France in risky defence of BNP Paribas 3 Jun 2014 Paris broke its silence on the French bank’s U.S. judicial woes by calling a mooted $10 billion fine “unreasonable.” The fear is that the lender’s operations might suffer as well. The concerns are understandable. But it may not be wise to side too closely with BNP.
Juncker fury shows what’s wrong with EU leaders 3 Jun 2014 The UK opposes the appointment of Jean-Claude Juncker as European Commission president. Others fear an uninspiring candidate will anger voters who want change. But the former Luxembourg PM openly ran for the job – and his centre-right group won the most votes. Time to move on.
UK housing bounce obscures a credit-lite recovery 3 Jun 2014 Fears of a finance-driven binge are misplaced. Mortgage lending is low and the government’s foolish Help to Buy scheme is small. Lending to corporates is falling. The UK has little credit, arguably too much foreign capital, and weak exports. Sustainability is in question.
IHG is a one-star candidate for M&A activism 3 Jun 2014 Bill Ackman protégé Mick McGuire is targeting the $10 bln hotels group. He wants IHG to sell to a bigger rival. Consolidation makes sense. But IHG is expensive, suitors like Starwood aren’t keen, and the group has fewer weaknesses than the typical activist target.
Spain gets new king for difficult times 2 Jun 2014 King Juan Carlos, 76, is bowing out in favour of his son Felipe. For younger generations, his role in the 1970s transition to democracy weighed less than recent scandals. Felipe, who isn’t tainted by them, will reign over a country facing many challenges.
Etihad’s Alitalia grab not as loony as it looks 2 Jun 2014 After spending another 300 mln euros on struggling Air Berlin, the Abu Dhabi carrier gives Italy’s stricken flag carrier another lease of life. Acquiring yet another minority stake in a loss-making peer does make sense. And Etihad buys much-needed political clout in Europe.
Bank of Cyprus is bank of choice for EU über-bulls 2 Jun 2014 Half the loans of the last major Cypriot bank are in arrears. Two-fifths of its funding comes from central banks. Yet Bank of Cyprus may still be able to secure foreign capital after the EU stress tests, if needed. If so, that would mark a new high in tapering ebullience.
Hugo Dixon: EU needs more non-bank finance 2 Jun 2014 Banks are on the back foot and won’t be able to fund growth on their own. Non-bank finance has to take up the slack. The ECB and Bank of England have identified the importance of securitisation. Similar leadership in other non-bank areas, such as equity capital, is required.
Revenue leeway may create too much Autonomy 30 May 2014 Globally aligning rules on how to book sales, as was agreed this week, should create greater consistency. It means more fine print to scour, however, while extra flexibility for U.S. companies could also invite trouble. A cautionary tale may be HP’s allegations against Autonomy.
BNP Paribas fine farce requires swift resolution 30 May 2014 The French bank’s shares sank 6 pct after a media report that penalties for sanctions breaches could top $10 bln. Doubts about the intentions of the U.S. authorities may be creating a false market in BNP shares. Worse, the delay raises the prospect of possible EU retaliation.
UK’s duff credit easing is still a model for ECB 30 May 2014 The Bank of England’s Funding for Lending scheme isn’t boosting bank credit. A rumoured ECB version will likewise fail to spur a massive wave of lending if demand is weak. But a round of credit easing that cuts elevated peripheral bank funding costs would still be worth a try.
Spanish soccer needs a financial bootcamp 30 May 2014 Spain hold the World Cup and Real Madrid are European champions. Yet the domestic game is less healthy, with many clubs deep in debt. The state is enforcing better financial management. Attracting foreign investment, and sharing TV money more evenly, could help teams shape up.
Low volatility and high doubt hamstring markets 29 May 2014 Trading volumes are dipping in several asset classes. Low price volatility and tougher regulation can be blamed. So can investors’ bruised confidence, after some big bets went awry this year. It’s safer to sit still than to move in what might prove to be the wrong direction.
FCA’s Hannam win makes dealmaking that bit harder 29 May 2014 Former JPMorgan rainmaker Ian Hannam comprehensively failed to overturn a finding he committed “market abuse.” This vindicates the UK watchdog’s zero-tolerance stance. Handling inside information is already risky and complex. This ruling makes things a little bit trickier.
The morning after Scotland votes for independence 29 May 2014 Most analysts have assumed Scots vote No in September’s referendum, but Yes-voters are gaining ground. If they prevail, critical questions that are currently completely up in the air will need to be answered rapidly. The most pressing one will be: who bails out Scottish banks?
Smith & Nephew returns to M&A spotlight 28 May 2014 The British medtech firm’s shares jumped on a report of bid interest from Stryker. The U.S. rival ruled out bidding for six months. But the market looks keen on a takeover of S&N, the subject of perennial bid talk. There could be synergies, scale and tax benefits.
GE’s new Alstom bid makes Siemens a distant second 28 May 2014 The U.S. conglomerate pledged new jobs and an asset swap to improve its $16 bln offer for Alstom’s power units. France seems to be warming to a bid already backed by the board. Rival bidder Siemens looks increasingly like a stalking horse, used merely to wring more out of GE.
Edward Hadas: The problem with the Piketty problem 28 May 2014 The French anti-inequality economist has been accused of using bad data. But any weaknesses in compiling and adjusting figures pale in comparison to his confused use of mathematical theory and social history. Unfortunately, too many economists are ill-equipped to criticise.
Scottish independence is loser in data fight 28 May 2014 Campaigners for an independent Scotland project a separate country would be better off. The no campaign disagrees. No surprises there. The case from London is stronger, but the economics aren’t clear-cut enough to make a no vote on Sept. 18 a no-brainer.
Nestle’s skincare buy-in has opportunistic streak 28 May 2014 The Swiss company, best known as a chocolatier, is paying Canada’s Valeant $1.4 bln for the marketing rights to a clutch of beauty treatments. It is Nestle’s first big move in the sector after February’s deal with L’Oreal. There are wrinkles. But they are worth wearing.