Italy’s Monte dei Paschi bail-in is a bailout 23 Dec 2016 EU rules require states that rescue banks to force losses on creditors, or convert them into shares. Italy's MPS rescue allows retail investors to swap bonds for safer ones, leaving the government holding the bag. It's a 2008-style bailout, complete with financial engineering.
JPMorgan’s Monte Paschi flop is in eye of beholder 23 Dec 2016 The U.S. bank led the attempted private rescue of Monte dei Paschi and thus shares some of the blame for its failure. But lost fees hurt it too. Delaying a bailout until after Italy's referendum also means the career of ex-PM Matteo Renzi may have a second act.
Russian sanctions will shrivel to soccer boycotts 23 Dec 2016 Pro-Kremlin leaders in Europe and the U.S. plus a rising oil price will embolden Vladimir Putin in 2017. That could lead to a rethink on sanctions and a soft response to Baltic sabre-rattling. Western protests will be limited to threatening boycotts of the 2018 World Cup.
Race to build will add impetus to old-world stocks 23 Dec 2016 Infrastructure is one of the few areas where Donald Trump, Angela Merkel and Theresa May will agree in 2017. Not all the numbers bandied about are as big as they sound. But it should create jobs in developed economies – and gee up long-underperforming infrastructure stocks.
Nokia’s new patents war dials up disappointment 22 Dec 2016 The Finnish group is countersuing Apple for patent abuse after antitrust accusations. Recent cost cuts have boosted Nokia's margins, but drawn-out lawsuits could hurt a business that is a third of operating profit. With network sales weak ahead of 5G adoption, it's a bad signal.
Monte dei Paschi endgame can still be made fair 22 Dec 2016 Italy's third-biggest bank unsurprisingly failed to raise 5 billion euros. A forcible debt-for-equity swap would limit state money. If compensation was only paid to mis-sold retail creditors, MPS could be rescued within European rules and without unfairly hitting taxpayers.
Banco Popular’s new broom has plenty to tidy 22 Dec 2016 Shares in the Spanish bank are already down more than 60 percent in 2016. Popular's new chairman Emilio Saracho will have cleaning up to do when he takes over next year. He broadly has two options, but the most likely is another capital hike to cover dud assets once and for all.
Grocery sector is ripe for big checkouts 22 Dec 2016 Pressure on traditional food retailers is relentless, and many-pronged. Customers are spending less of their budget on food and suppliers like Unilever are toying with selling direct to shoppers. Then there’s Amazon. The solution isn’t better retailers – it’s fewer of them.
Fund manager pay will be next to feel the squeeze 22 Dec 2016 Low returns, lacklustre performance and the growth of cheaper index-tracking funds are squeezing fees. That in turn means lower revenue and margins. To placate shareholders, asset managers will have to follow the example set by investment banks – and pay their people less.
Spanish banks get their mortgage comeuppance 21 Dec 2016 Domestic lenders must refund excess interest charged on housing loans with floor clauses, after the European Court of Justice unexpectedly overturned a Spanish ruling. Fair enough: the original verdict was too kind on banks. The hit to earnings looks painful, but manageable.
Mediaset shares on the up bit of a rollercoaster 21 Dec 2016 Silvio Berlusconi's group has soared in value on hopes of a takeover by Vivendi, controlled by Vincent Bollore. The French tycoon may still unlock a breakup value higher than the current share price. Yet his objectives aren't clear, and Mediaset may also face a big dip.
South African debt will be downgraded before Zuma 21 Dec 2016 After legal and political setbacks, the country’s president is more vulnerable than ever. Yet Jacob Zuma’s power base makes removing him difficult. The longer he clings to office, the bigger the chance that South Africa loses its investment-grade credit rating in 2017.
Breakdown: Fintech steps towards maturity 21 Dec 2016 Blockchain, robo advice and other technologies once hyped as the most disruptive to finance will take a back seat in 2017. The payments battle will step up a gear. Alternative lenders will hunt for deposits. And resurgent earnings may give U.S. banks a timely war chest.
China’s global food push goes soggy with Weetabix 21 Dec 2016 Bright Food may sell the UK cereal maker for $1.2 bln, less than when it took over in 2012. The acquisitive firm has a mixed track record but this foreign foray offers a cautionary tale; buying a business is the easy part and Western products don't always suit Chinese tastes.
Praxair’s Linde generosity is a win-win 20 Dec 2016 The German industrial gases group has a smaller market cap and is less profitable. It will still get a 50 pct stake in the merged company. Yet despite the adverse exchange ratio, the tie-up can generate up to $13 bln in additional value for Praxair. It can afford to be generous.
Gulf bank mergers will solve an oily problem 20 Dec 2016 Three Qatari banks have become the latest in the region to explore merging. They won't be the last. Exposure to volatile crude and hard-up state owners could trigger more consolidation of the sector in 2017. Governments will exit their charges - and ease their budgetary holes.
Lloyds’ MBNA swoop works – unless Brexit bites 20 Dec 2016 The British lender is to pay Bank of America 1.9 bln pounds for its UK credit cards arm. Assuming cost savings materialise, Lloyds is bulking up cheaply. Absent hits from a market probe, or a surge in unemployment when the UK quits the EU, dividends should be largely unaffected.
Turkey-Russia pact can survive Ankara flashpoint 20 Dec 2016 Moscow’s ambassador in the Turkish capital has been shot dead by a policeman seeking revenge for Aleppo. In 2015, Recep Tayyip Erdogan and Vladimir Putin were at loggerheads. Now mutual self-interest over Syria and a perceived common enemy mean the shock can be smoothed over.
Mega-merger market set for last gasp 20 Dec 2016 Cheap debt and falling hurdle rates will keep bosses on the hunt. Border-spanning acquisitions are harder to square with trustbusters, however, and big targets less affordable as an M&A cycle ends. That makes space for smaller deals, which in any case tend to create more value.
Canada’s busy deal maven both hands-on and not 19 Dec 2016 Prem Watsa has drafted an airtight policy for Fairfax's $4.9 bln offer for Swiss insurer Allied World, keeping close control of his company. Meanwhile BlackBerry, where he is lead director and a big investor, is trying to parlay its smartphone history into hands-off driving.