Chancellor: Bernanke’s courage hides bigger error 15 Oct 2015 The Fed chairman did what was necessary to hold the financial system together after the 2008 Lehman bust. Yet his memoirs reveal that he still doesn’t understand the dangers posed by low interest rates, or the difficulties of escaping from his extraordinary monetary remedies.
UK bank bosses avoid worst of personal liability 15 Oct 2015 New UK legislation that could see miscreant bankers jailed will be changed so the burden of proof is on the regulator. Doing otherwise might have been counterproductive. The senior managers’ regime now looks like an enhanced version of what banks should be doing anyway.
Repsol’s plan looks good on paper 15 Oct 2015 The Spanish oil firm wants to raise 6.2 bln euros selling assets. It is also slashing costs and spending. The measures will ease balance-sheet strains at $50 oil and reflect welcome realism. But the targets are ambitious and assume half the dividend is paid in shares.
Volkswagen can take $80 bln hit before crumpling 15 Oct 2015 The carmaker faces hefty penalties, legal fees and recall costs. But if its main business can be kept stable, VW can weather dieselgate without a capital increase or a breakup, Breakingviews analysis shows. Cash generation and strategic cuts give it room to absorb shocks.
UK builds high fence around its retail banks 15 Oct 2015 The Bank of England won’t let deposit-taking banks that also do investment banking enjoy capital and funding benefits from having the two under one roof. That’s logical, and the capital hit may be bearable. But synergies for big UK universal banks like Barclays are now reduced.
Unilever’s growth could shrink in the wash 15 Oct 2015 The Anglo-Dutch soap and soup company grew sales nearly 10 pct in Q3. That’s unexpectedly good. It doesn’t, though, mean the emerging markets for which Unilever is a bellwether are recovering. Leave aside currency moves and hot demand for ice cream, and the outlook is lukewarm.
Euro zone rediscovers sloppy fiscal policy 15 Oct 2015 Deficits are creeping up in Spain, Italy and even growth star Ireland. Reasons include easy money and pre-election spending. As yet, the gaps aren’t dangerously big. What’s more worrying is poor spending decisions, slowing reforms and fiscal dissonance between member states.
Burberry poorly dressed for luxury’s chill winds 15 Oct 2015 The British fashion label’s sales disappointed in the first half. It is highly exposed to Hong Kong and China, and scantily represented in Japan where Chinese tourists now shop. The U.S. is stormy too. Cost cuts help, but Burberry may just have its stores in the wrong places.
Edward Hadas: VW, like BP, took the wrong chances 14 Oct 2015 Studies of the oil company’s disasters showed a willingness to cut corners on safety. The carmaker’s deceit has not yet been thoroughly dissected, but its approach to regulation may have been similarly careless. Companies have to choose what matters. Bad choices can prove costly.
Home intrusion could pay for German landlords 14 Oct 2015 Residential landlord Vonovia is upsetting 8.1 bln euro rival Wohnen’s agreed merger with LEG, offering to acquire the buyer instead. At first glance, the new deal would leave Wohnen’s shareholders better off. In return, they cede control and take on the risk Vonovia has overreached.
Italian post IPO should be sealed with a discount 14 Oct 2015 Poste Italiane is Italy’s biggest privatisation in a decade, at up to 10 bln euros. Despite its brand and network, the postal service loses money and the bank is laden with Italian government debt. A more modest price would reflect that the turnaround cheque is still in the mail.
Tech sector softness is etched in ASML’s slowdown 14 Oct 2015 The $38 bln Dutch microchip-printer maker has said Q4 revenue will be 10 pct below the previous quarter. Weaker demand in China and elsewhere is affecting the entire semiconductor industry but investment spending is being curbed sector-wide. ASML should still hit longer-term targets.
Renzi shrinks Italy’s political risk premium 14 Oct 2015 Prime Minister Matteo Renzi achieved an important step in his plan to reform Italy’s upper house. That should mean more stable governments. Italy’s bond yields are already close to pre-crisis levels. Narrowing the discount to France or Germany requires further economic reform.
VW scandal fuels investor fears about environment 13 Oct 2015 Shareholders managing some $1 trln in assets are pushing the biggest carmakers to disclose how emissions rules affect their businesses. The investors also want to know about the companies’ links to regulators. It’s another sign of how climate issues can sometimes take the wheel.
Rob Cox: VW needs an eight-step recovery plan 13 Oct 2015 That’s the minimum number of constituencies the $68 bln carmaker, snagged in a giant engineering deception, must now mollify to restore credibility. Customers, investors, suppliers, dealers, governments, unions, staff and ordinary people each will require a unique approach.
Barclays tiptoes back to investment bank see-saw 13 Oct 2015 Hiring ex-JPMorgan executive Jes Staley as its CEO might augur the UK bank returning to its former investment bank-led growth strategy. Trouble is, growing that kind of business in the new regulatory landscape is hard. And Barclays Capital’s returns were never that great.
AB InBev may suffer beer-swill antitrust hangover 13 Oct 2015 The brewer’s latest deal could trip over a decades-old Supreme Court defeat for former rival Pabst. That case’s crackdown on beer mergers led to a backlash and big JVs like Molson’s with SABMiller. Since AB InBev’s bid for the latter, trustbusters seem ready to turn back the clock.
AB InBev must change spots to make SAB deal work 13 Oct 2015 Having won its UK rival’s agreement to merge, the Budweiser brewer now gets to put its fearsome talent for cost-cutting to work. But that may not be enough. AB InBev will need to create growth and court governments to make the $104 bln bid stack up. Those are different skills.
UK regulator will squirm at Barclays CEO choice 13 Oct 2015 Jes Staley oversaw rapid growth at JPMorgan, and the BoE pushed out another expansionist investment banker as the UK bank’s boss in 2012. But Staley will commit to Barclays’ current plan to shrink, and its traders and advisers need a leader. Signing him off will be a tricky call.
Glencore getting smaller but maybe not wiser 13 Oct 2015 The embattled commodities trader is hacking back production in a bid to reduce its debts. The latest cut could be a fifth of its copper production. Companies with strong, single-minded leaders often choose to shrink rather than change after crisis hits. That leaves them at the mercy of markets.