China will find schmoozing IMF was the easy bit 30 Nov 2015 The yuan has made it into the global lender’s basket of reserve currencies, despite China’s patchy reform record and clumsy market interventions. For Beijing politicians, getting into the IMF’s club is itself a reward. Persuading investors to want more yuan will be tougher.
Billionaires add thrust to clean-energy moon shot 30 Nov 2015 Bill Gates, Mark Zuckerberg, Jeff Bezos and Jack Ma are among those pledging to pool their lucre for big investments in climate-friendly R&D. The aim is worthy but such ambitious projects have a mixed record. At least these entrepreneurs know how to tolerate serious cash burn.
Bankers catch a crumb in critical conflicts case 30 Nov 2015 Delaware’s top court chided RBC in its upholding of a $76 mln penalty against the firm for working both sides of a deal. In a footnote, though, the tribunal toned down a lower court’s notion that advisers must save directors from themselves. The buck still stops in the boardroom.
AB InBev’s SABMiller deal losing big-brand fizz 30 Nov 2015 The Budweiser brewer may sell SAB’s Peroni and Grolsch labels to speed antitrust clearances, reports say. The Molson venture in the U.S. has already gone and China may demand disposals. AB InBev will retain some gems, but the SABMiller empire could soon be unrecognizable.
BTG Pactual depends on trust more than ex-boss 30 Nov 2015 The arrested André Esteves owns a controlling stake. Over time, though, he has made Brazil’s No. 1 investment bank more international and diversified. The new co-CEOs are experienced, too. The firm may not need Esteves, but it does need trading partners to shrug off the crisis.
Bank living-will laggards risk capital punishment 30 Nov 2015 Big American lenders will soon hear whether their resolution plans are to be rejected for a third time. New global bail-in rules remove the pressing need for regulators to break banks up. But in an election year they could punish insolence by insisting on higher capital buffers.
Dixon: EU-Turkey deal is historic, if it sticks 30 Nov 2015 The EU has dangled the prospect that Turkey can join the bloc, offered to liberalise visas and promised the government a chunk of cash in return for Ankara agreeing to stem the flow of migrants to Europe. The snag is that not all of the pact looks deliverable.
BHP’s Brazil disaster points to dividend cut 30 Nov 2015 The Anglo-Australian miner needs to conserve cash to pay for the Samarco dam disaster in Brazil. Forecast earnings already fall short of the $6.5 billion it paid shareholders last year. BHP would be wise to get ahead of the curve and scrap its commitment to progressive payouts.
Delta Lloyd waves white flag on insurer capital 30 Nov 2015 The Dutch insurer is raising capital equivalent to over half its market value to prepare for new Solvency II rules. But it’s also ditching its own solvency model for a tougher version supplied by regulators. If peers follow suit, insurer capital would be much more simple.
Deutsche Wohnen takes hostile bid defence too far 30 Nov 2015 The German landlord has complicated a 14 bln euros approach by rival Vonovia by buying apartments worth 1.2 bln euros and taking on debt. True, it shows that Wohnen can gear its balance sheet up under its own steam, but there are less risky ways to make the case for independence.
Toshiba’s overdue nuclear illumination is welcome 30 Nov 2015 The scandal-hit Japanese group has been too fuzzy about the performance of important businesses. Now it has finally laid out the finances and outlook for various key units. Improved disclosure, plus growth potential in nuclear power, should help restore some market confidence.
Bank of East Asia feels weight of its China drive 30 Nov 2015 The Hong Kong lender has the second biggest branch network of any foreign bank in the People’s Republic. But fast expansion has come at a cost: BEA underperforms rivals. With activist Elliott still building its stake, it’s a good time to focus on improving profitability.
Climate will supplant shale as top energy disruptor 27 Nov 2015 The world’s politicians may be about to get serious on cutting greenhouse gases at the U.N. Paris confab. And shareholders are pushing Big Oil to disclose global warming risks. The consequences for the industry will be longer lasting than the recent oil production revolution.
Review: Another "Minsky moment" may be on the way 27 Nov 2015 Hyman Minsky didn’t just predict the global financial crisis 10 years in advance, a new book on him argues. The maverick economist also explained how the cure – bailouts by the Federal Reserve and other central banks - would drive the financial system to the brink yet again.
Turkey has more friends in politics than markets 27 Nov 2015 Europe’s recent rapprochement with Ankara is born of necessity. Less porous shared borders will help control the flow of migrants into the West. But investors have a choice. Their ardour will hinge on how much reform latitude President Tayyip Erdogan gives his new government.
