Italy’s bad bank fit for its one real purpose 29 Jan 2016 The new plan to get bad loans off banks’ books is mind-bendingly complex. But the inputs are quite simple: banks’ desperation, investor greed and rating-agency whims. The lender where it’s most likely to work is Monte dei Paschi di Siena, which happens to be Italy’s biggest woe.
Murdoch’s second season could be good for Sky 29 Jan 2016 Four years after resigning at the height of a phone-hacking scandal, James Murdoch is back as chairman of the pay-TV group. That may rattle minority investors, but Murdoch has proven himself. It would be an odd move if Fox planned to buy the 61 percent of the company it doesn’t own.
Monetary policy enters mysterious quantum realm 29 Jan 2016 Japan’s foray into negative rates typifies a world where conditions are so loose that traditional relationships break down. Take bond yield curves, which used to be able to foresee recessions. This handy warning system no longer behaves as expected in the new quantum paradigm.
ThyssenKrupp salvation is right on its doorstep 29 Jan 2016 The German steel-making group’s turnaround has sputtered: shares are down 35 pct in a year and the outlook is tepid. A better corporate structure could create new oomph. A full-blown breakup may be tricky, but fellow Essen resident RWE’s spinoff plans may work for Thyssen too.
What happens in Baku may not stay in Baku 28 Jan 2016 Azerbaijan is calling in the IMF as its currency plunges. Yet it isn’t the only one heavily exposed to oil and gas prices. Dependence on Russia for trade, growing debt and reliance on commodities could unsettle the region unless prices recover or financial holes are plugged.
EU tax reform is flawed – get used to it 28 Jan 2016 European measures to kybosh flagrant corporate tax avoidance schemes look broadly welcome. Without global agreements, though, disparities will always let the likes of Apple and Alphabet whittle down bills. And binding sovereign countries to one approach is akin to herding cats.
Deutsche Bank risks its own “keep dancing” moment 28 Jan 2016 Despite a rotten quarter in investment banking, Germany’s biggest lender will keep adding risk and rainmakers. CEO John Cryan is entitled to see fixed-income issues as cyclical. But in time his stance may echo ex-Citi boss Chuck Prince’s 2007 pledge to stay at the subprime ball.
Russia and OPEC only need to give an inch on oil 28 Jan 2016 Russia has given its biggest signal yet that a grand bargain with Saudi, Iran and the rest of OPEC to reduce oil output is possible. All sides want to avoid the economic catastrophe of $20 crude but none wants to sacrifice market share. A modest cut may be all that is required.
H&M suffers from rare wardrobe malfunction 28 Jan 2016 The Swedish fast-fashion retailer said discounts on a glut of winter wear would weigh on sales. H&M is a little less efficient than chief rival Inditex, and the strong dollar isn’t helping either. Still, both are in a different league from most peers.
Marchionne’s new Fiat goals verging on fanciful 27 Jan 2016 The Italian auto boss has achieved the near-impossible before, turning around Chrysler, cutting debt and spinning off Ferrari at a luxury valuation. But his new plan to grow operating profit by 20 percent a year looks like a real stretch, especially with the U.S. market peaking.
Italian bad bank satisfies both Rome and Brussels 27 Jan 2016 Italy has a plan to make its lenders healthier by letting them sell toxic debt to new securitisation entities. But overly cushy terms would break state-aid rules. Rome’s fix is a guarantee for which the banks pay a premium – but whose cost is reduced via a sleight of hand.
Shell/BG vote is a bet on oil prices bouncing back 27 Jan 2016 More than 80 percent of Shell shareholders approved the tie-up with gas group BG on Jan. 27. That implies they think oil will recover to $60 a barrel, twice its current level. Cost savings help support the deal, but it still requires an optimistic frame of mind.
Santander has been punished enough 27 Jan 2016 It has been easy to construct a bear case around the Spanish bank based on its Brazilian exposure, weak capital and frail home market. But with shares trading below those of peers, the bad news is already priced in.
RBS bad news is actually a small positive 27 Jan 2016 The state-owned UK bank has pre-announced a host of charges that will deplete capital and knock 2.5 bln stg off earnings. But RBS has a buffer. The closer it gets to addressing its main uncertainty – U.S. mortgage litigation – the closer dividends and reprivatisation will look.
Novartis blurry outlook merits investor pink-eye 27 Jan 2016 The Swiss pharma group disappointed with earnings and forecasts. It’s a combination of drug patent pressure and challenges in its eyecare unit Alcon. Neither can be quickly fixed and more radical action seems off the table. A return to Novartis’ premium rating isn’t imminent.
Time for BASF to press the self-help button 27 Jan 2016 The low oil price is hitting the German chemicals giant harder than previously expected, with writedowns denting 2015 operating profit by 18 pct. Investors won’t be best pleased. But BASF has a big oil and gas investment budget it can hack back before considering deeper cuts.
Generali CEO exit bearish sign for corporate Italy 26 Jan 2016 Mario Greco’s imminent departure from the Trieste insurer to rival Zurich is a direct transfer of Italian talent across the Alpine border. His new employer could use the help. But concerns that Generali’s board was returning to its “salotto buono” days would be worrisome.
Ireland has limited shelter against Brexit storm 26 Jan 2016 The Irish state is right to fret about a UK exit from the EU. It could knock 20 pct off trade between the two countries and hit Ireland’s economic recovery. Rebranding Dublin as a financial hub would help – but requires Germany to beef up the euro zone’s half-done banking union.
Cox: Argentina, Aramco are deals for tricky times 26 Jan 2016 Two big transactions dominated Davos. One would open up a democracy to capital markets after years of feckless governance and isolation. The other is designed to help a repressive regime retain power. In the world’s current parlous state, it’s to be hoped that both get done.
UK takes middle road with new bank conduct tsar 26 Jan 2016 Andrew Bailey, new head of the Financial Conduct Authority, is likely to be less antagonistic towards the financial firms he polices than predecessor Martin Wheatley. His record on bank pay suggests he can be tough when needed, but his appointment looks largely pragmatic.