Germany

Fintech superstars face brutal financial comedown

3 June 2020

Digital banks like Chime and Monzo have millions of customers but are tackling their first big crisis with scant revenue. Online lenders from Kabbage to Klarna face rising defaults, less new business, and funding concerns. Valuations, business models, even survival, look shaky.

Germany’s new $90 bln fiscal bazooka may misfire

2 June 2020

Chancellor Angela Merkel’s government is working on new stimulus measures. But the package, which is still being negotiated, is short on infrastructure investment. Consumer handouts and tax cuts may end up boosting savings given concern about the outlook for the economy and jobs.

TUI’s summer cheer may be short-lived

2 June 2020

The $3.5 bln holiday operator’s shares have risen by around 60% since Spain said it would welcome tourists again. But fewer sales and high debt could eventually force CEO Friedrich Joussen to raise more equity. With the stock buoyant, it’s a good time to tap shareholders.

Germany’s car bonus scheme is only half the trip

1 June 2020

Chancellor Angela Merkel is mooting 5 bln euros in auto subsidies. A similar plan saved jobs at Volkswagen and Daimler in 2009. But the incentives would cover 2 mln vehicles – barely half last year’s sales. If the pandemic has permanently dented demand, a bigger boost is needed.

German carmakers step on Chinese electric pedal

29 May 2020

VW is taking big stakes in two Chinese EV firms, while Daimler may invest in battery-maker Farasis Energy’s $480 mln IPO. Demand remains tepid, oil is too cheap, and the targets look richly priced. But these deals lock in supply, and position both to compete with Tesla in China.

Virus bailouts will be messier than past rescues

29 May 2020

Governments are ponying up trillions of dollars to save lockdown-hit firms. Further assistance looks inevitable as economies falter. States will demand higher taxes and jobs in return, putting them at odds with private owners. And lending to smaller firms creates bigger tensions.

Bankers’ share sale boom hints at fragile recovery

27 May 2020

Saint Gobain sold $2.7 bln of shares in Sika, one of several recent so-called block trades. Such deals are a quick way for banks to win business but, as Citi’s experience with the Swiss group shows, carry risks. Companies’ rush to exit suggests stock market gains may be fleeting.

JAB’s $23 bln coffee unit is priced to take away

26 May 2020

The investor is offering shares in JDE Peet’s at a decaffeinated 20% discount to Nestlé. Consumers stuck at home are giving packaged brands like Kenco a boost, but prices per cup can still grind higher when cafes reopen. Europe’s biggest float this year can brew a robust return.

Lufthansa rescue gives taxpayers first-class seats

21 May 2020

The German flag carrier will get a 9 bln euro bailout, including new shares and non-voting stock. The government gets a 25% stake on the cheap, and a more generous payout than other investors. Shareholders can at least be grateful that politicians are staying out of the cockpit.

Thyssenkrupp’s ‘bad bank’ needs speedy euthanasia

19 May 2020

The ailing German conglomerate is carving out loss-making units it can either sell or shut down. Such frank self-assessment is a solid step towards recovery. But with 2020 losses set to dwarf last year’s 400 mln euros, the quicker they’re put out of their misery the better.

JAB can go further to ease caffeine addiction

18 May 2020

At-home drinking has helped the group’s 25 bln euro coffee arm, JDE Peet’s, hold its value despite Covid-19. Listing a chunk will help pay down the unit’s debt. Still, JAB could sell further equity and use the money to build a portfolio less reliant on three big companies.

Hapag-Lloyd sails into valuation Bermuda Triangle

14 May 2020

The German shipping giant’s shares have doubled in a month, to the bemusement of all including its CEO. A tiny 3.6% free-float may be part of the puzzle. But positive reasons for the valuation hike – brightening horizons, M&A fever or short-sellers caught short – are absent.

Crisis exposes flaws in EU’s second-tier banks

13 May 2020

ABN Amro and Commerzbank, both former bailout recipients, lost money in the first quarter. The cause, virus-induced bad debt, is common. But a narrow focus and low profitability make them particularly exposed, leaving taxpayers stuck with some of the lowest returns in Europe.

Curbing German exceptionalism has political price

11 May 2020

A national court’s ruling on ECB asset buying has challenged the primacy of EU law. If politicians can’t defuse the stand-off, Brussels will have to take legal action against Europe’s paymaster. The fiasco is likely to give Euroscepticism across the continent a boost.

Thyssenkrupp lift deal becomes $18 bln albatross

7 May 2020

Advent and Cinven paid up for the German group’s elevator unit because it looked virus-proof. Sadly for the buyout barons, a possible 10% revenue drop this year means it may be anything but. The duo could be stuck with a low-return asset, a level below private equity’s top floor.

ECB firefighters can circumvent German roadblock

5 May 2020

A ruling by Teutonic judges challenged the European Central Bank’s long-standing efforts to use bond buying to stimulate the euro zone economy. Inventive rate-setters will find ways to plough on to achieve their aims. But it’s a very German way to test their independence.

Corona Capital: U.S. GDP, Gilead’s drug, Spotify

29 April 2020

Concise views on the pandemic’s corporate and financial fallout: the U.S. economy takes a dive; Gilead’s antiviral drug may help a bit; and Spotify sings an upbeat tune.

Icahn’s Volkswagen-Navistar deal is DOA

8 April 2020

The activist was finally set to make a fat return on the U.S. truck maker thanks to the German carmaker’s $2.9 bln offer. But the deal was never signed, and the target’s shares have halved. Given CEO Herbert Diess may have to take state aid, another Icahn bet may bite the dust.

Corona Capital: Lufthansa, JPMorgan, Foursquare

7 April 2020

Concise views on the pandemic’s corporate and financial fallout: Lufthansa parks hopes of a quick airline-industry recovery in the hanger; JPMorgan skirts close to committing an early earnings faux pas; and Foursquare checks into the M&A market.

Europe lockdown easings are hard act to follow

6 April 2020

Austria hopes to reopen some shops next week, with Germany following suit from mid-April. Britain and America, with inferior testing and higher virus transmission rates, are well behind. And compared with China’s timetable, the West’s guinea pigs might still be jumping the gun.