Even flawed UPS trustbusters beat none at all 7 Mar 2017 Brussels has egg on its face after a court overturned its 2013 decision to block the U.S. parcel delivery outfit's merger with TNT. Europe rarely nixes deals, and occasional errors are inevitable. A bigger threat to M&A is protectionism, which requires far less serious analysis.
Markets’ latest distortion: riskless company debt 7 Mar 2017 Some 200 billion euros of corporate bonds are trading below interbank swap rates – usually seen as a floor for credit risk. That renders one measure of companies’ creditworthiness redundant. This distortion comes courtesy of central bank meddling and German parsimony.
UK retailers get a spring reality check 7 Mar 2017 Rising food and fuel costs are forcing shoppers to spend less on clothing and other discretionaries. That is bad news for stores that are already having to cut prices to attract business. With their own costs going up, retailers are about to be squeezed on multiple fronts.
Brexit bravado extends to UK challenger banks 7 Mar 2017 UK lender Shawbrook has spurned an 827 mln pound bid from two buyout firms offering a decent premium. That's fine if it hits targets set last May that pledged healthy growth and high returns. But it places a lot of faith in Britain's economy after it leaves the European Union.
Nationality of Vauxhall’s owner is a red herring 6 Mar 2017 The sale of GM’s European operations to French carmaker PSA Group has caused fresh concern over its plants in the UK. Yet irrespective of the owner, the key risk for automotive jobs in Britain is Brexit. A stronger Peugeot may even have more patience with Vauxhall than GM.
Latam tax amnesties test private banks’ stamina 6 Mar 2017 Latin American countries are finding that tax forgiveness programs can bring billions in hidden assets into the open. UBS and Credit Suisse are discovering that the process can cause chunky asset outflows. Moving onshore could help the Swiss giants retain their share of the pie.
Macron pitches novel way to imperil EU banks 6 Mar 2017 The French presidential favourite wants ministers, not regulators, to set capital rules for banks and insurers. Despite the ECB’s best efforts, oversight remains far from harmonised. Handing the reins to politicians would just add financial stability concerns to the mix.
Standard Life gets weak upper hand in fund merger 6 Mar 2017 The Scottish asset manager is effectively taking over rival Aberdeen without paying a premium. That cushions it from the risk that teams don’t get on and clients snaffle the benefits. Yet embattled Aberdeen boss Martin Gilbert has also done better than might have been expected.
Deutsche Bank gives itself a chance of revival 6 Mar 2017 The German lender is to raise 10 bln euros, chiefly via a rights issue and a part-IPO of its funds arm. Assuming slimmed-down revenue can then grow, there’s a path to hit a 10 pct return goal in the medium term. But the fragile investment bank will need to do the heavy lifting.
BT’s Champions League win could be an own goal 6 Mar 2017 The UK telco’s 1.2 bln pound bid beat rival Sky to retain rights to Europe’s elite soccer tournament. It’ll help BT’s TV push. But justifying the 32 pct price rise requires heroic assumptions about the boost to subscribers elsewhere in the business.
Peugeot’s Opel deal shows shrewd engineering 6 Mar 2017 At a price of 1.8 bln euros, the French carmaker should get a good return from GM’s European business. The U.S. auto group lacked sufficient size to run Opel and Vauxhall efficiently. By taking PSA warrants, GM also gets insurance against appearing to have sold too cheaply.
Scot asset managers try marriage of inconvenience 5 Mar 2017 Merging Standard Life and Aberdeen will create an 11 billion pound fund giant able to rip out costs and fight back against competition. Leaving both chief executives in charge is an unseemly fudge, though. Hopefully the clunky governance will be temporary.
Deutsche $8.5 bln equity hike would be partial fix 4 Mar 2017 The German bank may raise funds while markets look kind. The infusion would boost creditworthiness and thus Deutsche Bank's key trading and corporate lending arms. That's fine unless investment banking falters, or Deutsche turns out to have underestimated its capital needs again.
Northern Ireland vote sends Brexit warning shot 4 Mar 2017 Nationalist party Sinn Fein made surprise gains in snap elections, buoyed by discontent with the ruling unionist DUP. That puts the duo, who must govern together, on a more equal but confrontational footing. The result may be a bumpier path for Britain’s EU exit negotiations.
Review: Libor revealed dark underbelly of trading 3 Mar 2017 Two new books show how the benchmark interest rate underpinning many of the world's financial products was rigged. Jailed trader Tom Hayes leads a cast of deceitful or inept bankers, brokers and regulators. Yet both tomes might have said more about how to stop future malfeasance.
Saudi Arabia’s Asian pivot looks defensive 3 Mar 2017 A rare royal visit to the region shows the oil-rich kingdom’s vulnerability. Declining U.S. demand and competition from Iran and Iraq make Eastern customers more important. Saudi can offer something rivals can’t - splashy investments and the IPO of its state oil producer, Aramco.
Drugmakers pose Brexit Britain withdrawal risk 3 Mar 2017 Pharma groups aren’t publicly threatening to pull staff out of the UK. But they could. Britain is a laggard in healthcare investment, and Brexit gives them negotiating power - especially after Prime Minister Theresa May’s gushing endorsement of the industry.
WPP growth machine creaks 3 Mar 2017 The advertising group, despite being in more than 100 countries, expects revenue to increase less than global GDP in 2017. Losing a couple of big accounts like AT&T and VW help explain it. But the media business faces structural threats, and WPP’s margin growth has a ceiling.
Viewsroom: SoftBank deal frenzy lacks hard logic 2 Mar 2017 The giant Japanese tech firm has been on a global M&A tear, but shareholders aren’t buying it. President Trump's mix of details-free policy pledges and jingoistic militarism looks dazed, confused and dangerous. Plus: Silvio Berlusconi's AC Milan sale puts Chinese buyers offside.
Schulz woos German voters with wrong reforms 2 Mar 2017 Angela Merkel’s Social Democratic challenger wants to roll back some of the labour market reforms pushed through 15 years ago by his own party. This plays well with voters but may harm Germany’s growth prospects. Abandoning excessive fiscal rigour would be the better U-turn.