Deutsche Bank will struggle even to hurdle low bar 25 Jul 2018 The German bank is targeting a 4 percent return target for 2019. To achieve it, the German lender requires revenue to hold steady while cutting costs to 22 billion euros. Given ongoing declines in the investment bank, even that modest goal looks ambitious.
Santander’s Spanish albatross takes flight 25 Jul 2018 The bank’s domestic revenue grew by a third in the second quarter, far outstripping its international units. In the euro zone crisis, Spain’s bigger lenders emphasised their overseas arms. Santander’s bigger heft at home and strong domestic growth could prompt a rethink.
ITV may need more than fine-tuning 25 Jul 2018 CEO Carolyn McCall wants to improve its clunky online service. Cost cuts and extra revenue will offset higher investments, soothing fears of lower dividends. If advertising revenue collapses and viewers switch over, she could have to contemplate lower payouts and M&A.
China’s peer lender pain will hurt the little guy 26 Jul 2018 Scores of peer-to-peer lenders have imploded since last month thanks in part to a regulatory clampdown. Consolidation is inevitable, and helpful for big players like Lufax. But the $200 bln industry’s travails will make it harder for struggling small companies to find credit.
China Tower offering sends the right signals 25 Jul 2018 The phone-mast giant set a fair price range for its $9bln IPO. It also limited sales to cornerstone investors, attracting not just friends and family. It’s a welcome change to how SOEs are dumped in Hong Kong. A solid debut could inspire others to follow this friendlier approach.
Macau casinos could lose VIPs to junket upstart 25 Jul 2018 Suncity boss Alvin Chau helps bankroll half of the gaming hub’s big-spenders. He also aspires to running his own casinos and could coax clients to try new markets like Vietnam. That may mean fewer high rollers at Wynn Macau, Galaxy and others when China’s slowdown bites.
Alibaba ad deal completes Carlyle engineering feat 25 Jul 2018 Jack Ma’s e-commerce titan is buying a stake in $24 bln Focus Media, some from the U.S. private equity firm. Carlyle led a 2013 New York buyout and profitable reverse merger into Shenzhen, but a complex structure and rigid rules made exiting hard. Alibaba provides the lucky coda.
Facebook and Twitter are lucrative quagmires 24 Jul 2018 Bosses Mark Zuckerberg and Jack Dorsey are under fire for allowing misinformation and bullying to flourish on their social networks. Lawmakers and users are beginning to notice, but advertisers have a higher tolerance – and that’s what keeps the swamp bubbling.
Holding: M&A lawsuit cures could turn toxic 24 Jul 2018 Delaware’s efforts to cut frivolous U.S. deal litigation have pushed cases from state to federal courts, a new study shows. There, too, marginal suits that benefit only lawyers should be discouraged, but cracking down runs the risk of letting dodgy transactions off the hook.
UK seeks awkward balance between M&A and security 24 Jul 2018 New plans to screen foreign purchases of British companies echo moves by countries such as France and are fairly sensible. However, they also increase politicians’ scope to meddle. That won’t make it any easier for the government to tout its open-market credentials post-Brexit.
Merging U.S. regional banks get the cold shoulder 24 Jul 2018 The $2.9 bln all-share union of southeastern lenders Synovus and FCB wiped over $800 mln off their combined market value. Financially, the combination is hard to fault. It may be disappointment over what might have been: the seller gets no premium, and the buyer isn’t a seller.
Lilly cashes in on four-legged premium 24 Jul 2018 The drug company is following Pfizer’s lead and floating its animal-health business. Investors are clamoring for the steady growth that rising pet spending brings, which could value the unit at $20 bln. This opportunistic move is just the prescription to boost Lilly’s returns.
Marchionne’s reformist legacy at risk in Italy 24 Jul 2018 Hailed as an Italian Thatcherite, the most successful car boss in a generation challenged rigid labour rules at home. Standing up against unions and local lobbies, he raised productivity and saved jobs. His absence will make it easier for Rome’s new bosses to go backwards.
Turkey misses easy chance to win credibility 24 Jul 2018 The lira slumped after the central bank left interest rates unchanged. With inflation at 14-year highs, there was every reason to tighten policy. Inaction will only reinforce investors’ concern that President Tayyip Erdogan’s distaste for higher rates is exerting undue influence.
UBS’s dented crown still sparkles 24 Jul 2018 The Swiss bank’s first-half pre-tax profit grew 15 percent year-on-year. UBS’s outlook was downbeat, and its prized wealth arm lost 1.2 bln Swiss francs in client mandates, its first quarterly outflow since 2016. Even so, higher quality revenue can help it keep a valuation lead.
