Generali’s cost cuts could go further 23 Nov 2016 Under pressure from low rates and Italian political risk, the insurer wants to boost operating performance. Boss Philippe Donnet is right to slash expenses to help do so. Yet hitting Generali's cost of equity implies cutting more than what is currently planned.
Markets well equipped for a post-truth world 23 Nov 2016 French builder Vinci's shares plunged after a hoax news release on Nov. 22, then mostly recovered. Markets have always been prey to the fake news and bogus rumours that now plague politics. The difference is that truth usually reasserts itself quickly in the world of money.
Deutsche chair ought to have both hands on wheel 23 Nov 2016 Paul Achleitner's likely re-election at the German lender has riled some investors. On his watch, Deutsche Bank shares have slid nearly 50 pct. A thorough if belated management overhaul earns Achleitner some credit. He could get more by ditching board roles at Daimler and Bayer.
Making pilots shareholders may save Lufthansa 23 Nov 2016 The carrier's pilots are striking to get a 20-pct pay rise that Lufthansa, dogged by high costs, cannot afford. Paying them in shares might end the gridlock. The airline would save cash, and entrepreneurial spirit in the cockpit could soften the pilots' outlandish demands.
EU unwise to play at banking tit-for-tat 22 Nov 2016 Brussels could insist foreign lenders trap more capital locally. There's logic from a stability point of view in forcing U.S. banks to do what European lenders already have to in New York. The risk is that American lenders don't see the EU as quite so integral to their business.
VW’s big-is-beautiful strategy is misguided 22 Nov 2016 The carmaker’s troubled core passenger-car brand is rightly cutting costs and focusing on newer technology, such as electric vehicles. Yet the gameplan unveiled on Nov. 22 repeats past errors by placing too much emphasis on how many cars are sold and too little on profitability.
Enel finds safety in disruption 22 Nov 2016 The Italian energy producer faces waning demand and tough competition. So it is trying to cut costs and attract customers by spending 4.7 bln euros on digitising the grid. That may be more than just jargon. Enel’s undemanding valuation at least gives it room to experiment.
Irish lack ammo in corporation tax battle 22 Nov 2016 Theresa May and Donald Trump’s plans to slash UK and U.S. corporation tax rates are ominous for Ireland. Cutting its headline rate further is toxic politically and would reduce a key source of revenue. It leaves Dublin reliant on EU access as competition for investment grows.
Sherwood exit highlights wider Goldman transition 21 Nov 2016 The investment bank’s European co-head Michael Sherwood is retiring. A brush with bust retailer BHS, while maybe not the reason, could have hindered a possible step up to CEO. In any case, Europe and fixed income, his other area of expertise, face uncertain futures.
Credit markets ill-prepared for Trump presidency 21 Nov 2016 The U.S. president-elect may boost spending and growth. But higher interest rates would also push up funding costs for companies and emerging economies. Though credit investors have largely shrugged off Trump’s victory, the end of loose monetary policy could prove a shock.
U.S. banks less worried by too-big-to-fail stigma 21 Nov 2016 Regulators' annual ranking of systemic lenders shows Citi, Bank of America and Wells Fargo have become riskier, while the likes of HSBC and Barclays have pulled in their horns. The shift implies American stress tests are a bigger constraint on capital ratios than global lists.
Britain’s brave new world hits post-Brexit reality 21 Nov 2016 Prime Minister Theresa May wants capitalism to work for the little guy. But in a speech to UK business she softened ideas like putting workers on boards, while promising low corporate taxes. Pressure to rein in the deficit and migration leaves less room for policy innovation.
French far right can make hay if Fillon shines 21 Nov 2016 Unabashed economic reformer Francois Fillon has a good chance of becoming the opposition centre-right's presidential candidate. His proposals risk alienating swathes of voters and give far-right leader Marine Le Pen a better chance of capitalising on her statist manifesto.
Merkel can win new term, but won’t finish it 20 Nov 2016 The German chancellor's decision to run for re-election in 2017 is a gesture of much-needed stability. Angela Merkel is likely to win despite the rise of the right-wing AfD party. After that, her best bet is to quit while she is ahead.
Review: A prophet for the age of endarkenment 18 Nov 2016 John Gray foresaw the Trump era. "Enlightenment's Wake", published in 1995, predicted that grand ideas would be replaced by ethnic and religious conflict, authoritarian regimes and great power rivalries. Still, the newly-relevant book offers some hope for despairing liberals.
Tesco returns to neglected retail basics 18 Nov 2016 The UK supermarket will plough most of its planned cost savings into shielding consumers from inflation, effectively continuing a price war. Yet Tesco also says it can double its operating margin. That hinges in part on a tricky strategy: persuading shoppers to buy pricier goods.
Deutsche bonus clawback can work even if it fails 18 Nov 2016 The struggling German bank wants to cancel former executives' unvested and previously suspended compensation awards. Deutsche Bank won't retrieve enough to boost capital meaningfully. But reassuring shareholders whose rewards have never matched employees' is still worthwhile.
UK watchdog turns screw on besieged fund managers 18 Nov 2016 The Financial Conduct Authority has criticised weak competition among asset managers. Proposed remedies including better transparency and governance could squeeze earnings and pay. It’s a knock the industry, under pressure from passive investments, didn’t want but probably needs.
VW finally makes it to third gear 18 Nov 2016 The German carmaker has convinced unions to let it shed 30,000 jobs. That's a second big step, after settling a big emissions cheating case. Next comes the shift to electric and self-driving cars, and beating an overly modest 4 pct operating margin target for its flagship brand.
Mediobanca ploughs lonely but fertile furrow 17 Nov 2016 The one-time puppeteer of corporate Italy wants to bulk up in wealth and asset management. Mediobanca is thriving, but it is also small. If boss Alberto Nagel’s latest strategy works then its potential endgame - to sell out to a bigger player - will get easier.