Hugo Dixon: Europe’s post-crisis challenge 16 Dec 2013 The hot phase of the euro crisis may be over. But the zone will limp on for years with low growth and high unemployment unless further action is taken on three fronts: bank balance sheets must be cleaned up, monetary policy loosened and more free-market reforms adopted.
New German government to take chances on growth 16 Dec 2013 With Wolfgang Schaeuble still in charge of Finance and the pro-European Social Democrats in a position of influence, Angela Merkel’s new cabinet brings continuity for Europe. But the SPD will control social policy. Its plans for welfare reforms may hurt long-term growth.
Hedgie merger of weakness shows funds transition 16 Dec 2013 Swiss funds group Gottex is merging with EIM in a deal valuing Arpad Busson’s firm at $35 mln. It’s a reminder of where troubled funds of funds are heading: clients want scale and smart solutions; small firms drown in regulation. Survival means having $10 bln under management.
How Deutsche, Barclays can ease U.S. capital pain 13 Dec 2013 The two banks are most at risk if U.S. regulators force foreign lenders to hold more capital. But if Barclays and Deutsche restructured their businesses into subsidiaries, they might be allowed to shift cheaper capital from their HQs. Credit Suisse’s revamp provides a blueprint.
RSA firesales could bring new headaches 13 Dec 2013 The UK general insurer’s CEO has quit and its shares have tanked after a third profit warning. The chairman is reviewing RSA’s empire and could sell units to shore up the capital position. But a piecemeal sale of crown jewels like Scandinavia would create its own problems.
Who’s next for Boris Bikes? Co-op? Wonga? 13 Dec 2013 The new-look Barclays will stop sponsoring London’s cycle hire scheme. But there must be lots of promising potential replacements for the team at City Hall to consider. Breakingviews imagines a memo to Mayor Boris Johnson.
Uruguay’s weed spoils could get even higher 12 Dec 2013 The country is first to legalize marijuana trade, with production from co-ops, sales to locals only and prices fixed. Relaxing such restrictions, however, could really spark up the economy. The Dutch did well from cannabis tourism, but agribusiness could be the winner in Uruguay.
Ziggo has ways to put pressure on Liberty 12 Dec 2013 The Dutch cable firm is in bid talks with Liberty Global, already a big shareholder. Liberty is prudent and patient, and could seek creeping control via a low offer. But synergies would suffer. And there is value in moving quickly: brilliant debt markets won’t last forever.
Russian rock worse for Ukraine than EU hard place 12 Dec 2013 The Ukrainian president rejected a deal with the EU for fear harsh conditions would deprive him of victory in the 2015 elections. With no sign of an end to demonstrations against his turn to Russia, his days in power are numbered. He’d better stick with Europe.
There’s method in ECB sovereign debt muddle 12 Dec 2013 President Mario Draghi seemed to contradict ECB executive board member Peter Praet by hinting he’s not about to demand capital against euro zone banks’ sovereign debt. Investors can expect more mixed messages. It’s hard to gee up lending while trying to become a tough regulator.
EU hits bank creditors and hopes for the best 12 Dec 2013 European authorities have agreed to force losses on creditors of failed banks from 2016, in order to spare taxpayers the full cost of bailouts. It gives resolution authorities useful flexibility. The new regime isn’t without risks. At least banks and markets now know the rules.
Peugeot keen on showing how much it needs help 12 Dec 2013 A 1.1 bln euro write-down and the foundering alliance with GM show how badly Europe’s second largest carmaker needs saviours. But a 3.5 bln euro lifeline from China’s Dongfeng and the French state will be painful for existing shareholders, first of all the controlling family.
European banks’ post-Volcker boost looks limited 11 Dec 2013 The region’s lenders are better served by new U.S. trading rules than feared: they can still prop-trade outside the United States, and fund management is exempt. But most EU banks do far less trading on their own account anyway. And other reforms could soon erode any advantage.
FirstGroup’s Greyhound activist gets it half-right 11 Dec 2013 Tom Sandell is right that First has cheap stock and a bad track record. It should also take any good offer for Greyhound buses. But his proposed spin-off of other U.S. units looks less useful. The onus is now on First to defend its existing routemap for value creation.
Edward Hadas: How not to do healthcare 11 Dec 2013 Prices and rationing are generally effective tools for economic management. Not in healthcare. The U.S. pricing system is chaotic and British rationing has created a bureaucratic monster. But the two contrasting models are both valid – and could be made to work better.
Why the UK is growing and the euro zone isn’t 11 Dec 2013 They both have austerity in varying degrees but UK growth is now pushing ahead of the euro zone’s. The UK’s flexible labour market and weakened pound are advantages. A Germanically strong euro weighs heavily on a euro zone where monetary policy can’t solve the profound problems.
Bostock exit says more about Santander than RBS 11 Dec 2013 The UK bank’s CFO is leaving after only ten weeks in the job to join the British arm of Spain’s largest lender. With RBS embroiled in scandal after scandal, executives with a way out may be inclined to move. Bostock’s departure looks more about succession planning in Madrid.
Santander arrives late for Chinese bank party 11 Dec 2013 The Spanish group is buying 8 percent of Bank of Shanghai in a tie-up worth 470 million euros. The deal comes as Western banks, including rival BBVA, have been selling out. Though the investment helps the Chinese lender’s IPO ambitions, the benefits to Santander are less clear.
Quality, not capacity, is key for European IPOs 10 Dec 2013 Europe’s new issues market is healthy for the first time in years. Investors have spare cash, the economic gloom is lifting and recent deals have traded up. That bodes well. But quality control is becoming paramount. A few shoddy or over-priced debuts could change everything.
Elliott is unlikely to block Celesio takeover 10 Dec 2013 The hedge fund has amassed enough votes to block McKesson’s $8 bln takeover bid. The U.S. offer for the German drug wholesaler does look a bit stingy. But Elliott will suffer if the deal fails - so McKesson can probably hold firm. Elliott has other ways to make money here.