Credit Suisse bows to Swiss National Bank pressure 18 Jul 2012 A month after the central bank questioned its strength, the group is boosting capital by 8.7 billion Swiss francs. It hopes to earn a 15 percent return on equity through extra cost-cutting. But any sustained recovery requires investors to believe the capital rebuild is now over.
Russian oil needs more than Putin’s tax tweak 18 Jul 2012 The oil reserves of Russia are twice those of the U.S. Yet output is only rising half as fast. A penalising tax code that discourages drilling for harder-to-reach oil is to blame. Making exceptions for the likes of Exxon is no substitute for bold reform.
Money-laundering probe puts HSBC in penalty box 17 Jul 2012 U.S. Senate revelations of the bank’s “pervasively polluted” approach to handling suspect cash have tarnished its status as a crisis survivor. Beefing up compliance is a smart response. But with a criminal investigation and big fine looming, HSBC can’t afford any more mistakes.
City of London watchdogs roughed up over Libor 17 Jul 2012 The Bank of England governor and the FSA chairman each took a blow in the latest parliamentary hearings into the rate-fixing scandal. But MPs still failed to ask a key question. The central bank’s Court may need to take over the role of inquisitor.
Global gloom is overdone 17 Jul 2012 The IMF is pessimistic about a “weak” world and that’s prompted calls for more stimulus. But the economy is adjusting. Cheaper oil has just cut UK inflation. Europe is weak because Italy and Spain are trying to live within their means. Amid it all, global growth persists.
Alcatel kept on hold despite mobile data explosion 17 Jul 2012 Telecoms kit makers like Alcatel-Lucent and ZTE should benefit from a smartphone-driven explosion in mobile data. Yet crimped telcos are delaying network spending, and price competition remains fierce. Lousy finances, and ugly profit warnings, set an annoying ringtone.
What if banks boycott Libor? 17 Jul 2012 The Barclays scandal is prompting banks to rethink their role in setting interest rates. But a mass boycott of Libor could throw markets into a tailspin. Regulators need to decide urgently how the benchmark for hundreds of trillions of dollars of contracts should be reformed.
Euro bank union should spur fatter capital buffers 17 Jul 2012 As the euro zone inches towards creating a collective safety net for banks, it will focus on reducing the cost to taxpayers. Witness the ECB’s volte-face on haircutting bondholders. One way forward is to copy the UK and require lenders to issue a minimum amount of bail-in debt.
Islamic bonds offer cheaper funding for lucky few 17 Jul 2012 Sharia-compliant bonds, once a pricey source of funds, are now cheaper than their conventional equivalents. A growing pool of captive Islamic capital is driving down yields and spurring interest far beyond the Middle East. But not everyone can take advantage.
Libor jailbirds would be hollow symbols 16 Jul 2012 Rate-rigging sentences might assuage public lust for Wall Street scalps. But U.S. prosecutors have missed big on financial-crisis villains. Al Capone was nailed for tax evasion. Libor convictions would also miss the point - and might only get real banksters’ distant cousins.
Negative rates challenge banks and economists 16 Jul 2012 When central banks push too hard on the monetary string, investors end up paying someone to take their funds. Below-zero nominal rates cause technical problems. But negative real rates - now normal - are actually more bewildering. They undermine standard economic analysis.
Hugo Dixon: Who will watch the Bank of England? 16 Jul 2012 The central bank’s current governor is already the most powerful unelected person in Britain. Witness the way he dispatched Barclays’ CEO. His successor will have even greater powers. It’s vital for democracy that this authority is exercised effectively, transparently and fairly.
New broom wouldn’t be quick fix for G4S 16 Jul 2012 The outsourcer’s chairman admits the CEO may have to go following the Olympics security fiasco. But the affair may expose deeper flaws in its model, and could prompt the UK to withhold new business. With a rescue bid unlikely, repairing the value destroyed will be a slog.
Cove game could end with a knockout 16 Jul 2012 The five-month battle for Mozambique gas explorer Cove Energy is coming to a head. Big new finds have increased the stakes in the bidding war between Shell and Thailand’s PTT. PTT’s May offer of $1.9 billion is the highest on the table. But the UK major can almost certainly top it.
Scottish soccer’s own goal sets example for banks 13 Jul 2012 Glasgow’s Rangers soccer club wasn’t too big to fail - the Scottish Premier League ejected it for reckless financial behaviour. The authorities must now choose how far down to relegate the side. Like financial regulators, they should fight hard against moral hazard.
Dentsu bet on UK ad men is mad dash for survival 13 Jul 2012 That explains why investors only lightly punished Japan’s ad giant for overpaying to buy Aegis. With Dentsu’s home market shrinking and a chance to earn 5 pct on its cash abroad the deal may not look so terrible - but only if Dentsu can keep its new Don Drapers from jumping ship.
Global warming adds to food inflation risk 13 Jul 2012 Corn prices spike after the hottest U.S. six months ever. Russian wheat is also afflicted. Does global warming threaten a food price shock? For now, the risk is mitigated by a big commodity price retreat from 2011’s speculative bubble. But in the long term, the threat is serious.
Guide for the perplexed: Libor litigation 12 Jul 2012 It’s unclear who got hurt in the rate-rigging mess, but banks will pay big bucks just fighting mounting lawsuits. How much is still anyone’s guess. Bank investors can hope for full disclosure and quick settlements, but as this primer shows, the legal battles have just begun.
Valentino makes Permira look not shabby nor chic 12 Jul 2012 Permira’s top-of-the-market acquisition of Hugo Boss and Valentino in 2007 looked like extravagant folly. Five years on, the buyout firm has sold Valentino to the Qatar royal family for a punchy price. That leaves its fashion binge looking respectable, if not glamorous.
Silicon Valley gift brings market to Oxford degree 12 Jul 2012 Venture capitalist Michael Moritz has donated 75 mln pounds to finance grants for poor students. Such schemes encourage colleges to control costs and produce other grateful graduates. It’s a better system than state grants where the less well off support the soon-to-be rich.