Insurers risk retreading banks’ pre-crisis folly 22 May 2018 Companies such as AXA have a new excuse for bold M&A. Recent European rules, like bank regulations before the 2008 crash, reward insurers who spread bets across markets and geographies. The result may be similar: more complex groups, and less capital to absorb losses.
Italy has room to bluff its way with Europe 21 May 2018 The likely government’s plans to boost spending and keep Monte dei Paschi state-owned break European rules. A revived economy, low rates and weak EU leadership give it a better hand than previous rebel Greece. And Europe needs to avoid a clash that could end the single currency.
Breakdown: EU gains new powers for Big Tech fight 21 May 2018 Europe’s new privacy rule, the GDPR, prohibits covert data gathering and allows users to have information moved or deleted. The likes of Google and Facebook may initially find it easier to comply than smaller companies. But over time they’ll face a hostile EU with new weapons.
EU’s Iran sanctions riposte is late and lame 18 May 2018 The bloc took 10 days to come up with a plan that will give its companies cover if they defy U.S. restrictions. That’s unlikely to stop businesses pulling out of the Islamic Republic. The dollar’s dominance in the financial system limits Europe’s ability to offer real protection.
Italian radical agenda is a recipe for chaos 16 May 2018 A leaked plan by likely coalition allies 5-Star Movement and League says states should be able to exit the euro zone and cancel debt. That, along with a soaring budget and proposals for a shadow government, promise conflict with the EU. Bond markets are too complacent on Italy.
EU transparency purge may boost bitcoin legitimacy 14 May 2018 The European Union will force exchanges to identify users who trade in cryptocurrencies. That could make it harder for criminals to use them to hide ill-gotten gains. The clampdown might deter some traders, but should make virtual currencies more respectable.
Italy’s radical government will be an EU headache 14 May 2018 The maverick 5-Star party and rightist League are nearing a coalition. Plans to cut taxes and boost social spending will clash with the euro zone’s strict fiscal rules. The new government may also demand more EU help with migrants. It’s a break from Italy’s pro-European stance.
Portuguese power bid tests EU’s open door to China 11 May 2018 China Three Gorges is set to bid for the 77 pct of EDP it doesn’t own. The group has been an investor since 2011, but success would place the 11 bln euro utility under Chinese state control. That will add a spark to European Commission plans to better screen foreign investment.
Turkish politics will subvert currency defence 10 May 2018 President Tayyip Erdogan wants to support the lira, which has hit record lows against the dollar. That would require measures to curb inflation and the current account deficit. His efforts to pump-prime growth, especially before June elections, will achieve the exact opposite.
UniCredit may be stuck with costly crisis capital 10 May 2018 The Italian bank should not be able to treat the proceeds of a 2009 hybrid issue as equity, a hedge fund argues. CEO Jean Pierre Mustier might prefer to get rid of the expensive instruments. But it’s hard to extract UniCredit from the transaction without upsetting investors.
Springer’s IPO struck down by multitude of sins 9 May 2018 The German publisher postponed a $4 bln offering. The stable, growing business should have been an easy sell. High debt, low liquidity and an accounting squabble were turnoffs. With interest rates rising, and markets more volatile, investors are less willing to take a risk.
Vodafone’s $22 bln deal is worth financial strain 9 May 2018 The UK mobile group is buying Liberty Global’s German and eastern European assets. Boss Vittorio Colao is funding the deal with debt and funky convertible bonds. He can point to juicy cost savings to quell any concerns about Vodafone’s creaky balance sheet.
Billionaire’s Burberry sale is fashionably early 9 May 2018 The luxury brand’s top investor, a vehicle of Albert Frere, has sold its 6.6 pct stake. It’s an odd move for the typically long-term owner. But Burberry’s valuation rivals peers like LVMH, and boss Marco Gobbetti’s turnaround will be a lengthy process. It’s a good time to exit.
Liberty Global is a $25 bln bet on EU telecoms M&A 7 May 2018 The group chaired by “cable cowboy” John Malone may sell its German and eastern European businesses to Vodafone. If regulators give the thumbs up, Liberty’s remaining assets would be prime targets in a wave of telecom dealmaking. Its valuation does not reflect that possibility.
The Exchange: Putting limits on central-bank power 4 May 2018 Central bankers emerged from the financial crisis with more clout than ever before. Can this be reconciled with democratic legitimacy? Former Bank of England Deputy Governor Paul Tucker explains why monetary authorities have become “overmighty citizens”, and how to rein them in.
Elliott wins partial victory at Telecom Italia 4 May 2018 The US activist succeeded in installing a majority of independent directors on the telco’s board, snatching control from investor Vivendi. Other shareholders will now be more fairly represented. But to keep CEO Amos Genish the directors will have to forget any strategy overhaul.
SocGen faces deeper problems than BNP Paribas 4 May 2018 Both French lenders reported a drop in underlying first-quarter pre-tax profit. Weakness in fixed-income trading was partly to blame but investment banking revenue can bounce back. When it does, SocGen’s management churn and lower French loan growth will give BNP the edge.
Enel and Iberdrola’s Brazil war lacks restraint 30 Apr 2018 The two companies’ rival bids for Eletropaulo have nearly doubled the market value of Brazil’s top utility in a month, to $1.6 billion. The Europeans want to boost their presence in Latin America’s biggest nation. But the deal is too pricey to create much value for the winner.
Electrolux buffeted by perfect Trump tariff storm 27 Apr 2018 The Swedish fridge maker lost a tenth of its value after operating profit almost halved in the first quarter. A rejig of its freezer factories in the U.S. was one culprit. But investors are dubious that cost cuts will enable such a global business to offset higher steel prices.
Mario Draghi struggles to ditch post-crisis policy 26 Apr 2018 Euro-zone growth is slowing before the European Central Bank boss can end asset purchases or join the Fed’s Jerome Powell in raising rates. One-off factors may be to blame now but a downturn is inevitable. Unusual policy will be the norm rather than the aberration in Europe.