Italian high finance picks up tab for bank sins 5 Oct 2017 Sickly mid-sized lender Banca Carige wants bondholders to take a loss as part of a 1 bln euro recapitalisation. Yet it will spare retail investors, leaving more pain for banks and insurers. The country’s flawed banking model is to blame. The good news is taxpayers won’t suffer.
Greg Fleming returns rich as Rockefeller 4 Oct 2017 The ex-Morgan Stanley exec is back on Wall Street in a venture with the legendary New York dynasty. The new advisory and money-management firm for the ultra-wealthy is small by Fleming’s standards. But he has found an ideal brand to target a fast-growing $60 trln market.
Office Depot photocopies M&A flop 4 Oct 2017 The chain store is jumping into IT services by forking over $1 bln for CompuCom. But its attempt to diversify has a bad track record: Dell, HP and Xerox tried it and failed. The 16 pct drop in Office Depot’s value implies investors reckon the deal won’t stop flagging sales.
Trump gets Puerto Rico priorities in a muddle 4 Oct 2017 The president’s vow to wipe out the U.S. commonwealth’s debt sent its bonds plunging. The devastation wrought by Hurricane Maria may necessitate another restructuring. But it doesn’t address the island’s problems. Its citizens need money, supplies and services, not distraction.
Hadas: Road to calm finance is unsafe at any speed 4 Oct 2017 A decade after the last financial crisis began, central banks are finally moving to normalise interest rates and money supply. With governments weak and banks and businesses hooked on easy credit, risks are high. There’s a better way to run this system, but few seem interested.
Catalan banks fairly punished for wrong reason 4 Oct 2017 The prospect of Catalan independence has hit Barcelona-based lenders CaixaBank and Sabadell. A schism from Spain and the EU could trigger deposit runs and losses, but the risk of that is low. Stagnant interest rates and weak profitability are a bigger threat than self-rule.
Uber board clears nearby jams, not entire route 4 Oct 2017 The ride-hailing app upped its governance star-rating, scrapping super-voting rights, expanding the board, and dropping internecine legal action. Directors also backed a SoftBank investment and set a 2019 IPO deadline. There’ll still be fights over control and valuation, though.
Europe faces bigger tax foe than Amazon and Apple 4 Oct 2017 The bloc’s antitrust chief ordered Luxembourg to collect 250 mln euros from the e-commerce giant. She is also pursuing Ireland over a 13 bln euro Apple case. The EU is winning the loophole battle. But a bigger war to level the global tax playing field may meet U.S. intransigence.
Tesco is spinning its wheels to get nowhere fast 4 Oct 2017 CEO Dave Lewis has boosted margins at Britain’s biggest supermarket, shrunk the pension deficit and cut debt. The first dividend in three years confirms the rebound. Yet the threat from inflation, weak consumer demand and online rivals have left Tesco shares stuck in a rut.
ECB bad-loan blitz to spur Italy insolvency reform 4 Oct 2017 The European Central Bank wants lenders to fully provision against new bad loans within seven years. That could be painful in Italy, where repossessing collateral can take even longer. The new rules give Rome a short window to finally get its bankruptcy law into shape.
Telco banks may be consigned to fringes of finance 4 Oct 2017 Orange and Altice plan to offer banking services to capitalise on a boom in digital finance. It’s a novel solution to slowing telecom revenue growth, and similar ventures were a hit in Africa. But mobile operators are entering a crowded field, with no obvious advantage.
India will miss its top banking chief 4 Oct 2017 Arundhati Bhattacharya’s four years atop the country’s largest lender have seen bad debt rise and the shares underperform. But she has made State Bank of India the best of an ailing bunch and stood up to errant tycoons. She sets a high bar for any successor.
Ford’s clever electric van plan in China 4 Oct 2017 The U.S. carmaker is changing course in China, insiders told Reuters, as sales slow. New state policies open an opportunity for Ford to build electric commercial vehicles. That could help meet quotas - and electrify Ford SUVs. Much depends on the partner, and battery supply.
Ford CEO bets ambitious retool on big cost cuts 3 Oct 2017 Jim Hackett is slashing $14 bln of fat over five years and switching $7 bln of investment to SUVs from cars. That'd boost earnings, helping speed development of electric and autonomous vehicles. The plan will have to fire on all cylinders to catch up with the likes of BMW and GM.
Wells Fargo boss makes case for his own dismissal 3 Oct 2017 At a Senate hearing Tim Sloan conceded poor oversight during the fake-accounts scandal, struggled to defend arbitration policies and was unconvincing about changing the bank’s culture. His performance should prompt incoming Chair Betsy Duke to find a leader who can turn the page.
