Wanted: CEO for Italy’s could-be national champion 24 May 2016 UniCredit needs a new chief executive. The bank’s ideal candidate has credibility to raise capital, gumption to lead a break-up or buy local rivals, and nous to schmooze shareholders from Verona to Libya. Share options cheap. Contact Breakingviews executive search.
Euro zone rules need more carrot, less stick 20 May 2016 Spain, Portugal and Italy are getting free passes to break Europe’s fiscal rules. Political calculations explain why, but even if penalties were enforced they’d be self-defeating. Instead of punishing sinners, the single currency needs simpler rules that reward those who comply.
Europe treats Italy with pragmatic kid gloves 18 May 2016 Brussels is giving Italy some deficit leeway. The country faces a banking crisis and Prime Minister Matteo Renzi’s job is on the line over a key constitutional reform. Once this hurdle is out of the way, he can get down to tackling debt. That’s worth some fiscal flexibility.
Vodafone ambitions reflect tougher telco times 17 May 2016 The $85 bln mobile group has finished a $30 bln networks splurge. It also thinks EBITDA will grow between 3 and 6 pct this year. The wide range reflects the fact that its main markets are highly competitive. Given the EU’s tougher line on mergers, this won’t get any easier.
Burberry could use refresher in old-school retail 17 May 2016 A sector-wide slowdown has exposed the inefficiencies in the UK label’s operations. High costs and low sales density show room for tailoring. Burberry chief Christopher Bailey needs help, but of a less than luxurious kind - specifically, some traditional retail expertise.
UniCredit governance issues go beyond CEO’s office 17 May 2016 The Italian bank’s shareholders are discussing replacing Federico Ghizzoni, according to reports. But the CEO can’t take all the blame for UniCredit’s listless state. The bank’s swollen board, with institutional investors inadequately represented, needs change too.
Italy’s old guard gets new religion with RCS bid 16 May 2016 Mediobanca and Pirelli are pitching in on a 773 mln euro bid for the Corriere della Sera publisher with Investindustrial, beating a rival bid. Putting RCS in the hands of powerbrokers sounds like a backward step. But the cash offer avoids some bad old salotto buono habits.
Moncler’s off-piste record deserves more credit 11 May 2016 The Italian maker of 1,000-euro puffer jackets saw revenue grow 17 percent in Q1. Despite its sales densities and profit margins being among the highest in the luxury sector, its shares trade at a discount. Exposure to one product explains why, but it’s probably due more slack.
UniCredit’s least-bad option: sell more assets 10 May 2016 The Italian bank’s sub-par capital ratio shrank in the first quarter. Even if it parted company with its under-fire CEO, a rights issue would be tricky. Selling the likes of Poland and Turkey would make the bank less diversified, but UniCredit lacks plentiful alternatives.
Italy fixes tomorrow’s debt crisis before today’s 6 May 2016 Rome is to tackle the inefficient Italian bankruptcy system, after a bad debt crisis forced big banks to rescue straggling lenders. Its proposals are radical, but they don’t tackle a pre-existing 320 billion euro pile of dud loans. That may not help the weakest lenders much.
Marchionne’s job upgrade bodes ill for Fiat 3 May 2016 The storied boss of Fiat Chrysler has taken over as chief executive of spun-out Ferrari, too. Leading the iconic luxury carmaker is surely the more alluring of the two jobs. Yet challenged Fiat Chrysler arguably needs Sergio Marchionne’s full attention more than ever.
EU budget delinquents have the upper hand 26 Apr 2016 The European Commission is considering penalising Spain and Portugal for flouting budget rules designed to underpin the euro. Doing so would risk a political backlash. Letting them off sends a signal EU budget rules are toothless. It hardly helps that the rulebook is so complex.
E.ON’s corporate alchemy hinges on nuclear boost 26 Apr 2016 Spinning off fossil fuels and energy trading might unlock around 7.5 bln euros in hidden value at E.ON, if the remaining group can catch up to valuations of peers like National Grid. A favourable deal with Berlin over nuclear decommissioning costs is a key precondition.
Luxury groups should focus their FOMO on Iran 25 Apr 2016 With $32.6 bln of frozen offshore cash to be repatriated post-sanctions and GDP to grow 6 pct next year, Tehran can be a magnet for high-end consumption. A lack of infrastructure and political volatility are reasons to hesitate. Offsetting that is the risk of missing out.
Technogym IPO is fittest without luxury tag 22 Apr 2016 The Italian upmarket exercise-machine maker should net an equity value of 675 mln euros, the middle of its price range. Technogym’s valuation looks more properly benchmarked against fitness peers than the luxury sector. Softness in the new-issues market calls for safety first.
Germany should buy into Italy’s bad bank 21 Apr 2016 If the government reforms, Italy’s Atlante fund for banks’ bad debt could be a money spinner. German insurers and pensioners earn nothing on Bunds, and are already exposed to Italy anyway through ECB money printing. Atlante would be a better investment—and good politics.
Rome’s Atlas bank fund takes on ever bigger burden 21 Apr 2016 The Greek titan held the heavens on his shoulders. Its Italian namesake, a rescue fund, may end up with a big stake in troubled Popolare di Vicenza - which may not even be listed. The messier this bailout, the less firepower Atlas has for its other task of buying bad loans.
Italy’s bad bank needs a fireman’s lift from Renzi 13 Apr 2016 The government wants banks and funds to pay 6 billion euros for weak lenders’ non-performing loans. If Prime Minister Matteo Renzi delivers on his boast to reform Italy, they might make a decent return. If not, a Breakingviews calculator shows the bad bank is in for a bad deal.
Bollore stake boosts Fnac’s Darty bid in two ways 12 Apr 2016 The Vivendi chief is buying a 15 pct stake in struggling French CD and book seller Fnac. That gives the retailer more cash to up its 660 mln pound bid for Darty. Speculation about what the billionaire has in mind should boost the value of the shares Fnac is offering Darty too.
Italy’s bank rescue is a risky Plan C 12 Apr 2016 Rome has corralled banks into backing a 6 bln euro rescue fund. It’s something, but raises knotty governance issues without decisively plugging bad debt holes. Were they available, market solutions or creditor bail-ins would have been much better than stiffing the bank sector.