France’s cable king closes in on mobile prize 29 Oct 2014 Patrick Drahi’s Numericable has launched a 4.7 bln euro rights issue to help fund the takeover of French telecoms rival SFR. The harder work will come once the cash is in. Numericable has to find 10 bln euros in promised synergies and cope with stiffer competition from Bouygues.
Sanofi creates toxic combination for investors 28 Oct 2014 The French drugmaker’s shares plunged after it said sales growth in diabetes drugs would stall next year. This is a vital business and the surprise slowdown is hard to decode. A reported boardroom rift just adds uncertainty. Sanofi needs to rebuild shareholder confidence.
Sweden’s bold zero rate won’t fix deflation 28 Oct 2014 While other countries mess with tiny numbers, the Swedish central bank has set its policy rate at an unequivocal zero. The boldness is striking, but the Riksbank hasn’t resolved the global mystery of inflation falling when growth is reasonable. Nor will zero reverse the trend.
StanChart still wrestling with slower-growth world 28 Oct 2014 The emerging market lender’s earnings are sliding. Weaker economies, rising expenses and bigger bad debts are all to blame. Even with extra cost-cutting, it’s too early to say when StanChart’s fortunes will improve. Until the bottom line stabilises, investors will remain wary.
BP can handle double-digit oil price 28 Oct 2014 The UK major has bumped up the dividend despite obvious headwinds of the low oil price, exposure to Russia and uncertainty over Gulf of Mexico fines. Yet cashflow is growing, it has room to cut costs and its leverage is comfortable. BP can afford to be confident.
UBS’ legal pain is beginning to look manageable 28 Oct 2014 The Swiss bank is still paying for past sins, with a 12 month extension of a U.S. non-prosecution deal and a hefty $1.9 bln addition to legal reserves in the third quarter. But the underlying businesses are now prospering. Investors can finally eye decent returns.
Lloyds’ dividend return may come sooner not later 28 Oct 2014 The UK bank’s shares show stress test strains. Lloyds’ extra $1.5 bln charge for insurance mis-selling is another drag. But a fresh restructuring plan is likely to improve earnings. And capital fears aren’t bad enough to delay the resumption of dividends much longer.
Deutsche Boerse’s next CEO could learn from LSE 27 Oct 2014 The German exchange lacks the punch of the industry’s biggest players. Incoming boss Carsten Kengeter, an ex-banker like LSE chief Xavier Rolet, could ape his London rival. That would mean a bigger push into growth areas like clearing or indexes, using M&A if necessary.
Chiquita inversion slips on cash appeal 27 Oct 2014 The banana company’s shareholders voted down a stock deal to acquire Irish produce distributor Fyffes, a decision that now points to a sale to Brazilian buyers. Ailing arbs, a crackdown on tax-driven M&A and economic ructions didn’t help. The path of least uncertainty wins again.
Anglo-American alliance bears down on bankers 27 Oct 2014 UK and U.S. supervisors agree bonuses should be deferred, serial-offending firms broken up and individual misconduct industrially logged. European regulators may have other ideas. But transatlantic harmony is a step towards these ideas being solidified as post-crisis policy.
EU bank stress-test winners still short of capital 27 Oct 2014 Most European banks passed the exam, at least on a headline level. But the accompanying disclosures make them look less robust up close. Investors can use the new clarity to push for extra capital buffers. These would help lenders cope with the risks of euro zone deflation.
Italy’s bank debacle could be useful for Renzi 27 Oct 2014 Italian banks’ poor showing in Europe’s stress test has sparked protest from the Bank of Italy. But for reforming Prime Minister Matteo Renzi, shocks to the system aren’t unhelpful. He can use the mess to reform ailing lenders so they can support the shaky economy.
Europe’s bank stress test warrants a narrow pass 26 Oct 2014 The analysis has enough nasties to avoid appearing a whitewash. And it has a big loser: Monte dei Paschi is a massive 2 bln euros short, amid other predicted failures. But while the bigger lenders passed and the air has been cleared, it may yet fail to spur credit supply.
World’s oldest bank faces radical treatment 26 Oct 2014 Monte dei Paschi will struggle to plug its 2 bln euro stress-test hole and stay independent. Investors in the last cash call got burned. The clean solution would be a takeover. But with buyers in short supply, a breakup may be required. It’s a big setback for the Bank of Italy.
Most of the heavy lifting lies ahead for Volvo 24 Oct 2014 An unexpected earnings jump propelled shares in the Swedish truck maker up 10 pct. But Volvo is facing an uphill struggle. The outlook for its core European market is weak, and its new cost cutting targets are ambitious.
Gucci makeover still a work in progress 24 Oct 2014 The flagship brand of French luxury and lifestyle group Kering posted disappointing sales in the last quarter, sending the shares down. Gucci is struggling with an image problem. At least it can point to early signs that its new strategy is bearing fruit.
EU bank tests: the good, the bad and the ugly 23 Oct 2014 The best European lenders will pass Sunday’s exercise outright based on their Dec. 31 balance sheet. Potentially some big names will fail that test, but pass on capital raised since. As for banks still deemed outright failures today, their bosses cannot expect to keep their jobs.
Bond markets nudge France towards periphery 23 Oct 2014 Investors want a growing yield premium to hold French bonds rather than Dutch, Belgian or Austrian ones and the cost of insuring against a Gallic default is inching up. Blame repeated budget misses and a sluggish economy. Still, a large, liquid debt market has some attractions.
Tesco fails to answer key strategy questions 23 Oct 2014 The UK retailer’s accounting error is larger than originally flagged. Sales are falling faster than feared. News that the chairman is being replaced will help. But Tesco’s new CEO missed a big chance to articulate a turnaround plan – despite some obvious remedies.
Credit Suisse’s future is mid-table drabness 23 Oct 2014 The Swiss group’s investment bank trumped Wall Street in Q3. But it’s no longer a top-tier player in any standalone business line, and questions linger over its ability to maintain strong fixed income returns if rates rise. Muted expectations should apply to other divisions too.