Carillion pension hole is ominous for UK companies 16 Jan 2018 Before its collapse the construction firm estimated it owed 587 million pounds to retirees. Britain’s pension protection fund, however, reckons the shortfall is nearer 900 million pounds. That’s bad news for Carillion’s creditors – and for other groups with big liabilities.
Scrapping UK bank levy is easy post-Brexit win 16 Jan 2018 As Britain leaves the European Union, the UK government is eager to persuade lenders to stay in London. But watering down regulations would risk irking Brussels. Getting rid of the surcharge on banks' balance sheets would be a simpler way to dust down the welcome mat.
Melrose can engineer a higher price for GKN 15 Jan 2018 The acquisitive engineering group has had its 7 billion pound bid for ailing GKN rejected. It could hike its offer by over 10 percent and still double its money, according to Breakingviews estimates. That would be an acceptable return, but will require precision execution.
Car lenders’ real risk is fines, not writedowns 15 Jan 2018 The rapid growth of UK auto finance has led to a glut of shiny new motors and twitchy regulators. Banks and carmakers can absorb a hefty drop in used-car prices. The bigger hazard is that lenders may cut corners to keep the market ticking over and end up paying conduct fines.
Carillion collapse is UK outsourcing stress test 15 Jan 2018 The troubled construction firm has gone into liquidation after failing to secure fresh funds. The UK government was right not bail out one of its key suppliers. Nevertheless, a messy cleanup will raise questions about the risks in handing state work to private contractors.
Corporate loans can propel Europe’s bank recovery 15 Jan 2018 Lending to companies has seen minimal growth in recent years, official data shows. A raft of positive economic data should provide the catalyst for increased demand. It would be a welcome way for slimmed-down lenders to give revenue a leg-up.
Sanctions purgatory haunts EU as much as Iran 15 Jan 2018 Donald Trump has again waived nuclear sanctions on the Islamic Republic, a short-term relief for the domestic economy. It’s also a near-miss for the European Union: fresh curbs on non-American firms in Iran could spark a transatlantic standoff. But the reprieve is only temporary.
Markets start doing Mario Draghi’s job for him 12 Jan 2018 The euro hit three-year highs and government bond yields rose after a hint the ECB boss may rethink how long ultra-loose policy will last. The moves amount to tighter monetary conditions. That buys rate-setters time to phase out negative rates even though growth is picking up.
GKN breakup defence is still on drawing board 12 Jan 2018 The UK engineer grappling with an accounting scandal rejected a $9.5 bln offer from serial acquirer Melrose. Its alternative plan of splitting itself in two makes sense and could deliver more value. But investors need more proof it can fix its business, and a clearer timetable.
Cobalt tax grab will send carmakers on a diversion 12 Jan 2018 The Democratic Republic of Congo, supplier of two-thirds of the world's cobalt, aims to more than double royalty charges. That's bad news for electric cars: the metal is a key battery ingredient. The move could backfire, however, by accelerating exploration of alternatives.
Puma spinoff helps Kering’s race-fitness 11 Jan 2018 Gucci’s parent will hand investors most of its stake in the German sports label, a distribution worth 3.5 bln euros. Offloading the lower-end brand should boost the 52 bln euro luxury group’s value. Kering may even be able to leave behind its traditional discount to rival LVMH.
Intesa can afford to speed bad debt cleanup 11 Jan 2018 Italy’s biggest retail bank may sell up to 15 bln euros of sour loans. It looks like a reversal of boss Carlo Messina’s plan to keep bad debts rather than sell them cheaply. But Intesa can take the hit and, with regulators bearing down on dud assets, a quick exit makes sense.
German economic success lays trap for Merkel 11 Jan 2018 The strongest growth in six years and the rude health of public finances may tempt a weakened Chancellor Angela Merkel into budget giveaways. But low interest payments flatter the fiscal picture and won’t endure. Better to invest in infrastructure and education than to cut taxes.
Ryanair pilots are key to regaining European crown 11 Jan 2018 Lufthansa overtook the Irish carrier to become Europe’s largest airline in 2017. Though acquisitions boosted the German group, Ryanair’s target of 200 mln passengers by 2024 depends on steady expansion. Unless it can win over irate pilots, its growth prospects will be grounded.
Metrovacesa’s property fiesta is worth attending 11 Jan 2018 The Spanish real estate group is listing, a decade after imploding. A lack of planning permissions on its land bank warrants a discount to rival Neinor Homes’ recent IPO. Still, Metrovacesa’s domestic strength makes it a reasonable way to access a recovering Spanish market.
M&S held back by dowdy online look 11 Jan 2018 The high street retailer’s food and clothing arms met quarterly forecasts, but both have strategic issues. M&S could dearly use the 25 pct-plus online sales growth seen by smaller rivals like Boohoo.com. Its current measly 3 pct showing is exacerbating its other problems.
Hadas: Fiscal debts are not our children’s burden 10 Jan 2018 When this generation dirties the water, the next has to pick up the tab. Debt is different. When governments borrow from taxpayers, the children will both pay the bill and enjoy the proceeds. The real deficit dangers lurk in foreign debt and distributional distortions.
Trump will be party pooper-in-chief at Davos 10 Jan 2018 The U.S. president’s “America First” agenda is the antithesis of the Swiss conflab’s global ethos. His visit to the mountain resort may be a bid for reconciliation, or a pitch for strongman status. Either way, his presence is a stark rebuke to Davos elites who got him badly wrong.
Sainsbury’s is proxy for UK retail’s split fate 10 Jan 2018 The Argos-owner’s food business had a better Christmas than its clothing and general merchandise. UK consumers, stung by high inflation, are spending less on non-essential items, but still need to eat. That means grocers are better able to pass on rising prices to customers.
Italy’s pension U-turn would try markets’ patience 10 Jan 2018 Centre-right parties, frontrunners in March elections, have vowed to scrap a key pension reform passed during the 2011 crisis. The law is rigid, but axing it would hurt young Italians and widen Rome’s fiscal deficit. Investors would have a reason to avoid Italian debt.