be more prudent than stoking a real-estate bubble.
Ben Bernanke is no holiday price Grinch 26 Nov 2012 Easy money hasn’t made turtle doves and other “Twelve Days of Christmas” gifts much pricier. The cost is up a below-average 2.6 pct, excluding swans. Thanksgiving was under 1 pct more expensive, against a rise in the U.S. CPI of 2.2 pct. There’s no inflation to unwrap this year.
Obama’s got 99 problems and the SEC isn’t one 26 Nov 2012 It’s a shame, but how else to assess the choice of Elisse Walter to run Wall Street’s watchdog? Picking a bureaucrat reflects Obama’s need to conserve political capital for bigger fights on fiscal issues and his cabinet rather than attempting an upgrade of the SEC’s import.
Conoco’s $5 bln Kazakh sale is the easy part 26 Nov 2012 The U.S. oil giant’s investors should be happy to see the costly Asian project go. The cash also will help fund lavish capex plans and the generous dividend. But Conoco’s real chore is to prove it can boost sluggish output while retreating from promising, if risky, regions.
Carney raises hopes for impossible BoE job 26 Nov 2012 The Bank of Canada chief is the surprise choice to run the UK central bank. He brings deep knowledge of financial regulation and an outside perspective. But that may still not be enough to meet the challenge of preserving growth, protecting banks and maintaining BoE independence.
Obituary: Ewing was archetype of Reagan-era excess 26 Nov 2012 No American executive better embodied the anti-regulatory fervor and cutthroat ambitions of the 1980s than the former Ewing Oil chief. After an assassination attempt and two dark decades following the Texas oil bust his legacy was revived by, and lives on in, today’s shale boom.
UK should resist yet another bank levy hike 26 Nov 2012 The coalition’s annual tax on lenders’ balance sheets started life as a smart way to raise cash while geeing banks to slash risky short-term funding. But bankers now expect the rate to be raised for the third time. That undermines incentives. Better to focus on stimulating lending.
Barclays’ investment bank is too good to lose 26 Nov 2012 Antony Jenkins is feeling the heat from investors. The Barclays CEO is under pressure to cast his investment bankers free and pursue the high street’s more staid returns. But with investment banking making up three-fifths of group revenue, Jenkins can’t afford to set it loose.
ECB’s stop-and-go bond-buying plan is clever 26 Nov 2012 The ECB’s purchases under its bond-buying programme would stop every three months during reviews of the target country. Critics fear it may make interventions less effective, or boost volatility. But the concerns are overblown. Regular pauses will keep the pressure on governments.
Hugo Dixon: Battle against Grexit far from won 26 Nov 2012 Assume Greece gets its next 44 bln euro tranche of cash and some debt relief. Even then, the banks will still be hobbled, while another round of austerity is in the works and vested interests are rife. It will be hard to restore growth - and without that the government will fall.
Mursi’s pharaonic blunder throws Egypt into chaos 26 Nov 2012 The vigorous protests against the Egyptian president’s power grab show he has underestimated civil society’s craving for democratic institutions. He still has time to stand down, but his move increases the political division and instability in the still-fragile country.
China’s nemesis: bribes, banquets and backslapping 26 Nov 2012 Graft plagues China, but official extravagance and nepotism are more visible and harder to stamp out. New anti-corruption chief Wang Qishan may clamp down on those flaunting Audis and Rolexes, but while the state retains a grip on key resources, shady dealing will drag on growth.
Worry over state-owned acquirers may be overdone 23 Nov 2012 Canada’s prime minister, mulling CNOOC’s bid for Nexen, is skeptical of firms controlled by foreign governments. The fear is their motives are more than commercial. But evidence from nearly 200 deals suggests that if state buyers have a hidden agenda, they aren’t paying for it.
How about Mitt Romney for Treasury Secretary? 23 Nov 2012 The beaten Republican candidate certainly has the right resume, and a re-elected Obama will need a new finance chief. Markets would celebrate the pick as a shocking pivot towards bipartisanship. But neither man may have the restraint to keep from wringing the other’s neck.
Germany first beneficiary of ECB’s future largesse 23 Nov 2012 The business climate in Europe’s largest economy unexpectedly brightened a bit in November. The staunchest critic of the ECB’s bond-buying programme is the first one to benefit from Mario Draghi’s determination to reduce uncertainty about the future of the euro.
Catalonian independence isn’t worth the pain 23 Nov 2012 Spain’s richest region’s parliamentary elections will determine whether it goes ahead with a referendum on independence from Madrid. Beyond the political rhetoric, the cost of a breakup from Spain and the EU would far outweigh its elusive benefits. Sobering up would be painful.
Monte dei Paschi finds patriotism doesn’t pay 23 Nov 2012 The venerable Italian bank hoped to receive state bailout cash without much dilution for existing investors. But Brussels looks likely to nip this in the bud. Banks in the euro zone periphery will think twice before loading up on public debt to help their struggling governments.
Company face-time ban adds to equities grief 23 Nov 2012 The UK regulator has decided that arranging access to company management doesn’t constitute equity research. That’s more than just semantics. It rightly removes a bad incentive for fund managers to shunt trades to certain brokers. Yet another headache for the equities business.
New risk factor for China stocks: divorce 23 Nov 2012 Longfor Properties shares dropped as its founding couple split, sparking fear of a covenant breach. It’s not the first Chinese company to be shaken by a marital rift. As divorce rates rise, investors should note that entrepreneurs’ private wobbles can have public consequences.
HP’s accounts bombshell: a guide for the perplexed 22 Nov 2012 The U.S. tech group says it was duped into overpaying for Autonomy. The $9 bln row centres on three allegations relating to how the UK group presented its sales. Unpick them, and HP has work to do to show Autonomy went beyond being aggressive in its accounting.
Central Europe can’t just wait for euro recovery 22 Nov 2012 The euro zone crisis has victims in central Europe, as exports stagnate and western banks pull back. But the region needs more than a euro recovery. Governments should stop making the situation worse. And reforms are needed to shake off lingering communist legacies.
Market limbo gets another extension 22 Nov 2012 China’s manufacturers have reported expanding output for the first time in more than a year. Data also show the U.S. recovery continues. These are big pluses. But a plunge in German services indicates the world is running on two out of three engines. European slowdown and the U.S. fiscal cliff will keep markets on edge.