BNP’s reputation hit harder than its finances 30 Jun 2014 The French bank’s $8.8 billion fine for sanctions violations is bearable: it may even be able to keep paying dividends. A much-feared dollar-clearing ban is also likely to be defanged. But BNP’s guilty plea will batter its reputation as a conservative and cautious institution.
NYSE vs Nasdaq is IPO trading at the margins 30 Jun 2014 Decisions like Alibaba’s about where to list captivate investors even though exchanges no longer compete on vital matters like liquidity. The Facebook debacle did briefly revive a debate over technology. In the end, though, little things like ticker symbols can swing the vote.
General Motors recall goes beyond 8 mln more cars 30 Jun 2014 The U.S. automaker has now called back 29 mln vehicles, almost as many as it has made in America over 10 years. The latest batch includes ignition faults from 1997. That’s four years earlier than previously thought and suggests a recent high-profile autopsy needs a rework, too.
Evonik in $400 mln soccer deal it doesn’t need 30 Jun 2014 The German specialty chemicals company is buying a 9 percent stake in a first-tier soccer team, emulating Adidas, Audi, Allianz and Bayern Munich. But Evonik’s products don’t reach end users. The potential benefits of its deal with Borussia Dortmund are hazy at best.
Captain of industry makes sense for U.S. military 30 Jun 2014 Dysfunction at the agency for veterans has become a major blight for Obama. Enlisting a former CEO of P&G to run it answers criticism of the president’s track record with business. It just isn’t clear that Bob McDonald was the best choice from the corporate talent pool.
Linn pumps more risk into energy partnerships 30 Jun 2014 A $2.3 bln acquisition of gas wells by the largest drilling MLP is the latest example of how a sector once dominated by ultra-safe pipeline owners is becoming increasingly adventurous. Exposure to volatile U.S. gas prices puts the stable cash flow desired by investors in danger.
Hugo Dixon: EU would also be harmed by Brexit 30 Jun 2014 The EU, not just Britain, would be hurt if London decided to leave. Jean-Claude Juncker’s nomination as Commission president increases the chance of Brexit. EU leaders need to work to limit the risk. Here’s how.
Philips lighting split is a bright idea 30 Jun 2014 The Dutch conglomerate is restructuring again, moving high-powered LEDs and car lights into a standalone unit with 1.4 bln euros in sales. The business is fast-growing and would benefit from outside capital. Stepping out of the parent’s shadow should help.
Renzi picks wrong energy policy for right reasons 30 Jun 2014 The Italian prime minister has a Machiavellian streak. Matteo Renzi’s move to cut renewable energy incentives could spook investors, but it may help his reform agenda. He now needs to prove that the end justifies the means.
UK’s hawkish shift is dangerous 30 Jun 2014 There are good reasons for the Bank of England to raise rates. But an early move this year could be costly. Sterling would rise further. Exports, already struggling, would suffer. Rebalancing dreams would die. The BoE must hope the housing market cools, and the Fed quickens.
Diagnosis of economic malaise lacks credible cure 30 Jun 2014 Global growth is feeble and financial markets are piling up risks, says the Bank for International Settlements. Yet its proposed remedies of tighter monetary policy and structural reform are unconvincing. Like everyone else, central banks are still seeking the right medicine.
Soros takes sub-quantum leap into activism 27 Jun 2014 His $29 bln hedge fund has famously confronted governments. But facing off with a U.S. oil and gas company is novel. Whether a test of a new – and recently profitable – strategy or a sign of change at the family firm, it gives underperforming bosses another scourge to fear.
Wall Street’s good-bad cops turn up heat on banks 27 Jun 2014 The OCC is warning again of risky lending that the Fed has in part fueled with low interest rates. The regulatory clash, and some of the OCC’s edicts, may look confusing. But it’s encouraging to see watchdogs keeping a closer eye on risk and putting lenders on the spot.
Review: Rebooting banking – with Google’s help 27 Jun 2014 Brett King’s account of how smartphones are changing retail banking suffers from an excess of acronyms and advertorial. Still, King explains how compliance costs make the emergence of an Amazon of banking unlikely, and how internet data can help banks provide better services.
Global investors can help avoid another 1914 27 Jun 2014 The assassination of a reformist archduke a century ago could have remained a local tragedy. But an Austrian overreaction turned it into the Great War. Today’s businesses and financiers are well placed to discourage overly aggressive responses to problems like Ukraine and Iraq.
