LSE investors look even more bearish on merger 4 May 2016 The UK exchange’s shares dived after U.S. rival ICE said it wouldn’t submit a bid. Investors weren’t giving an LSE-Deutsche merger much credit for potential revenue synergies as it was. Now, fear a deal could get blocked may be prevailing over value creation from cost savings.
British store wars get simpler but no less fierce 4 May 2016 Sainsbury is disclosing fees suppliers pay to get their goods on shelves – equivalent to half its operating profit. Such complex agreements are falling out of favour with frustrated shoppers. Ditching them should help increase sales but won’t do much to end an ongoing price war.
Credit Suisse sheds problem assets but not stigma 4 May 2016 The Swiss bank has sold $1.2 billion of distressed credit to buyout group TPG, locking in an extra $100 mln of writedowns. High-yield prices are similar to what they were in October. Hence Credit Suisse hasn’t gained much financially for the dent in its credibility.
SocGen gets nose in front of BNP and EU peers 4 May 2016 France’s third bank by assets added more capital than BNP Paribas, with better returns. It also trounced fixed income trading rivals with a 17 pct revenue increase. SocGen’s decision to cut 220 mln euros more costs could provide cover against future rises in bad debts.
Shell, after eating for two, starts strict diet 4 May 2016 After buying rival BG, Shell has cut costs. But it will need the $30 bln of planned asset sales to help cover gaps in cashflow over the next three years. It looks like a tall order, though the rising oil price will help. Shell probably has scope to reduce spending further.
BHP’s $44 bln Brazil lawsuit shows dangers of JVs 4 May 2016 Miners use joint ventures to get places they otherwise couldn’t. But sharing risk can go very wrong. Brazil wants to hit BHP Billiton and Vale with a huge claim for the Samarco mining disaster. It’s a bill neither can afford for a partnership neither really controlled.
Next models three unflattering UK trends 4 May 2016 The fashion chain lowered its sales outlook for the third time in five months and cut profit guidance. Life will only get harder. New players like Sainsbury’s are selling clothes, foreign rivals are better judges of what shoppers want, and consumers may be nearing “peak stuff”.
Siemens turns screw on rival ABB 4 May 2016 The German engineer has long trailed its more profitable and agile Swiss peer. But quarterly results suggest Siemens is closing the gap. It is growing faster while catching up on profitability, which makes a 28 pct price-to-earnings discount hard to justify.
UK deal veto would be big setback for Li Ka-shing 4 May 2016 A $15 bln takeover of Telefonica’s O2 unit was key to making the Hong Kong tycoon’s costly bet on European telecoms pay off. If CK Hutchison cannot overturn a likely EU veto, his UK telco will either have to carry on as a disruptive fourth player, or find a fallback deal.
UK slowdown has a silver lining for Cameron 3 May 2016 An unexpected contraction in manufacturing is the latest sign that growth is losing momentum. Usually such a slowdown would be unmitigated bad news for the government. Right now, it’s all useful PR fodder for Prime Minister David Cameron in his battle to keep Britain in the EU.
Investors treat Russia like a wounded bear 3 May 2016 Russia’s escalating anti-Western rhetoric is damaging its chances of winning back foreign investment. Shifting the blame may keep Russians distracted from economic realities for a while longer, but it can’t replace hard cash.
UBS’s golden ratio shows cuts are vital 3 May 2016 The Swiss bank is rejigging its wealth unit after trading income as a percentage of invested funds dipped to historic lows. Group return on equity was just 5.1 pct in the first quarter. UBS depends on rich folks being active. When they aren’t, the only option is to trim expenses.
HSBC and ANZ take roundabout path to stability 3 May 2016 Choppy markets and higher bad debts knocked HSBC’s pre-tax profit by 14 pct in the first quarter. Erstwhile rival ANZ slashed its dividend after first-half earnings dropped almost a quarter. The process of making banks safer and less exciting is proving far from straightforward.
Marchionne’s job upgrade bodes ill for Fiat 3 May 2016 The storied boss of Fiat Chrysler has taken over as chief executive of spun-out Ferrari, too. Leading the iconic luxury carmaker is surely the more alluring of the two jobs. Yet challenged Fiat Chrysler arguably needs Sergio Marchionne’s full attention more than ever.
BNP keeps capital catch-up plan on track – just 3 May 2016 The French bank’s revenue shrank less than costs, reversing the dynamic from the previous quarter and helping returns to improve. BNP needs profits to bring solvency in line with peers. But it would help if earnings were driven by a higher top line, not just lower bad debts.
Leicester City upends "size is everything" mantra 3 May 2016 The lowly UK soccer club has, remarkably, won the Premier League. Victory in Britain’s top division had been the preserve of a five-club oligopoly since 1992, and Leicester was a 5000-1 outsider. Businesses facing seemingly unbreakable glass ceilings have a new role model.
Aberdeen’s big problem is emerging "meh" 3 May 2016 The UK asset manager’s stock has slumped, despite a recovery in its core emerging market investment business. The good news is that outflows have slowed, and Aberdeen is hacking costs and diversifying. The bad news is that the recovery is tepid, and clients come back only slowly.
Who cares who invented bitcoin? 2 May 2016 The whole point of the cryptocurrency and related technology is that they now live a life of their own. That makes Australian Craig Wright’s claim to be bitcoin creator Satoshi Nakamoto a curiosity at best. There is, however, a caveat related to the originator’s personal stash.
Gucci misses opportunity in "hell handbag" spat 29 Apr 2016 The Italian label wants Hong Kongers to stop burning paper versions of its $3,000 handbags at relatives’ graves. While it has a point, legally speaking, Gucci’s ire is misplaced. Wanting to spend the afterlife with a Gucci handbag is the ultimate pledge of brand loyalty.
RBS sale delays hit credibility more than finances 29 Apr 2016 The part-state owned UK bank says it may miss an EU-mandated timeframe to dispose of 300 branches. Even if it takes another 12 months, RBS’s capital position should be OK. But for investors to believe the path to dividend reinstatement, it needs to avoid any missteps.