Sweden is a lab rat for fighting deflation 3 Jul 2014 The Nordic nation has slashed interest rates more than expected. Sweden is a small, open economy with an independent central bank. So this will be an excellent post-crisis test case of the power of monetary policy to fight deflation when asset prices are rising. It won’t be easy.
Cash calls misstate likely EU bank equity deficit 3 Jul 2014 The first half of 2014 saw a spate of European bank share sales ahead of stress test results this autumn. It would be wrong to conclude that all the new equity will go to plug a capital hole. Some lenders are being preemptive, some are just cautious.
Europe challenged by inadequate private investment 3 Jul 2014 The euro zone economy might benefit if governments invested more, but a new study shows that weak spending by companies has been a bigger drag on growth. The problem is much easier to diagnose than to cure. Special lending programmes and tax breaks might help.
Ashley bonus badly conflates owner and exec roles 2 Jul 2014 Founders often make awkward teammates for outside investors. Mike Ashley of Sports Direct is a case in point. The UK retailer now has a bonus scheme that might pay him hundreds of millions of pounds. It is bad. It confuses Ashley’s position as an owner with his executive role.
Babywear bid target must prove it can stand alone 2 Jul 2014 Mothercare rebuffed a $453 mln approach from U.S. suitor Destination Maternity. There are understandable concerns about financing and strategy. But the ailing UK firm must show how it can develop healthily alone. Otherwise investors will throw their toys out of the pram.
Edward Hadas: The stupidity of student debt 2 Jul 2014 Education loans keep growing in the U.S. and the UK. The new reliance on debt is financially dangerous and shows weak economic thinking. The sensible way to fund the social good of higher education is pay-as-you-go: with affordable tuition, donations and government money.
No moral high ground in banks’ fight with U.S. law 2 Jul 2014 It’s reasonable to question America’s ability to use the dollar’s global status to impose its foreign policy on a recalcitrant world – and then go after lawbreakers like BNP Paribas. But the financial industry, whether offshore or on, isn’t credible enough to make the case.
Sarkozy probe latest sign of sick French politics 2 Jul 2014 A formal investigation for corruption and influence-peddling undermines the former president’s hoped-for comeback. His conservative party doesn’t offer a credible alternative to the unpopular ruling socialists. The EU’s second-largest economy is sinking into political paralysis.
Bulgaria’s banking crisis has lessons for Scotland 2 Jul 2014 The EU’s poorest state has Brussels’ approval for a $2.3 bln rescue after runs at two lenders. If Bulgaria’s currency board survives, it will be aided by a small banking sector and large currency reserves. A Scottish sterling peg would have the exact opposite.
CaixaBank opts for abrupt shake-up 2 Jul 2014 In a surprise move, the Spanish bank’s current CFO will replace Juan María Nin as chief executive. Meanwhile, Chairman Isidro Fainé consolidates his power. New CEO Gonzalo Gortázar is well regarded but he lacks retail bank experience. He still deserves the benefit of the doubt.
U.S. cooks up penalties with anti-foreign flavor 1 Jul 2014 New research shows that overseas firms like BNP Paribas do in fact pay bigger fines and plead guilty more often than U.S. companies. One reason may be that prosecutors target only the most serious cases abroad. But the gaps feed suspicions that America is playing favorites.
How merger momentum could explode past $4 trln 1 Jul 2014 With about $1.8 trln of M&A so far, 2014 is shaping up to be the biggest year since 2007. If deal volume returns to its typical proportion of global market capitalisation, it would hit $4.5 trln next year. So much activity so quickly, though, probably means more value destroyed.
BNP’s Prot should go 1 Jul 2014 The French bank has pleaded guilty to criminal wrongdoing and will pay a near-$9 bln fine to U.S. authorities. Chairman Baudouin Prot was CEO when BNP Paribas was helping clients evade U.S. sanctions. His position is untenable. In the name of accountability, he should resign.
Market gives BNP benefit of doubt on U.S. fallout 1 Jul 2014 Shares in the French lender have fallen more than 15 pct since it warned in February of U.S. action against sanctions abuses. Factor in market falls, and a near-$9 bln fine, and investors value the hit to BNP Paribas’ reputation and business at below $3 bln. That looks generous.
BNP’s reputation hit harder than its finances 30 Jun 2014 The French bank’s $8.8 billion fine for sanctions violations is bearable: it may even be able to keep paying dividends. A much-feared dollar-clearing ban is also likely to be defanged. But BNP’s guilty plea will batter its reputation as a conservative and cautious institution.
Evonik in $400 mln soccer deal it doesn’t need 30 Jun 2014 The German specialty chemicals company is buying a 9 percent stake in a first-tier soccer team, emulating Adidas, Audi, Allianz and Bayern Munich. But Evonik’s products don’t reach end users. The potential benefits of its deal with Borussia Dortmund are hazy at best.
Hugo Dixon: EU would also be harmed by Brexit 30 Jun 2014 The EU, not just Britain, would be hurt if London decided to leave. Jean-Claude Juncker’s nomination as Commission president increases the chance of Brexit. EU leaders need to work to limit the risk. Here’s how.
Philips lighting split is a bright idea 30 Jun 2014 The Dutch conglomerate is restructuring again, moving high-powered LEDs and car lights into a standalone unit with 1.4 bln euros in sales. The business is fast-growing and would benefit from outside capital. Stepping out of the parent’s shadow should help.
Renzi picks wrong energy policy for right reasons 30 Jun 2014 The Italian prime minister has a Machiavellian streak. Matteo Renzi’s move to cut renewable energy incentives could spook investors, but it may help his reform agenda. He now needs to prove that the end justifies the means.
UK’s hawkish shift is dangerous 30 Jun 2014 There are good reasons for the Bank of England to raise rates. But an early move this year could be costly. Sterling would rise further. Exports, already struggling, would suffer. Rebalancing dreams would die. The BoE must hope the housing market cools, and the Fed quickens.