Peugeot’s Opel repair job looks halfway complete 24 Jul 2018 CEO Carlos Tavares has restored Opel to profitability, just a year after buying it from GM. A 5 pct operating margin makes his long-term targets credible, at the risk of giving hostile unions a stronger hand. Still, Tavares’ cost cuts vindicate Peugeot’s premium valuation.
Hammerson tinkering reflects strategic impasse 24 Jul 2018 The UK landlord needed to atone for an Intu deal U-turn and its spurning of a Klepierre merger. A buyback and flogging 1.1 bln pounds of assets doesn’t quite do so. The problem is that even at their lowly valuation selling more UK assets looks hard to do.
Lax corporate governance damns China Inc 24 Jul 2018 A new report reveals slow progress improving clarity and accountability. Weak controls are so rampant that foreign and local investors alike prefer state dinosaurs to independent companies. More boardroom meddling by Beijing will further deter investment in the private sector.
China’s fiscal nudge betrays growth jitters 24 Jul 2018 The government is adding some $10 bln of corporate tax cuts as part of a broader policy push. It follows tussles between the central bank and the finance ministry over how to support an economy that just expanded 6.7 pct. Speed is as much a priority as rebalancing growth.
Japan’s $11 bln Line treads a very fine one 24 Jul 2018 The chat app’s shares have bounced around since its 2016 IPO as user growth proves elusive. Line bumbled its way from ride-hailing to music-streaming, and is now aiming at fintech. It’s a promising market, but trading at over 100 times earnings leaves little room for error.
Europe can’t stop Alphabet profit machine 23 Jul 2018 Regulators and lawmakers have tried to throw sand in the gears of the internet goliath, but blowout quarterly figures show Google’s parent is in a strong position. Europe will need more than stringent data rules, giant fines, and hearings to slow the $827 bln company’s growth.
Stock picker’s exit a sign of the hedge-fund times 23 Jul 2018 Leon Cooperman is parting with investors after nearly three decades to turn his Omega Advisors into a family office. The value investor was an anachronism in a field led by systematic giants like Ray Dalio’s Bridgewater. Going out while markets are on a high, at least, is shrewd.
Tesla sends wrong message to right stakeholders 23 Jul 2018 Elon Musk asked some suppliers to cut prices. He’d be nuts not to. It’s a way for the $53 bln electric-car maker to control costs while dangling the prospect of more business for parts makers if Tesla succeeds. But pitching it as a do-or-die moment undermines Musk’s credibility.
Papa John’s poison-crust defense is justified 23 Jul 2018 The U.S. pizza chain has adopted a mechanism that would dilute ousted founder and largest shareholder John Schnatter if he tries to gain creeping control. It will keep other bidders away too. Such measures often aren’t helpful, but in this case they offer needed breathing space.
Trump hardball may still become Iran oil softball 23 Jul 2018 The president’s Twitter attack on Tehran counterpart Hassan Rouhani doesn’t sound great for importers of Iranian crude. Yet U.S. sanctions policy is volatile - just ask Russia’s Rusal. Another Trump goal - low petrol prices - implies Iranian exports will still be tolerated.
Apollo sends hospitals for cost-cutting surgery 23 Jul 2018 A healthcare outfit owned by the private-equity firm is buying rival LifePoint for $2.7 bln, the latest deal in the sector. The two industries make good bedfellows. Buyout shops are cash-rich and hospitals can more easily slash expenses and raise prices if not publicly traded.
Carige mess shows limits of ECB’s crisis toolkit 23 Jul 2018 The European Central Bank wants the troubled Italian lender to fix its governance and raise capital. But trying to force Carige’s hand by replacing management or fining it may spook investors, and hopes for a merger look optimistic. Moral suasion may be ECB’s least bad option.
Bank of Japan’s trial balloon shot down on runway 23 Jul 2018 Bond yields and the yen rose after Reuters reported the central bank was debating whether to scale back monetary stimulus. The move would be good for bank investors. But the scale of the market reaction and economic reality will make it hard for Governor Haruhiko Kuroda to act.
Atos picks good second best with $3.4 bln U.S. buy 23 Jul 2018 The French group is purchasing IT outsourcer Syntel after missing out last year on European peer Gemalto. Its original target was a more logical fit but the transatlantic deal gives Atos an entry pass to its new target’s U.S. bank clients and will create value after a few years.
Ryanair budget model is being eroded 23 Jul 2018 The carrier’s post-tax profit fell by a fifth due to strikes and a heatwave that encouraged people to holiday at home. But these one-off problems pose less of a challenge to CEO Michael O’Leary’s low-cost business than rising staff costs and the risk of a chaotic Brexit.