Citi snatches Wells Fargo’s banking bronze medal 1 Jul 2020 At $106 bln Mike Corbat’s lender is worth more than Charlie Scharf’s for the first time since the financial crisis, making it the third biggest U.S. bank. Citi may not reclaim its pre-2007 top spot, but Corbat’s overhaul is bearing fruit. Scharf, meanwhile, has his work cut out.
Activists are ready to play, but lack playbook 30 Jun 2020 JPMorgan reckons market conditions have been ripe for pushy investors to set their sights on new target companies. The pandemic fallout could force lots of changes and deals. Yet traditional activist ideas and a near-exclusive focus on shareholder value may not cut it.
Casino deal epitomizes the house edge 30 Jun 2020 Houston billionaire Tilman Fertitta is using his blank-check company to buy his online-gaming business from his restaurants-to-river cruises outfit. The deal’s cheap compared to virus-inflated rival DraftKings’ valuation. But Fertitta’s inside knowledge gives him a winning hand.
Jefferies ushers in awkward summer for Wall Street 30 Jun 2020 As markets gyrated, the U.S. investment bank almost tripled its quarterly top line from fixed-income trading. Where revenue goes, traders’ pay goes too. That will be a theme as bigger banks report their earnings, reinforcing one of Covid-19’s more unequal economic side effects.
Uber tries for bigger meal ticket with small fry 30 Jun 2020 Boss Dara Khosrowshahi may strike a deal with Postmates after failing to bag Grubhub. The food-delivery service is tiny compared to rivals with outsized valuations, so the mooted $2.6 bln price is easier to stomach. Yet benefits are as questionable as risk, and Uber could wait.
The Exchange: BIS chief Agustin Carstens 30 Jun 2020 It has been a hectic year for central bankers, who are on the front line of fighting a global recession. The head of the Bank for International Settlements joins Swaha Pattanaik to discuss how to unwind massive monetary stimulus, risks in the financial system, and regulation.
Wirecard is argument for a Big Four pay clawback 30 Jun 2020 Audit giant EY is embroiled in the German scandal after signing off accounts when $2 bln was missing. Remedies like splitting bookkeeping from consulting or using two auditors may focus minds on finding frauds. But until pay is linked to clean accounts, scandals will continue.
Scandi airline rescue is formation-flying lesson 30 Jun 2020 Sweden and Denmark are taking an equal share of the knotty $1.5 bln rescue of regional carrier SAS. If equity and debt holders agree, it’s an exception to the rule that national priorities impede cross-border bailouts. Air France-KLM’s fractious state owners should take note.
European bankers ahead in game with no winner 30 Jun 2020 Deals targeting companies in the region rose 39% to $415 bln in the first half, defying a massive global slump. Anomalies helped. As Brussels favours European corporate champions, the relative trend will continue. That helps UBS and Deutsche even if companies are suffering.
New Standard Life boss may give dividend the bird 30 Jun 2020 Keith Skeoch is leaving the $7 bln fund group shortly after his co-CEO Martin Gilbert. With both architects of the Standard Life Aberdeen merger gone, successor Stephen Bird faces a lengthy turnaround, made harder by Covid-19. A fat payout looks like an unaffordable luxury.
Corona Capital: U.S. recovery, Small-business aid 30 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: White House virus adviser Anthony Fauci’s estimate that U.S. cases could breach 100,000 a day is bad news for the economy. Plus: Uncle Sam’s loan program for small businesses comes to an end with money in the bank.
India’s war on China apps will have network effect 30 Jun 2020 TikTok and others from Tencent to Alibaba are among those banned on security concerns. It narrows a growth market for Chinese tech and may embolden other governments to close doors. But Beijing has plenty of ways to retaliate, including in pharmaceutical supply chains and more.
Carlyle hedges Indian link in pharma supply chain 30 Jun 2020 The buyout firm is taking a 20% stake in Ajay Piramal’s contract drugmaker at a healthy $2.8 bln valuation, ahead of a planned carve-out from its lending-focused parent. The division can benefit from a worldwide reshoring push. Short-term concerns explain the fiddly deal terms.
Fed takes from U.S. bank investors in two ways 29 Jun 2020 The biggest lenders will have to set aside $50 bln more in capital under new rules. Goldman Sachs and Wells Fargo are two that may have to cut payouts to shareholders. A bigger drag for investors overall will be the curb on buybacks, which flattered earnings per share for years.
Gilead gives glimpse into feverish drug market 29 Jun 2020 Its Covid-19 treatment will set governments back about $2,300 per course – more than it costs to make but far less than U.S. patients would incur with longer hospital stays. There are many ways to decide the value of a drug. Gilead is, perhaps wisely, being relatively restrained.
