Rodrigo Rato jailing is weak crisis coda 23 Feb 2017 The ex-IMF chief has been sentenced to over four years in prison for fiddling expenses while head of Spain's Bankia. It's a rare instance of severe banker punishment. For investors globally, though, this case will offer little satisfaction and even less deterrent value.
RSA flies the flag for insurance simplicity 23 Feb 2017 The UK group’s operating profit rose by a quarter in 2016, pushing its shares up 6 pct. The results vindicate CEO Stephen Hester’s small-is-beautiful strategy. Diversified giants like Axa and Allianz should benefit from scale. But performance - and valuations - suggest otherwise.
EU veto could do LSE and Deutsche Boerse a favour 23 Feb 2017 It's a year since the two exchanges proposed joining forces. The European Commission will soon decide if the tie-up is anti-competitive. A thumbs-down would spare both sides the need to navigate post-Brexit political waters, and force them to do the sensible thing: wait.
Hadas: Statistical tricks are easy and dangerous 23 Feb 2017 The Trump administration might take up the new autocratic practice of fiddling with standard economic measures. That’s easy to justify, because the data really are arbitrary and can be misleading. But falsifying disagreeable official numbers is a modern kind of tyranny.
Modest goals show why Peugeot lusts for Opel 23 Feb 2017 After a stellar 2016, the French carmaker lifted its target for operating margins to 4.5 pct. That’s still well below the 6 pct it achieved last year, suggesting current earnings are unsustainable. It helps explain why boss Carlos Tavares is keen to snap up GM’s European brands.
Glencore’s biggest foe is its swashbuckling self 23 Feb 2017 The mining giant has recovered from its near-death experience a year and a half ago. Net debt has halved to $15.5 billion and higher prices mean its mines are generating mountains of cash. Resisting the urge to spend it will be Chief Executive Ivan Glasenberg’s biggest challenge.
Pearson buyout would be a study in low returns 23 Feb 2017 The UK education publisher's stock is down 22 percent this year, and its sprawling global business looks ripe for a breakup. Factor in the chance that the core U.S. textbook market is in terminal decline, however, and private equity would be brave to write the cheque.
Staley’s auctioneering is paying off for Barclays 23 Feb 2017 The UK lender bounced back into the black in the fourth quarter and will close most non-strategic asset sales six months early. Despite market share gains, economic profit may elude its investment bank. But boss Jes Staley's brisk dealmaking has girded Barclays' balance sheet.
Unilever may be tempted by artificial sweeteners 22 Feb 2017 After escaping Kraft Heinz's $143 billion bid, the Marmite maker said it will focus on boosting shareholder return. The assumption is that it does so organically, or via small deals. But a big move, like buying Colgate, could get the share price up - if Unilever could stomach the execution risk.
VW can regain trust with sweeping pay reform 22 Feb 2017 The troubled carmaker plans to overhaul its ill-designed executive pay scheme. This is an opportunity to start rebuilding shareholders’ confidence. Essential changes include turning managers into entrepreneurs, introducing pay clawbacks and giving investors more say on pay.
The race is on to be the SABMiller of food 22 Feb 2017 AB InBev bought the UK beer giant in 2016, but only after SABMiller tried to copy its rival's M&A machine. Last week's aborted $143 bln bid for Unilever by Kraft Heinz – like AB InBev, part of 3G Capital's stable – may nudge General Mills, Mondelez et al into similar pursuits.
Aramco golden ticket has risks for Western banks 22 Feb 2017 JPMorgan and Morgan Stanley may have won the contest to be lead underwriters on the Saudi oil giant's $100 bln offering. The mandate could propel them to the top of the league tables, opening doors in the kingdom and elsewhere. But an IPO flop could be fatal for their franchises.
Lloyds’ latest targets look a bridge too far 22 Feb 2017 The UK bank announced statutory pre-tax profit double that of 2015, upped its dividend, and generated excess capital. Its margin and cost targets are an impressive show of strength. Yet fierce mortgage competition and low expenses make it hard to see how they will be hit.
Korea fraud electrifies case for ABB spinoff 22 Feb 2017 The Swiss group suspects its South Korean treasurer helped steal $100 million. Fraud equivalent to a fifth of 2015 local sales was only uncovered after the executive absconded. This plays into the hands of activist investors who wanted ABB to become less complex.
Le Pen’s French referendum pledge is tall order 21 Feb 2017 The far-right politician’s promise to hold a plebiscite on EU membership and leave the euro is spooking investors. To call such a vote, however, she would have to find constitutional loopholes. That would be an even bigger challenge than winning France’s presidential race.
KKR gambles on mobile data with Telefonica towers 21 Feb 2017 The private equity group is paying up to 1.3 bln euros for 40 pct of the Spanish telco's infrastructure business Telxius. It's a similar valuation to the unit's failed IPO last year and KKR won't have control. But higher demand for mobile internet usage offers long-term upside.
Mining giants require more financial medicine 21 Feb 2017 Rising commodity prices and cost-cutting helped BHP Billiton and Anglo American boost earnings and cut debt, but memories of mining's traumatic downturn are still fresh. There's no sign of another investment or borrowing binge, though. Financial convalescence is the priority.
HSBC’s upward march takes a temporary detour 21 Feb 2017 The UK bank's shares are up by two-thirds since the summer, as investors salivate at the benefits of higher interest rates on its revenue. Yet one-off charges and other setbacks dragged it into the red in the fourth quarter. HSBC is on the mend, but the road is bumpy.
Hadas: Trump’s FX truthiness misses the big points 20 Feb 2017 The U.S. president’s complaint that cheap overseas currencies hurt U.S. jobs contains a little truth, but his proposed cure is far worse than the disease. The main problem in foreign exchange is excess volatility. Fixing that requires better global coordination – a distant dream.
Unilever exposes holes in UK industrial strategy 20 Feb 2017 A takeover of the Anglo-Dutch consumer giant would have tested the prime minister’s vow to defend sectors and workers from foreign buyers. Even though it’s now off, May lacks the tools to deliver on the pledge. Her party would need to ditch its scorn of French protectionism.