Putin shoves Europe over the energy rubicon 5 Sep 2022 By shutting the Nord Stream 1 pipeline, the Russian president has ensured the continent faces sustained high power costs. States have so far stopped short of drastic market interventions. All are now wising up to the need to freeze prices, ration demand, and tax windfall profits.
Paris and Berlin’s windfall tax timidity is futile 19 Aug 2022 France and Germany oppose a raid on firms profiting from the energy crisis. Berlin could borrow more, and President Macron has pledged not to hike taxes. Yet given it won’t make investors see either country as way more business-friendly, the reluctance makes little sense.
Banks’ LBO debt hangover may leave lasting scars 16 Aug 2022 Dicey markets forced Goldman Sachs and peers to take a hit on $80 bln of buyout loans that got stuck on their balance sheets. Calmer conditions mean the worst may be over. But the trauma, along with rising rates and competition from private lenders, adds to the case for job cuts.
Anshu Jain’s influence still lingers at Deutsche 15 Aug 2022 The Indian banker, who has died aged 59, was an industry icon who pushed the German group to go toe-to-toe with Wall Street. His stint as CEO was beset by solvency and conduct woes. But Deutsche Bank’s latest strategy is about as reliant on trading as Jain’s plan a decade ago.
Banks’ private-credit fightback may underwhelm 4 Aug 2022 JPMorgan and Deutsche are trying new ways to fend off lenders like Ares, who are displacing them in funding buyouts. Holding onto loans for longer or launching funds mean lower returns and tough competition. Their best hope is that the booming $1.2 trln sector deflates by itself.
Time for Volkswagen to park its Porsche IPO 28 Jul 2022 The 82 bln euro German group’s plan to list the luxury marque has been tarnished by its decision to name the same CEO for both companies. The IPO could be a distraction at a time when carmakers face a recession. The best option right now is a delay, plus a governance rethink.
Russia is giving German industry a slow puncture 27 Jul 2022 Industrial users of gas are in the firing line as Moscow halts supply. Companies like BASF face a hit from higher input costs and energy rationing, rather than a Uniper-style bailout. The problem for Berlin is that sustained high prices could make production head elsewhere.
VW’s CEO ouster heralds less noise, more muddle 25 Jul 2022 The $86 bln carmaker replaced Herbert Diess with Oliver Blume. It loses a bold champion of electric vehicles, but also one prone to gaffes and weakened by union battles. The decision to keep Blume in charge of both VW and Porsche, meanwhile, muddies the latter’s looming IPO.
Berlin spreads pain in 15 bln euro Uniper bailout 22 Jul 2022 That’s how much equity and debt the government may pump into the gas importer driven to near-bankruptcy by reduced Russian supplies. Diluted shareholders, Finnish owner Fortum, and German taxpayers will share the burden. So will consumers who will pay higher prices for gas.
Vendor is main winner in Brookfield’s towers coup 14 Jul 2022 The Canadian group and DigitalBridge are buying Deutsche Telekom’s masts in a 17.5 bln euro deal. Their ability to pay in cash helped beat bidders like Cellnex. Infrastructure funds have over $300 bln to invest, giving sellers scope to demand a high price even in tricky markets.
Finland’s Uniper hit best seen as defence spending 12 Jul 2022 Helsinki wants Berlin to rescue the ailing German energy group, but limit the hit to Finnish owner Fortum. Germany doesn’t agree. Finns would be better off seeing any dilution from a forthcoming capital hike as part of the cost of de-Russifying. Like the cost of joining NATO.
Uniper investors head for bailout they don’t merit 5 Jul 2022 The 4 bln euro German utility’s value has been smashed by its need to expensively replace Russian gas. Given Berlin is mulling a way to spread this cost, Uniper shares may yet rebound. The outcome may wind up being more generous than its main Finnish shareholder deserves.
Uniper woes could force reality check on Berlin 30 Jun 2022 The German utility needs state support after Russia cut gas supplies, forcing it to buy more expensive fuel instead. A better alternative would be for the regulator to allow Uniper to pass the cost on to consumers, dampening demand. The risk of open-ended bailouts helps its case.
Germany’s gas action plan pulls its punches 24 Jun 2022 As Gazprom restricts supplies, Berlin is switching coal power plants back on and squabbling over nuclear energy. But it’s still shielding Germans from high prices. A better ploy would be to use fiscal buffers to protect poorer citizens, thus incentivising everyone to use less.
Wirecard exposed finance’s scary credulity 17 Jun 2022 The payments group collapsed in 2020 after admitting $2 bln of its cash was fake. “Money Men”, a book by the FT journalist who uncovered the scandal, describes a chaotic and unsophisticated fraud. All the more shocking that analysts, advisers, auditors and regulators were fooled.
Central banks still have space to fight inflation 15 Jun 2022 Jerome Powell and Christine Lagarde are tightening monetary policy to try to control soaring prices. Previous shocks have prompted the Fed and ECB chiefs to pause or loosen again. Despite plunging equity prices this time, calmer credit markets imply the “Fed Put” is far off.
EU banks’ fading growth hopes imply more cost cuts 6 Jun 2022 After more than a decade of austerity, lenders like BNP and Deutsche are now betting on rising revenue to deliver adequate shareholder returns. A lacklustre economy could scupper that. To hit their targets, banks may have to slice into technology budgets and branch networks.
DWS CEO exit is helpful deterrent for greenwashing 1 Jun 2022 Asoka Woehrmann resigned from the $7 bln asset manager as regulators probe allegations it exaggerated its sustainable investing skills. Fund groups have benefitted from booming demand for ESG investments. The fallout at DWS gives other bosses an incentive to tone down the hype.
Siemens Gamesa’s minorities can hold out for more 23 May 2022 The turbine maker’s parent wants to take it private at 18 euros a share, half its value in early 2021. After a slew of profit warnings, any exit looks tempting. But with big savings in store and 2.5 bln euros in the bank, Siemens Energy CEO Christian Bruch can afford to pay more.
German fiscal obsession is ill-timed and untenable 19 May 2022 Finance Minister Christian Lindner is keen to reinstate a debt limit that was waived during the pandemic. The Ukraine war means the economy is facing new problems. And massive investments are needed in the green transition. This is no time for fiscal fetishes.