U.S. Supreme Court hands banks hollow victory 29 Jun 2020 The justices ruled the president can remove the head of the Consumer Financial Protection Bureau for any reason. But they didn’t nix the agency. That’ll make it easier for Joe Biden to sharpen the CFPB’s focus on banking shenanigans if he beats President Donald Trump in November.
U.S. airlines are flying into stress-test airspace 29 Jun 2020 Bailouts of American Airlines, Delta and others have effectively branded the industry systemically essential. But Washington has only imposed temporary restrictions in return for taxpayer aid. Like banks, airlines need more oversight of longer-term financial flight paths.
Bankrupt shale pioneer’s backers need new model 29 Jun 2020 Chesapeake enters Chapter 11 with funding to come out again. Supportive creditors may be right that there’s a future in U.S. fracking, which the firm helped develop. But making money was hard when borrowing and dealmaking were easy. It’ll be even tougher as climate risk bites.
German lift LBO hits ceiling on lax lending 29 Jun 2020 Advent and Cinven, who paid $19 bln for Thyssenkrupp’s elevator unit, had to tweak terms for the deal’s funding after an investor revolt. Rock-bottom interest rates give buyout groups a strong hand with creditors. After the Covid-19 crisis, however, lenders’ tolerance has limits.
BP’s $5 bln chemicals sale is easy bridge to burn 29 Jun 2020 The UK oil major is offloading its remaining petrochemicals assets to privately held Ineos. Selling out of a growth area for an unspectacular price would usually seem like a strategic goof. But BP was a small player, and CEO Bernard Looney needs cash for his zero-carbon pivot.
Agnellis can win twice from EU auto merger probe 29 Jun 2020 Brussels is worried the union of Peugeot and Fiat, controlled by the Italian clan, will dominate van sales. High margins make it hard to justify outsized market share. Selling models to a smaller rival like Agnelli-backed CNH would boost competition and let the merger pass.
Fawning over Kardashians accentuates Coty’s flaws 29 Jun 2020 The cosmetics group will buy 20% of Kim Kardashian West’s make-up line for $200 mln, the FT said. New boss Peter Harf is taking a smaller stake than Coty acquired last year in half-sister Kylie Jenner’s unit. But $8 bln in debt and collapsed sales look like more urgent concerns.
Corona Capital: Amazon, Car perks, College sports 29 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: Companies are trying to bolster pocketbooks. Amazon makes extra payments to employees while car companies are offering major discounts. Plus: Under Armour ditches its UCLA deal.
Beijing picks one too many bilateral brawls 29 Jun 2020 China has added India, Canada and Japan to its lengthening list of diplomatic spats. Trade partners are too distracted to coordinate a response, but individual retaliatory measures are adding up. With its economy still weak, Beijing can ill afford to fight on so many fronts.
Tencent embraces its inner Goldman Sachs 29 Jun 2020 The Chinese tech titan’s investment portfolio has swollen to more than $65 bln with stakes in Warner Music, Afterpay and more. The deals, led by a Wall Street banker, are now vital to Tencent’s growth. Financial and strategic returns from buying make up for a lack of building.
Albertsons owners take shopping cart to the ankles 26 Jun 2020 The supermarket chain’s IPO raised 40% less than it hoped, pricing below the range set just a week earlier. The final valuation looks fair, suggesting the market is working as it should. It's a good outcome for investors, though not so much for Albertsons backers and advisers.
Corporate boycotts expose an inconvenient truth 26 Jun 2020 Brands like Ben & Jerry’s and Verizon are pulling ad spending from Facebook because of racist content. It’s as if capitalism sprouted a conscience. But much as some might claim otherwise, companies just aren’t wired to drive social change. The possible exception: Facebook itself.
Review: Russian capitalism binds “Putin’s People” 26 Jun 2020 The president’s murky networks blur the line between public, private and criminal cash, Catherine Belton writes. Tycoons must obey the omnipresent Kremlin to survive. Half of ordinary Russians do the same: They rely on the system for work. It helps explain Putin’s survival.
Corona Capital: Nike, Microsoft and retail pain 26 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: Bad news for landlords. Nike’s online sales surged during the lockdown even as stores were mostly closed. Meanwhile, Microsoft is shutting most of its retail outlets — for good.
Liverpool has one more financial peak to conquer 26 Jun 2020 The Reds ended a 30-year wait to win English soccer’s Premier League. Healthy financial results helped on the pitch. To reach European rival Barcelona’s exalted level, though, Liverpool needs more sponsorship revenue. That should hold up better than TV rights and player trading.