Europe risks overindulging in Brexit schadenfreude 9 Jun 2017 The election leaves Brussels without a stable partner in Brexit talks. Yet EU leaders should be pleased that voters did not reward Theresa May’s immigration views, or unite behind a hard exit. Sticking to a tight timeframe and big bill could squander chances of a compromise.
Sterling post-election blues will be slow to lift 9 Jun 2017 A hung parliament has hit the currency hardest of all UK assets. The saving grace is that a brutal exit from the European Union and a second Scottish independence referendum may now be a little less likely. But neither is a good enough reason to stock up on pounds anytime soon.
Weak government may be just what Britain needs 9 Jun 2017 A hung parliament promises months, or years, of political instability. For finance and industry, though, this may mean freedom to carry on without major interventions. The worst manifesto ideas, on migration, Brexit and nationalisation, are likely to end up in the policy dustbin.
Europe’s next bank rescue may be Italian fudge 8 Jun 2017 Italy’s big banks may pump 1.2 bln euros into small lenders to help enable a government rescue. The banks see a bailout as the least bad option. Yet after the failure and resolution of Spain’s Banco Popular, it’s a backward step that punishes good banks for the sins of others.
Spanish bank rescue poses several big questions 8 Jun 2017 Seizing Banco Popular and selling it to Santander averted a panic without a bailout. But it’s not clear how regulators calculated the hole on the lender’s balance sheet, or why they previously deemed it solvent. Investors need answers to have faith in Europe’s resolution regime.
Macron has chance to make France a better investor 8 Jun 2017 President Emmanuel Macron wants to use some of the shares the state owns to finance an innovation fund. That’s tinkering at the margin. The Republic is too activist a shareholder in some cases, too passive in others. Better to fix clearer goals for a totally revamped portfolio.
Hadas: Misbehaving wages keep economists baffled 7 Jun 2017 Conventional economic theory says wages start to rise when labour markets tighten. It isn’t happening in the U.S., Britain, Japan or Germany. Many semi-plausible excuses and partial explanations have not solved the mystery. That leaves central bankers in a quandary.
Santander picks up Europe’s regulatory roadkill 7 Jun 2017 Europe’s resolution board wound Banco Popular down and sold it to the Spanish lender for one euro. It’s a neat solution that avoids taxpayer support or financial chaos. While Banco Popular may be a unique case, this will leave creditors and other weak banks feeling anxious.
Viewsroom: The UK goes to the polls 6 Jun 2017 The Brits are about to elect a new government that’ll take the country out of the EU. Brexit, though, has taken a back seat in the campaign to deadly attacks in London and Manchester – and growing concerns about how the new masters of Whitehall will deal with social welfare.
Europe is a fertile petri dish for GDP-linked debt 6 Jun 2017 Linking national debt payments to economic performance could help countries cope with downturns. There are many obstacles. Bad governments might fiddle statistics; good ones may be reluctant to pay a premium for flexibility. Even so, the euro zone is a good place to test the idea.
British voters are sleepwalking to painful Brexit 6 Jun 2017 Prime Minister Theresa May called the election to strengthen her hand in negotiating the country’s departure from the European Union. But the political debate has barely touched on the trade-offs involved. The electorate is ill-prepared for the consequences that may follow.
New Irish leader is more like Renzi than Macron 5 Jun 2017 Leo Varadkar will be Ireland’s youngest prime minister, prompting comparisons with France’s Emmanuel Macron. Parallels with Italy’s former PM Matteo Renzi are more apt. His government is weak, and he could be at odds with Europe on Ireland’s chief challenges of Brexit and taxes.
Akzo is emblem for new “fortress Europe” 1 Jun 2017 The Dutch maker of Dulux paint thwarted a generous 25 bln euro takeover attempt from U.S. rival PPG without putting forward a convincing financial defence. As European governments reach for more power to fend off unwanted mergers, Akzo has shown how shareholders can lose out.
Euro zone “safe” bonds would be anything but 31 May 2017 The European Commission has suggested creating low-risk securities by pooling sovereign bonds. The idea is to reduce banks’ exposure to governments. But risks would still be interconnected. Without a common tax base and joint liability, no pan-euro zone debt can be truly secure.
Activist adds teeth to Ericsson’s turnaround 31 May 2017 Cevian has taken a 5 pct stake in the Swedish telecoms-kit maker. Boss Borje Ekholm’s strategy of slimming down and boosting margins is sound, but lacks credibility as he was on the board when things turned sour. It can’t hurt to have a big investor breathing down his neck.
AIB’s IPO must balance politics and pragmatism 31 May 2017 Ireland plans to float 25 pct of the nationalised bank. A good result for the government would be a valuation similar to UK lender Lloyds. Similarities include low costs and strong market share. But AIB also has some things Lloyds doesn’t, like a bad loan ratio of 14 percent.
U.S.-EU trade talks could yet be chalk and cheese 30 May 2017 Trump officials hope a transatlantic deal will be easier to forge because barriers are already low. T-TIP has its own special problems, though, including local rules for white-collar workers and protections on products like feta. Such issues can be just as tricky as tariffs.
IAG can weather turbulence at BA 30 May 2017 The owner of Britain’s flag carrier is reeling from an IT glitch that grounded hundreds of flights. While unions blame cost cutting, the airline has little choice but to bear down on expenses. The impact will fade: customers have short memories and focus on prices in the end.
Italian early election is least bad option 30 May 2017 Growing political backing for a voting law makes a 2017 election more likely. The new system may produce a weak coalition that would struggle to reform. But it would allow elections to be held before a tough budget stirs up anti-EU sentiment or ECB policy tightening hits growth.
RBS pays prudent price to bury Goodwin-era shame 30 May 2017 The UK bank is close to settling with investors who say they were misled in the run-up to its 2008 bailout. Doubling their payout will cost an extra 100 mln pounds. But it spares RBS the risk of losing in court and the embarrassment of revisiting ex-CEO Fred Goodwin’s decisions.