BT avoids a breakup but at a cost 25 Feb 2016 The UK telecoms group can keep its infrastructure arm, a watchdog ruled, though the unit must operate more independently and under tighter regulation. Whether or not that promotes efficiency, it may force the company to increase spending. And a split is still on the table.
Bayer CEO can bide time on agri-business spinoff 25 Feb 2016 A merger wave among agriculture-chemicals makers may entice incoming boss Werner Baumann to put the German drugmaker’s crop science unit in play. A sale or the like could fetch up to 39 bln euros and unlock value. Yet Bayer’s record revenue and rising profit mean there’s no rush.
Central Asia needs life support as Russia suffers 25 Feb 2016 Tajikistan has appealed to the International Monetary Fund for help. Falling oil prices and sanctions have hit remittances from migrant workers in Russia that are the lifeblood of its economy. Other countries in Moscow’s economic orbit may need similar treatment.
EU’s new bank stress probe flunks Taleb test 24 Feb 2016 European lenders’ 2016 financial checkup looks too kind. Regulators will stress for negative rates, but only partially, while Brexit risk is ignored. But a bigger flaw is the use of a single adverse scenario. As Nassim Taleb has argued, stress tests need several.
Brexit more complex than big versus small business 24 Feb 2016 The assumption is listed firms will vote to stay in the EU, while red-tape-throttled small firms will not. But only a third of the FTSE 100 signed a letter backing Brexit. A glance at UK farms’ subsidies, labour and low tariffs suggests many small firms will vote to remain.
Foreign minnows resist opaque U.S. penalties 24 Feb 2016 An Andorran bank has managed to erase its money-laundering black mark. Last year, the Chinese-backed owner of a U.S. wind-farm project won a settlement with D.C. over the secretive CFIUS group’s block on its activities. Overseas Davids can occasionally slay Washington Goliaths.
Peugeot could rev revival by scrapping luxury line 24 Feb 2016 The French group has become one of Europe’s most profitable mass-market carmakers under boss Carlos Tavares, with a 5 pct operating margin in 2015. But a costly plan for a new premium brand risks spoiling the performance. Junking the idea would speed an already healthy recovery.
Abu Dhabi shake-up closes door on oil majors 24 Feb 2016 Abu Dhabi is restructuring its national oil producer. The sheikhdom on Feb. 14 named one of its most capable technocrats, Sultan Ahmed al-Jaber, as director general of its state oil company to help lead the task. It could freeze global oil majors out of the emirate for good.
Portugal squall maps new territory in euro crisis 24 Feb 2016 The state’s left-wing government has reassured bond markets by passing an emergency budget and buying back debt. Yet the recent spike in bond yields shows Portugal remains vulnerable to high debt and low growth. And it shows that the calm from the ECB’s bond-buying can be broken.
Delta Lloyd sweetens investors’ bitter pill 24 Feb 2016 The Dutch insurer plans to raise only 650 mln euros through a rights issue, rather than the 1 bln euros many shareholders feared. If the firm can pull that off, its solvency headache will be eased. But owners are still being asked to cough up over half the value of the company.
M&A cycle reaches "running out of ideas" phase 23 Feb 2016 Time Inc’s interest in Yahoo’s bits, a Deutsche Boerse-LSE marriage and merger talks - however unlikely – between Honeywell and United Technologies are all variations of deals that have been tried but failed for regulatory and other reasons. They may fare no better this time.
LSE and Deutsche Boerse union faces uphill battle 23 Feb 2016 The UK and German stock exchanges are in detailed discussions to merge. Market and regulatory shifts make doing so logical. But this deal will probably raise both financial stability and competition concerns – and encounter the complication of coinciding with a possible Brexit.
Forget Bloomberg: Boris Johnson for U.S. president 23 Feb 2016 London’s maverick mayor, now openly opposed to UK Prime Minister David Cameron on Europe, hasn’t yet given up his American citizenship. In an imaginary world where Johnson has been exiled, here’s how he might campaign for the White House against Trump, Clinton, Bloomberg et al.
Deutsche bondholders send tepid vote of confidence 23 Feb 2016 The bank had to buy back less than half the 3 bln euros of debt on offer, making a tidy profit as most investors stood pat. That may allay fears of a market panic, but wide credit spreads suggest the lender is still considered risky. Its return to health is a work in progress.
Light at end of StanChart’s tunnel grows dimmer 23 Feb 2016 New Chief Executive Bill Winters’ restructuring plan dragged the lender to its first full-year loss in 26 years. Slowing emerging markets and lower interest rates aren’t helping. Even a modest 10 percent return on equity target for 2020 looks far from certain.
VW car buyback would speed emissions-scandal exit 23 Feb 2016 After five months, the German automaker hasn’t shown U.S. watchdogs that its diesel vehicles can meet environmental standards. Purchasing the worst clunkers might limit legal exposure, appease regulators and help end the fiasco. The hefty $5 bln cost could be money well spent.
InterContinental’s slowdown could book in a merger 23 Feb 2016 The hotels group’s revenue per available room grew less quickly in the fourth quarter. The takeover of Starwood Hotels by Marriott International has raised expectations for more industry tie-ups. But InterContinental’s $1.5 bln special dividend implies it won’t be a predator.
BHP admits dividend pledges and mining don’t mix 23 Feb 2016 The world’s largest miner slashed its interim dividend 74 pct and followed rival Rio in scrapping a “progressive” policy. About time. Promising payouts will only ever go up is daft in such a cyclical sector. Consistency matters less than safeguarding the balance sheet.
Alphabet sinks further into antitrust quagmire 22 Feb 2016 The European Commission may beef up its anti-competitive complaint against Google. U.S. authorities are probing the search giant, too. Proving abuses will be difficult, but the expanding scope means the company will have to expend more energy to pull itself out of the bog.
Irish banks’ bad debt clean-out is paying off 22 Feb 2016 Bank of Ireland said it would pay a dividend in 2016 for the first time since the crisis. No wonder – unlike some EU peers, Irish banks have made progress in hacking back their bad debts. As the economy recovers, the release of provisions could help to bolster capital further.