BAE and EADS show the value of M&A scepticism 10 Oct 2013 The European aerospace groups have outperformed their local markets since aborting their merger a year ago. That proves tough corporate self-help can trump M&A. And right now EADS can be especially grateful that Angela Merkel blocked the deal.
World Bank cost cuts just what the doctor ordered 10 Oct 2013 The global lender’s medically trained boss, Jim Kim, is proving his management chops with $400 mln in savings and a focus on efficiency. The moves could help speed loans while keeping competitors at bay. That’s a prescription for growth at the bank as well as in client countries.
Telecom Italia’s Brazil goals are ambitious 10 Oct 2013 The debt-laden telco wants $12 bln for its 67 pct stake in TIM Brasil, the country’s second-biggest mobile operator. But eking out such a rich price will be tough. A carve-up by rivals would be logical but controversial. And there aren’t many credible outside bidders.
Royal Mail set to deliver IPO at right price 10 Oct 2013 It may not seem that way, if shares in the privatised UK postal service pop to a chunky premium. The British government could have asked for more money, or held back more shares to sell later at a higher price. But Royal Mail’s peculiarities justify the choice of tactics.
China’s Bakrie burns may have less sting 10 Oct 2013 Like Nat Rothschild, China Investment Corp. has been scorched by Bumi Resources. A $1.3 bln debt swap has turned the sovereign fund from major creditor to minority investor in the Indonesian miner. But CIC’s state backing limits the risk of climbing into bed with the Bakrie clan.
New hybrid fans will have weak hand in a crisis 10 Oct 2013 Banks are selling so-called additional Tier 1 bonds to replace hybrid debt in their capital buffers. These are bonds only in name: issuers don’t contractually have to pay investors a penny. That makes it all too easy for them to bin loyalty to creditors if times get tough.
IMF seers should admit ignorance – or get a grip 9 Oct 2013 A history of recent IMF forecasts makes for depressing reading. Not only do almost all the key numbers go down, but the experts don’t seem to understand what propels and restrains economic growth. More financial, demographic and institutional analysis would help.
Edward Hadas: A call for radical financial reform 9 Oct 2013 What if the current financial mess - debts, deficits and oversized banks with overpaid bankers - was the result of a war? Strong post-war leaders would put things right with a recalibration of debts and government programmes. So why not skip the war and just clean up the system?
Italy’s corporate zombies haunt Letta reboot 9 Oct 2013 The Italian premier has derailed Silvio Berlusconi’s attempt to take down his government. Now his grand reform promises are tested by the problems of Alitalia and Telecom Italia, both victims of past attempts to block foreign ownership. So far, not so good.
BRIC woes make African economies shine brighter 8 Oct 2013 The not-so-dark continent will outpace all but one of the BRICs next year, the IMF now believes. Policy failures in Brazil, Russia, India and China have led to scaling back of growth. These bruised giants may look to African stars like Ghana and Nigeria for economics lessons.
Good British news has become a habit 8 Oct 2013 A few months ago, positive economic readings surprised investors, and pushed up the pound. The numbers are now just as encouraging, but investors have raised the bar. Sterling is no longer a sure-fire bet.
Ukraine turns to Europe. Now how about a bailout? 8 Oct 2013 The former Soviet state faces trouble on many fronts. The emerging markets rout has hurt its access to financing, currency reserves are falling, and strengthening ties with Europe are damaging relations with Russia. An international bailout may be needed, but would be tricky.
Monte Paschi revamp opens door to foreign buyer 8 Oct 2013 The Italian bank is to shed thousands more staff and cut back its sovereign debt portfolio. Investors may still be wary of the plan to repay bailout cash by raising capital equal to the bank’s current market value. But potential foreign acquirers have more clarity.
Santander believes in Spain again 8 Oct 2013 The Spanish bank is doubling up on consumers in its crisis-hit home country by buying a majority stake in the consumer finance arm of retailer El Corte Ingles. It might seem risky, but Santander gets access to 10.5 million new clients and a goldmine of data for a modest price.
Hedgies’ Greek bank trade sweet enough as it is 7 Oct 2013 Greece’s improving economy has prompted the likes of John Paulson to invest in the country’s banks. That should help return them to the private sector. But hedge funds don’t need an extra-sweet deal with lower strike prices on the warrants that came free with the banks’ recaps.
Airbus has got the sales. Now how about profit? 7 Oct 2013 The European aircraft maker won over Japan Airlines, one of the few remaining Boeing-only carriers. The order of 31 A350 jets confirms the string of Airbus’ recent sales successes over its U.S. competitor. Now it should get to work on what its rival does better: profit.
Turning back clock won’t help Spain’s crazy hours 7 Oct 2013 Spain is in the wrong time zone, according to maps and a recent parliamentary report. But a mere change of schedule can’t make Madrid work like London. The late, long lunch break is a more significant productivity-sapping Spanish peculiarity - which cannot be changed by decree.
Solvay pays up to tap into fracking market 7 Oct 2013 The Belgian chemicals group is paying $1.3 bln for Chemlogics, a privately owned U.S. specialist in compounds used in the oil industry. The deal, Solvay’s biggest since 2011, looks pricey. But there should be tax savings, a sales boost, and a chance to ride the global shale boom.
Hugo Dixon: Bundesbank right to focus on doom loop 7 Oct 2013 Bundesbank President Jens Weidmann has criticised rules which encourage euro zone banks to load up on their own governments’ debts. The ECB will have the power to end this bad practice when it becomes the industry’s regulator. But how to do this without triggering a new crisis?
Review: Economic history makes a happier return 4 Oct 2013 In “The Great Escape”, Angus Deaton recounts the frequently forgotten economic accomplishments of the last century. There were massive improvements in health and welfare. While giving new perspective to the rise of inequality, he makes a persuasive case against foreign aid.