Warren Buffett is wise to keep on truckin’ 3 Oct 2017 The Berkshire Hathaway boss has a soft spot for old-school businesses, even ones facing tech upheaval. His investment in truck-stop operator Pilot Flying J, with some $20 bln in revenue, fits the nostalgia bill. It'll be a long haul before electric and driverless rigs cruise by.
Equifax’s lax cyber defense made for easy target 3 Oct 2017 Former CEO Richard Smith told Congress the company’s failure to maintain software led to its data hack, and admitted he didn’t ask hard questions. The mistakes should be a lesson for other firms, and a spur for the White House as it considers replacing Social Security numbers.
Jerome Powell makes for a Goldilocks Fed choice 3 Oct 2017 The central bank governor is less hawkish than other candidates on President Trump's shortlist, including Kevin Warsh. Powell also aligns with the White House on regulatory reform. And his confirmation would be easier. Those factors could make him a Fed chair who is just right.
Ford is playing catch-up with General Motors 3 Oct 2017 GM’s stock hit a record high after the largest U.S. automaker detailed plans for robotaxis and 20 new electric cars. It raises the bar for Ford CEO Jim Hackett. His new strategy needs concrete goals, especially on driverless vehicles and cost controls, to protect its premium to GM.
Fidelity apes hedge funds to play active defence 3 Oct 2017 The asset manager’s UK offshoot will charge clients more when funds beat their benchmarks and less when they underperform. The risk is that fees become more opaque. Yet a variation on alternative managers’ “2-and-20” model may help it resist the onslaught from cheap trackers.
ChemChina makes quick buck from Pirelli flip 3 Oct 2017 The Chinese state giant and its European partners had to put the brakes on their pricing ambitions for the tyremaker’s 6.5 bln euro IPO. Yet less than two years after taking Pirelli private, the consortium is on course to squeeze private equity-style returns from the relisting.
WPP handed lucky exit from Japanese jam 3 Oct 2017 The British ad group, which owns 25 pct of Asatsu-DK, reckons Bain’s $1.3 bln offer for the Asian company is stingy. But WPP is already a winner. CEO Martin Sorrell will either profit from the private equity group’s margin-boosting clout or get the best terms in a decade to exit.
Nestlé can pre-empt Dan Loeb with refreshed board 3 Oct 2017 The Kit Kat maker’s directors are light on consumer and digital expertise. Half of them are Swiss, a market worth just 2 percent of sales. Nestlé’s latest revamp plans are far from radical, and the activist may next seek boardroom changes. The company could beat him to it.
Anil Ambani’s telecoms empire is slipping away 3 Oct 2017 Now that a merger of its mobile unit has failed, the Indian tycoon is running out of options to keep control of his flagship Reliance Communications while reducing its $7 bln of debt. One creditor has already petitioned for insolvency. Others may soon run out of patience too.
Bain has advantage on WPP in Japanese ad-land spat 3 Oct 2017 The U.S. buyout firm wants to buy Japan’s third-largest ad agency for $1.3 bln. That would let Asatsu-DK escape a disappointing tie-up with major shareholder WPP. The UK giant may not like it, but WPP has little room to extract a better price and may have to sell eventually.
Rivals circle Taiwan’s TSMC in new chip era 3 Oct 2017 Morris Chang, father of Taiwan's chip sector, is retiring at 86. His successors were groomed for years to take over the $189 bln behemoth Chang founded three decades ago. They'll need to work hard to defend TSMC's dominance against Samsung and rising mainland competitors.
Two rights at Uber in danger of making a wrong 2 Oct 2017 Travis Kalanick's newly appointed directors add useful expertise to a flawed board. And the effort by incumbents to limit the ousted founder's power as part of a deal to raise capital from SoftBank also makes sense. Both stand to lose if they dig in too firmly against each other.
China rate cut will please all and fool only a few 2 Oct 2017 The central bank will dole out extra liquidity to lenders who help out small businesses. In reality, though, the bar is low and most banks will benefit. Given the Chinese leadership’s emphasis on cutting back debts, it’s a smart way to dress up a future liquidity injection.
Holding: Allergan exposes patent-reform quackery 2 Oct 2017 The $70 bln drugmaker's fishy deal with Native Americans may impede a U.S. tribunal from cracking down on such rights. Weak rules in the forum also face review in the new Supreme Court term. With luck, the pushback will lead to better remedies for flawed intellectual property.
Monarch suffers very British failure 2 Oct 2017 The airline’s past reliance on tourism to Egypt and Tunisia, now danger areas, started the rot. But the Brexit-induced slump in sterling worsened things, and a laissez-faire resistance to government intervention – unlike the German help handed to Air Berlin – finished the job.