VW’s emissions scandal needn’t break its own bank 28 Sep 2015 The carmaker’s financial services arm is being sucked into its current crisis. The group’s funding costs are rising and the ECB won’t buy its asset-backed debt. The $164 bln-by-assets lender is vulnerable to a brand implosion - but should cope with more realistic scenarios.
VW tests U.S. enforcers’ fairness to foreign firms 28 Sep 2015 The German carmaker skidded into a legal system that extracts bigger fines and more guilty pleas from overseas companies than American peers. Differences in the cases may explain the discrepancy. But any prosecutor bias may get as much scrutiny as Volkswagen’s emissions tricks.
Shell’s Arctic retreat better late than never 28 Sep 2015 The Anglo-Dutch major faces a write-off of up to $4.1 bln after ditching oil and gas exploration in Alaska. Environmentalists will be happy. But if the group wants to bed down BG and ride out low oil prices, investors should cheer the demise of costly and brand-dilutive forays.
Catalan poll result messier than investors think 28 Sep 2015 Spanish yields fell after pro-independence parties failed to win a majority of votes. True, Catalonia now has a doubtful mandate to secede unilaterally - but secessionists still won a majority of seats. Madrid’s next government will have to work hard to defuse tensions.
Vodafone and Liberty may yet converge 28 Sep 2015 Talks between the two telcos over a potential swap of European assets have come to nothing. Regulatory headwinds may be an issue, but the sticking point seems to have been price rather than strategic rationale. That means a deal – eventually – can’t be ruled out.
On economics, UK opposition could be more radical 28 Sep 2015 Big-name experts will help the British Labour party find new ways to promote economic growth and social justice. Stiglitz, Piketty et al will beef up the anti-austerity campaign. But if Labour listens to its new panel of advisers, it could take a sharper turn to the left.
VW bungles restart with new CEO from old guard 25 Sep 2015 Volkswagen lifer Matthias Mueller will be the stricken carmaker’s next boss. He has what it takes to fix operational woes. But as an internal appointment he is an imperfect investigator of past wrongdoing. Herbert Diess, poached recently from BMW, would have been a better choice.
VW needs a chairman from Frankenstein’s lab 25 Sep 2015 Who could lead Europe’s largest carmaker out of its current emissions-scandal funk? The challenge is so big and diverse that it would be impossible to find the one perfect candidate. Breakingviews names five managers that Wolfsburg engineers must wish they could “cut and shut”.
Edward Hadas: VW crashes into regulation 25 Sep 2015 The German carmaker crossed the sometimes fine line between permitted arbitrage of regulation and cheating. Volkswagen got it wrong, but successful economies mostly get it right. Although regulators can be annoying, industrial prosperity depends on them.
Cameron, China and the missing pig semen 25 Sep 2015 The People’s Republic’s taste for hog DNA was touted as a 45 million pound win for UK trade back in 2013. Two years later, the results have fallen woefully short. Trade and investment are real, but the more important stuff happens when politicians get out of the way.
Swiss banks can look beyond leverage ratio noise 25 Sep 2015 Credit Suisse and UBS could face a 6 pct capital-to-assets ratio requirement, after a proposal was voted through Switzerland’s lower house. That’s higher than for peers, but the swing factor is forthcoming global bail-in rules. In most scenarios, Swiss lenders should cope.
Bud-SAB tie-up hinges on a scramble for Africa 24 Sep 2015 Cost-cutting will help brewer AB InBev justify a $110 billion strike at SABMiller. But a convincing top-line growth story is required if existing equity investors are to roll into the new entity. There are several levers. Africa is the most important.
StanChart’s CEO pay is needlessly complicated 24 Sep 2015 New boss Bill Winters is getting 6.5 mln stg to compensate him leaving his hedge fund. Shareholders can only hope his stake in Renshaw Bay is worth that. Such buyouts are too complex. Big hires should get more transparent salaries - even if that means they’re higher.
Credible VW cleanup calls for external chairman 24 Sep 2015 After replacing its chief executive, the German carmaker should look for a new chair. Picking long-term CFO Hans Dieter Poetsch was questionable even before the emissions cheating was uncovered. It’s now untenable - VW’s restart needs to be driven by an independent outsider.
Nomura/MPS achieve painful closure on swaps mess 24 Sep 2015 The Japanese bank has resolved litigation with Monte dei Paschi by releasing it from structured transactions. The terms mean Nomura forgoes 440 mln euros - twice as much as Deutsche Bank, which settled over similar trades in 2013. But both banks also gain from ending the saga.
Abengoa cash call keeps it from emergency room 24 Sep 2015 The Spanish engineering firm’s main creditors will underwrite a dilutive 650 mln euro rights issue to cut debt. It will also sell assets, cancel the dividend and the founding family will lose control. That helps restore credibility but Abengoa needs to show it can deliver.
Alliance Trust has new directors, same problems 24 Sep 2015 The Scottish firm targeted by activist Elliott Advisors has added two new independent board members. It’s a small change, and too late to impact an ongoing review into how Alliance can close its stubborn discount to net asset value. What’s needed is a new model, not just new non-execs.
VW could use bank-style clawback of CEO pay 23 Sep 2015 Martin Winterkorn’s resignation clears the way for sweeping changes at the sprawling carmaker after its costly emissions scandal. He was one of Germany’s best-paid bosses. Revamping compensation, and even trying to recoup some of the CEO’s cash, would send a strong message.
"People’s QE" is more sensible than unconventional 23 Sep 2015 The new Labour leader in the UK wants the government to use newly created money to pay for infrastructure investments. The gains are clear. It’s simpler and more just than borrowing, healthier for the financial system and not necessarily more inflationary. The risks are hypothetical.
Santander takes mañana approach to capital raising 23 Sep 2015 The Spanish bank is aiming at a core Tier 1 capital ratio above 11 pct by 2018. Boss Ana Botin has already raised capital this year, and can make a case for a gradual buildup of solvency levels. But many of Santander’s rivals are already where it wants to be right now.