EU can move forward after unneeded Juncker drama 27 Jun 2014 The UK-created conflict on the appointment of the former Luxembourg PM as European Council president is coming to an end. Europe’s leaders now have to sort out the somewhat confusing British demands for change. Once that is done, there will be room for compromise.
Spain’s tax reform misses most goals 27 Jun 2014 The reform of Spain’s tax system was supposed to make it more efficient, help boost growth and make companies more competitive. Instead, its effect on growth looks minimal and it will have an adverse impact on public finances.
Numbers show Germany will beat Brazil to World Cup 27 Jun 2014 The football-mad host nation has cruised into the knock-out stages of soccer’s jamboree. Some fancied rivals have gone home early. But a Breakingviews calculator – based on hard numbers like transfer value, population and public engagement – suggests Germany will lift the trophy.
Builder’s shaky foundations dent UAE’s credibility 27 Jun 2014 Shares in Arabtec have lost more than half their value in six weeks. The abrupt resignation of its CEO, uncertainty over sovereign support and poor communication are to blame. It’s a warning to investors attracted to the country by its new emerging market status.
Emerging market equities look cheap 27 Jun 2014 They are trading at the deepest discount to developed market peers for nearly 10 years. Companies listed in the West may be more reliable and have better corporate governance. Growth in developing countries is also slowing. But there’s good value in more adventurous bets.
U.S. drought could spark economic water warfare 26 Jun 2014 Scarce rains have left California and the U.S. Southwest dry just as industries from beverages to semiconductors grow concerned about the availability of H20. That presents a flood of opportunity for water tech firms and Great Lakes states like Indiana, Michigan and Wisconsin.
Averting bond fund runs requires only easy fixes 26 Jun 2014 These vehicles now manage $3.3 trln, double five years ago. Investors can pull their money out quickly, which means a rush for the exits could cause panic. Imposing redemption fees is one solution. Holding more cash and restricting rapid withdrawals would be more effective.
Barclays’ hit reflects investment bank fears 26 Jun 2014 Shares in the UK bank tanked 9 pct after accusations of fraud in its “dark pool.” That implies a surprisingly big $6 bln hit. Fine inflation is rampant, and Barclays could suffer reputational damage. It’s a reminder: small investment banking businesses can carry outsized risks.
Carney takes narrow view of financial stability 26 Jun 2014 The Bank of England governor had a chance to address galloping UK house prices via macroprudential tools, curbs to UK mortgage guarantee schemes, and dire warnings. All he offered was underwhelming lending rules. That is no way to protect banks in the long run.
Alcoa tries to fly over Chinese aluminum glut 26 Jun 2014 The manufacturer is paying some $3 bln to buy private equity-owned Firth Rixson and expand its aerospace parts business. The deal looks pricey, but it does jet in handy cost savings and, potentially, fast growth in a high-margin business free of irrational Chinese competition.
Shell’s pipeline sale is but a good carve-up start 26 Jun 2014 The $260 bln Anglo-Dutch oil company is spinning off its small U.S. midstream business into a tax-advantaged master limited partnership. It should fetch a valuation multiple four times what Shell itself gets. Separating refining from exploration would bring far bigger rewards.
Skeptics have best of U.S. Ex-Im Bank fuzzy math 26 Jun 2014 Depending who’s talking, the export lender costs taxpayers $2 bln or earns $2 bln, is essential or aids just 2 pct of exports, and helps mainly Boeing or predominantly small businesses. Ex-Im is a political football more than a linchpin of trade, and its critics have the edge.
New setback raises pressure on StanChart top team 26 Jun 2014 The emerging markets lender has warned earnings will decline for the second year running after a poor first half. The departure of another senior executive reinforces the sense that StanChart is struggling to get to grips with its problems. The share price fall looks justified.
Mortgage curbs alone can’t stop housing booms 26 Jun 2014 The Bank of England is set to use new tools to cap home loans. They can help protect lenders and borrowers from getting into trouble. But global experience shows that restricting credit alone doesn’t bring down property prices. Only new taxes, or more building, will do the trick.
Biggest risk of geopolitics is as a distraction 26 Jun 2014 Fears that war and foreign policy chaos will disrupt the global economy have insidiously crept into the minds of investors, Barclays discovered. In reality, despite deterioration in the Middle East, the global balance is broadly positive. There are bigger things to worry about.