France finds wrong way to send banks right message 8 Jun 2016 A court has ordered SocGen to pay compensation to rogue trader Jerome Kerviel for wrongful dismissal. It sounds absurd. After all, he cost the French bank 4.9 bln euros. But it serves as a useful reminder that the failings of the pre-crisis financial system were a team effort.
Commerz plays Jedi to ECB’s negative-rate Empire 8 Jun 2016 The German bank may stash billions of euros in vaults to offset the pain of the ECB’s negative rate policy. The financial gains are modest, yet the move is a warning against future rate cuts. If the ECB slashes further, other rebellions may start to undermine monetary policy.
Landesbanken head for fresh political stitch-up 8 Jun 2016 Germany's notorious state-owned banks are facing yet another crisis. Bremer Landesbank is reeling from a 400 mln euro hit on shipping loans. It deserves bailing in. But politics may mean it staggers on beyond its sell-by date - a common Landesbanken problem.
Merger “synergies” can’t just be code for job cuts 8 Jun 2016 Most mega-deals leave companies with fewer staff, and higher sales and profit per head, a Breakingviews analysis shows. That's capitalism. But the mood is changing, at least in pro-market Britain. Synergies do exist, but those reliant on cutting jobs may get harder to realise.
Trade slowdown raises bar for economic catch-up 8 Jun 2016 That’s the grim message from the World Bank’s latest reduced forecast for global GDP growth. Governments in the developing world will have to rely on domestic consumption rather than exports to deliver improved living standards. Investing in infrastructure should help.
Sterling not done as pre-Brexit whipping boy 7 Jun 2016 An EU exit would be less disastrous for Britain’s stocks and bonds than its currency. Some firms will gain from weaker sterling, and rate cut speculation may support gilts. But foreigners holding these assets are going to hedge FX exposure, piling yet more pressure on the pound.
Saudi reform plan dodges most taxing question 7 Jun 2016 Income tax is perhaps the missing link in the kingdom’s latest plan to modernise the economy. Saudis currently keep all their earnings. That isn’t compatible with a record budget deficit. Taxing wages is a taboo, but it’s also the best way to diversify away from oil dependence.
Dixon: Fiscal union has no place in EU Brexit plan 7 Jun 2016 European politicians’ knee-jerk reaction if Britain votes to quit the European Union will be to integrate further. This would be foolish, provoking a populist backlash. A better response would be to loosen fiscal policy while embarking on bolder economic and market reforms.
Shell puts post-merger momentum to good use 7 Jun 2016 The Anglo-Dutch energy major has added $1 bln to its targeted synergies from merging with gas group BG. The oil price is out of its control and divestments will be tricky, but it’s making good progress on three other fronts: capex, costs and production.
Europe can handle Germanic political risk 6 Jun 2016 Popular President Joachim Gauck won’t run for a new term in 2017. The timing is awkward for Chancellor Angela Merkel. But as voters have no direct say in electing a successor, Austrian-style turmoil is not on the cards. Germany for now will remain Europe’s bedrock of stability.
Money-for-nothing idea will survive Swiss rebuff 6 Jun 2016 Welfare systems once seemed as outlandish as the proposed guaranteed basic income for all that has been rejected by Swiss voters. Advocates must provide more details on funding and the potential social impact. Other countries, such as Finland, will be the lab for the experiment.
Inter Milan typifies China’s muddy sporting goals 6 Jun 2016 Chinese money is pouring into foreign teams, rights and agents. Now Suning is paying $307 mln for 70 pct of Inter Milan. A mainland retail giant is not an obvious owner for a top Italian soccer club. But these deals are all about anticipating a politically backed sports boom.
Local vote is wildcard in Italy’s reform gamble 6 Jun 2016 The radical 5-Star Movement looks set to win Rome in mayoral elections, with second round votes still to come. That plus other local election results could stir up opposition to Prime Minister Matteo Renzi's constitutional reforms, and make it harder for him to call elections.
Sops for overworked bankers miss real problem 3 Jun 2016 While UBS now offers two hours of personal time a week, Morgan Stanley is dangling paid sabbaticals. If only gruelling work culture were going out of fashion. A temptation to wring more out of fewer people will persist as long as firms and investors fixate on the short-term.
Bayer-Monsanto could be squeezed in hungry world 3 Jun 2016 Population growth and climate change will boost demand for seeds and agrichemicals. Bayer's strategic rationale for a $62 bln Monsanto bid looks sound. But if food shortages really bite, the merged group's pricing power may come under attack. There are precedents in pharma.
Bank of Italy has little room to talk on bailouts 3 Jun 2016 Governor Ignazio Visco has argued that governments should have more freedom to rescue banks. His case for bailouts in limited circumstances is defensible, except in Italy, whose banking crisis is a result of government failure and poor oversight. It sounds like special pleading.
Life lessons from a German corporate failure 3 Jun 2016 With six profit warnings, four CEOs and its share price halving over two years, German industrial services group Bilfinger is a huge corporate disappointment. Now it is finally dismantling itself. Other companies can learn from some of Bilfinger's more glaring mistakes.
Italy’s bailout fund is more grower than shower 2 Jun 2016 Buying shares in just two Italian banks may use up half of the money the Atlante fund was given to clean up the financial system. Its remaining 1.7 bln euros pales next to Italy’s 300-plus bln euros of bad debt. Making a dent in that calls for leverage and luck.
OPEC silence beats hollow pledges 2 Jun 2016 Oil producers’ failure to agree on a policy to curb supply is not all bad. A deal would have boosted prices in the short term but been hard to enforce given Saudi-Iran tensions. The already-weak cartel can ill afford the reputational damage of promising more than it can deliver.
Russian retailers can expand but they can’t hide 2 Jun 2016 A devalued rouble and deep recession have hit Russian shoppers. More are going to open-air markets for bargains instead of Western-style retail chains. To compensate for less spending per capita, the big supermarkets are building in every place they can reach.