Abengoa has creditors over a barrel 27 Nov 2015 The beleaguered Spanish engineering group might survive if lenders take haircuts of two-thirds. In liquidation, losses could mushroom due to the group’s spiralling working capital needs, complex business and slow Spanish courts. Abengoa needs a speedy resolution and more cash.
Dollar peg remains Saudi Arabia’s best option 27 Nov 2015 Saudi Arabia is under pressure to break its currency peg with the dollar. The inflexible riyal means Saudi can’t devalue to offset weak oil prices. But given Riyadh’s huge forex reserves, the risks of moving to a floating currency still outweigh the rewards.
Britain’s “Black Friday” better left on the shelf 27 Nov 2015 The Thanksgiving shopping orgy, recently adopted by the UK, is unhelpful for all concerned. Consumer credit is spiralling, confidence falling and retail margins are under pressure. If shoppers and retailers take a rational view of low prices, the festival will snuff itself out.
BBVA’s Abengoa swerve cements risk-oversight kudos 27 Nov 2015 Unlike its domestic peers, the Spanish bank didn’t lend to the teetering engineering group. Nor did it invest in Bankia’s failed IPO or Spain’s bad bank, Sareb. Luck may be an element, but BBVA’s risk controls and an independent-minded chairman are probably helping, too.
Indian sale makes Bain Capital rare buyout hero 27 Nov 2015 The U.S. firm has sold its remaining $116 mln stake in Hero MotoCorp four years after investing in the world’s largest motorbike maker. In rupee terms, Bain doubled its money in four years. As private equity pours into India, it’s a reminder that getting money out remains harder.
Barclays money-laundering rap is oddly reassuring 26 Nov 2015 The UK bank has been fined for cutting corners on a 1.9 bln stg deal for politically sensitive clients in 2011. The temptation for banks to bend the rules for VIPs is just as strong today. But more vigilant regulators are chipping away at the idea that this is business as usual.
ECB has bright idea for targeted bank-bashing 26 Nov 2015 Imposing a staggered penalty on banks that hoard cash is one of many ways to ease policy being discussed by the European Central Bank. Such levies have drawbacks. But at least a split-level charge would encourage the biggest hoarders to boost cross-border lending.
Britain joins sovereign wealth party too late 26 Nov 2015 Creating a 1 billion pound sovereign wealth fund to encourage shale gas drilling in the UK could fail on two fronts. It won’t sway opponents of fracking in the UK countryside, and a financial windfall is unlikely given a global gas glut and unattractive shale economics.
German open-door isolationism is unsustainable 26 Nov 2015 Angela Merkel has ignored domestic calls to shut out refugees. But she will find it harder to brush off French calls for the same. Alienating a key ally would undermine the union Merkel wants to save, and threaten economic integration.
Jack Ma paper chase is test of newsprint’s appeal 26 Nov 2015 The Alibaba founder is interested in buying Hong Kong’s South China Morning Post. The 112-year old title’s earnings are under pressure, and the financial logic looks thin. But as fellow e-commerce boss Jeff Bezos showed with the Washington Post, newspapers still have trophy value.
Qube edges ahead in Aussie infrastructure fight 26 Nov 2015 Brookfield’s $6.5 bln agreed bid for Australia’s Asciano has hit serious opposition from competition regulators. The Canadian group could yet salvage its takeover. But interloper Qube, whose break-up consortium is already examining Asciano’s books, now looks like the favourite.
UK’s Osborne is less austere than he makes out 25 Nov 2015 Finance minister George Osborne isn’t quite the budget zealot his Nov. 25 spending cuts suggest. The UK has run bigger deficits relative to GDP than France during his tenure. He has also executed tax and spending U-turns when required. It helps that gilt investors buy the hype.
UK housing market policy gets ever more misguided 25 Nov 2015 Britain is hoping its Help to Buy scheme will get more punters into the inflated housing market. That’s alongside 2.3 bln stg in subsidies to tempt private sector builders to sell at a discount. Even if this somehow creates 400,000 new homes, the rich gain more than the poor.
Pfizer’s war chest stealthily rebuilt by Allergan 25 Nov 2015 The $160 bln mostly stock deal will create a combination gushing $25 bln of operating cash flow annually. An offshore tax address means there’s no reason to keep over $60 bln of cash on its balance sheet. That’s a lot of financial firepower to buy back shares and fuel more M&A.
Brazil crisis may have silver lining: rule of law 25 Nov 2015 Latin America’s biggest economy will get worse before it gets better. The arrest of billionaire banker André Esteves suggests room for further nasty surprises from the Petrobras corruption probe. But feisty independent courts and stronger institutions point to a brighter future.