Italy shows Germany the way forward in bank reform 28 Jan 2015 The shake-up of Italian regional banks can be a role model for fixing the notorious Landesbanken. These German state-owned lenders are short of a business model and endanger financial stability. The ECB has the tools to act. But Italy’s will for change is lacking in Germany.
ECB, Syriza have broken euro zone’s German spell 27 Jan 2015 The European Central Bank’s easing and the Greek anti-austerity party’s electoral victory show the euro zone is breaking free of German dominance. With loose monetary policy and banking union, it seems ready for growth-friendly policies that don’t ignore economic reality.
Honeymoon really is over for Siemens boss 27 Jan 2015 Lacklustre quarterly results hit shares in Europe’s largest industrial group. After 18 months, CEO Joe Kaeser has not lived up to early hopes. He’s completed some smart disposals. But he’s also overspent on shale and, by centralising power, hobbled unit managers.
Siemens faces big oil deal debacle 23 Jan 2015 The collapsing oil price turns the German engineer’s dash for shale into a costly blunder. Its $7.6 bln September bid for U.S. oilfield kit maker Dresser-Rand will stain CEO Joe Kaeser’s reputation. With shares of Dresser’s peers clobbered, a major impairment is looming.
Deutsche may wind up as Europe’s Goldman Sachs 14 Jan 2015 Listing its retail arm, as the German lender is reportedly considering, would leave a Goldman-style investment bank with a transactions business tacked on. It could cut Deutsche’s leverage. But the group would be upping its bet that the fixed income slowdown is cyclical.
Tech steering carmakers down valuation dead end 12 Jan 2015 As the Detroit auto show kicks off, manufacturers from Toyota to Ford to VW are getting little, if any, credit for profit growth. Recalls, currencies and geopolitics are all to blame. Longer term, they’ll feel the squeeze from connected vehicles. Low multiples may be here to stay.
Merkel subjects Greece to risky tough love 8 Jan 2015 The German chancellor wishes to keep the euro zone intact – while playing up her indifference to the prospect of Greece leaving it. She just wants to make sure the next government in Athens will back reforms. That’s the only way to make a deal politically acceptable in Berlin.
Germany’s reform zeal peaked a decade ago 5 Jan 2015 Berlin often lectures its euro zone peers on structural reform. Germany indeed adopted radical labour market reforms in 2005. They were beneficial, but amounted to political suicide for Angela Merkel’s predecessor. Since then the Chancellor hasn’t shown much appetite for change.
Europe returns to Franco-German axis of neurosis 2 Jan 2015 A prolonged economic slump highlights Europe’s core problem: a crisis in the French-German partnership. Populist parties are rising and the UK could leave the EU. Although many countries still want to join, it’s up to Paris and Berlin to make the case for a rejuvenated Europe.
More than Slim odds America Movil buys T-Mobile 22 Dec 2014 Carlos Slim’s telecoms empire needs to reduce its dependence on Mexico. The fourth U.S. wireless carrier is cheap, parent Deutsche Telekom doesn’t want it and there’s strategic logic to a deal. The increasingly frightful competition in U.S. telecoms may be a sticking point.
German Mittelstand will survive higher death tax 17 Dec 2014 The country’s constitutional court has shot down the privileges benefitting the heirs of family firms. Bigger companies face a higher burden, but they can cope. The tax code will be fairer and fiscal revenue could be higher – all without harming Germany’s economic backbone.
Poor growth prospects show Germany’s weaknesses 15 Dec 2014 Europe’s supposed economic powerhouse can only grow by 1 percent a year in the long-run, according to revised Bundesbank forecasts. Misguided policies drag down Germany’s economic potential as dividends of past reforms are petering out. That’s bad news for the euro zone.
Politics outweighed German unification economics 10 Dec 2014 Karl Otto Poehl, who died on Dec. 9, quit as president of Germany’s central bank in 1991. He thought his government’s reunification plans were unsound. His fears were justified and his steeliness admirable. But the economics proved less important than the politics.
Volkswagen can turn investors round 10 Dec 2014 Shareholders don’t really trust Europe’s largest carmaker. That may change in 2015, as hot new cars boost sales and cost-cutting takes hold. If boss Ferdinand Piech throws in higher dividends too, that could seal the deal – and narrow the valuation gap with BMW and Daimler.
Springer holders to trade lesser power for growth 8 Dec 2014 The controlling family of Germany’s largest publisher will tighten its grip over the company by changing its governance, after a deal with private equity group General Atlantic. Axel Springer will become takeover-proof. At least it will be able to grow by using its own shares.
GM plant closure flags Europe’s wider car crash 5 Dec 2014 Bochum represents Germany’s first shutdown since World War Two. That shows how slow the industry has been to close European factories, despite slumping sales. Many are operating way below capacity and firms are offloading vehicles at a discount. That will keep profits low.
Germany’s $5 bln housing deal looks hard to topple 1 Dec 2014 Residential landlord Deutsche Annington is offering to buy rival Gagfah to create Germany’s largest real estate group and reap sizeable savings. The 18 pct bid premium seems stingy. But the price fairly reflects Gagfah’s fundamentals, and it’s hard to see anyone else paying more.
E.ON’s "bad power" spinoff promises little upside 1 Dec 2014 Germany’s largest utility is exiting conventional generation, bundling unwanted risk into a new company to be handed to shareholders. E.ON can concentrate on distribution and clean electricity. Both managements will benefit from focus. Still, the new entity’s prospects are bleak.
If Vodafone wants Liberty it has to get creative 1 Dec 2014 The mobile giant is eyeing cable group Liberty Global for a $90 bln-plus takeover. The strategic case is easier to make than the financial one. Regulators may be persuadable. Investors and Liberty Chairman John Malone could be colder. Vodafone has to be resourceful.
Zalando still has much to prove 26 Nov 2014 Europe’s biggest online fashion retailer says it might eke out an operating profit in 2014. That helped propel shares in the recent 5.3 bln euro IPO. Cost discipline is good but may come at the expense of growth, which Zalando needs to sustain its share rating.