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.
Prisa lives to fight another day 10 Dec 2013 Spain’s largest media group has won breathing space from creditors in a complex, yet promising deal. The snag is that the plan inflicts dilution and relies on two assumptions: that the Spanish economy will pull through, and that assets will fetch good prices. Neither is certain.
Pru throws down gauntlet to taper doomsayers 10 Dec 2013 Having hit four-year growth targets, the UK insurer plans to double cash generated from fast-growing Asian operations by 2017. The worry is that Fed tapering leads to a slowdown in the region. But Pru’s market position is so entrenched that it would be wrong to bet against it.
Mandela’s successors can shape his economic legacy 10 Dec 2013 As world leaders remember a great statesman, they may ponder South Africa’s middle-income trap. Compared with other post-colonial economies, even stagnation would be a tribute to Mandela’s peace-making. It’s up to those who followed him to buck recent trends and escape the trap.
Spain makes a hash of energy policy 10 Dec 2013 The country’s energy sector has accumulated a 26 billion euros deficit due to the gap between production costs and consumer bills. Now the government is pulling the money it had promised to reduce the shortfall this year. Its constant flip-flops are worrying investors.
Bob Diamond’s African punt needs strong governance 9 Dec 2013 The ex-Barclays boss is said to be preparing a $250m London cash shell to buy African financial institutions. Scandals involving Libor and Bumi have hurt both Diamond and his proposed way of investing. Rehabilitation via M&A could succeed – but only if the governance is spot on.
WTO’s small victory saves it from irrelevance 9 Dec 2013 The Bali deal to simplify customs rules lacks the drama of previous rounds. But after more than a decade of fruitless negotiation, it shows global agreements are still possible. The next challenge is to prevent future progress being confined to competing regional blocks.
FX increasingly slave to other markets’ moves 9 Dec 2013 Currencies have been especially tough to call in the past year. When global rates are so uniformly low, moves in the mammoth FX market seem to be a by-product of what’s happening in other, smaller, assets classes. That makes predictions almost impossible.
Banks’ taper rehearsal gives emerging markets hope 9 Dec 2013 Global banks’ loans to developing countries fell by just 2 percent in the second quarter. Exclude Brazil, Russia, India and Mexico and credit actually rose. Lenders’ early calm response suggests the withdrawal of the Federal Reserve’s cash glut may be less painful than feared.
Cheap money wrong cure for West’s long-term stasis 6 Dec 2013 Larry Summers seems to think years of negative real interest rates can end “secular stagnation”. That’s too optimistic. If the torpor is demographic and technological, it’s probably incurable. In that case, more money-printing will only bring new financial messes.
Mandelanomics was too conventional to shine 5 Dec 2013 Nelson Mandela, dead at 95, was a brave leader who was too timid economically. Avoiding the errors of others, he set post-apartheid South Africa on course toward being a mostly free market with stable finances. Unfortunately, he also left the country slow-growing and unequal.
Deutsche ditch divines commoditized commodities 5 Dec 2013 The German bank is quitting energy and base metals trading. That should free up capital without hurting results. It’s a helpful step that others like Barclays and BNP Paribas may follow. It won’t, however, fully solve the bigger problem of a swoon making profits elusive for all.
Osborne lets UK recovery ease austerity’s pain 5 Dec 2013 Stern responsibility remains the British Chancellor’s watchword. With jobs increasing and GDP rising faster than expected, it’s easy to resist calls to abandon his austere course. Small shifts, like tax cuts for young workers and a new attack on tax dodges, are useful ornaments.
Merck’s pricey deal will make material difference 5 Dec 2013 Germany’s drugs group Merck has made a toppy 1.6 bln stg offer for the UK’s AZ Electronic Materials. The deal offers synergies and diversification, and deploys otherwise idle cash. Since pharma valuations are rich, the speciality electronics firm offers relatively cheap growth.
BNP Paribas pays up for Polish promise 5 Dec 2013 The $1.4 bln deal for Rabobank’s retail business in Poland is what cross-border banking M&A looks like post-crisis. BNP is paying a premium to book value for a business with low returns. The French bank avoided a costly auction but needs synergies and growth to make the deal pay.
Japan’s yen glut is failing to lift global bonds 5 Dec 2013 With the central bank printing money at home, Japanese investors were supposed to be big buyers of global bonds. Instead they have been net sellers this year. While that’s changing, a yen deluge looks unlikely as long as investors remain afraid of the Federal Reserve’s next move.
Libor losers become EU cartel winners 4 Dec 2013 Barclays and UBS escaped $930 mln and $3.4 bln of trust-busting fines for exposing Libor cartels. It’s compensation for taking the reputational hit of settling early with other regulators. When the saga is done, the balance of financial pain may be in the whistleblowers’ favour.