Inditex high street reign comes with higher bar 11 Sep 2019 The Zara owner’s strong first-half sales growth was overshadowed by downward pressure on its gross and operating margin in the second quarter. Investors’ concern about the cost of growing revenue may be valid but a widening valuation discount to peer H&M seems harsh.
Spain will soon face tab for policy stasis 27 Aug 2019 Prime Minister Pedro Sanchez has spent four months unsuccessfully trying to secure a parliamentary majority and may have to call another election. Political gridlock mattered less when the economy was doing well. Now it will hinder Madrid’s ability to combat slowing growth.
Santander’s Orcel offensive is double-edged sword 26 Jul 2019 The Spanish bank accused Andrea Orcel, the ex-UBS banker it backed out of appointing as CEO, of “dubious ethical and moral behaviour”. That calls into question Chairman Ana Botin’s original decision to hire him. This increasingly bitter battle will only produce losers.
Santander’s valuation discount looks out of date 23 Jul 2019 The Madrid-based bank posted an 11% annualised return on equity for the second quarter. Slow Spanish and UK markets mean shares in the 65 bln euro lender trade at around 0.9 times book value. Exposure to fast-growing Latin America means it should close the gap faster than rivals.
Santander’s Andrea Orcel story doesn’t add up 19 Jul 2019 The Spanish lender offered the former UBS banker up to 35 mln euros for lost compensation when he joined as CEO, a letter seen by Breakingviews says. That clashes with the bank’s subsequent explanation for withdrawing the offer. Chair Ana Botin owes investors an explanation.
Andrea Orcel could benefit from his own advice 5 Jul 2019 The former UBS investment bank boss is suing Santander for 100 million euros after the Spanish bank yanked an offer to make him CEO. A lengthy battle will further cloud the rainmaker’s future career. Breakingviews imagines what counsel the hard-charging banker might give himself.
Huawei’s EU friends will stay on the line for now 30 May 2019 BT and Vodafone paused sales of some of the Chinese group’s phones after America put it on a blacklist. Yet Huawei equipment still pervades European telecom networks. Ripping it out now would be costly and disruptive. Better to wait and see whether the U.S. pressure persists.
Spanish election half-solves political paralysis 29 Apr 2019 Prime Minister Pedro Sanchez's Socialists gained support in the country’s third vote in four years. That gives him a clear political mandate, but still no majority. He’s in a stronger position than before but still probably needs support from regional parties to get much done.
Carlyle shows Mubadala benefits of procrastination 8 Apr 2019 The buyout group is acquiring 30-40 pct of Cepsa from the Abu Dhabi fund. The $12 billion enterprise value is in line with the Spanish energy group’s aborted IPO last October. The only downside is that a listing would have made it easier for Mubadala to sell more in future.
Santander’s Latam double-down comes at a cost 3 Apr 2019 The bank run by Ana Botin wants to raise its return on equity to as much as 15 percent. That looks hard with the UK mired in Brexit, and Europe slowing. Allocating more capital to fast-growing countries like Brazil makes sense, but risks making the business more volatile.
Oligarch’s Spanish bid is lesser of two evils 19 Mar 2019 A takeover by Mikhail Fridman’s LetterOne could leave investors in DIA with heavy losses. But supporting the management means backing a $680 mln rights issue – almost twice the supermarket’s market value. After accounting problems and profit warnings, the former looks preferable.
Cox: Really, no one else will bid for Commerzbank? 19 Mar 2019 Berlin’s blessing of M&A talks with Deutsche may scare off interlopers. But Germany’s number two offers ING, UniCredit, Santander and others a unique chance to expand in the largest euro zone economy – and perhaps eventually move their HQs to Frankfurt to gain other goodies.
Carlos Slim has upper hand in Spain property fight 14 Mar 2019 Hedge fund Polygon reckons Realia, controlled by the Mexican tycoon, uses lowball land valuations and raised capital it doesn’t need. The 800 mln euro company’s response is unconvincing. Yet unless regulators force it to change, Slim could increase his stake at a lowball price.
European telco giants are cheap for a reason 21 Feb 2019 Deutsche Telekom, Orange and Telefonica appear undervalued relative to the past five years given their rising sales, stable EBITDA margins and M&A options. But they look less of a bargain once hefty network investment needs and the possibility of low returns are taken into account.
Spain’s snap election could harden Catalan divide 15 Feb 2019 Socialist Prime Minister Pedro Sanchez called a vote after separatist parties refused to support his budget. A coalition including conservatives and far-right Vox could get more done. But the parties’ hard line on Catalan independence might cause tensions to flare again.
Santander gives bondholders a painful lesson 12 Feb 2019 The Spanish lender flouted market convention by not redeeming a subordinated bond at the first opportunity. The move wrong-footed some investors and shows that banks will put shareholders’ interests above creditors. But not all peers can afford to take such a hard-nosed approach.
Spanish banks’ capital journey is only beginning 1 Feb 2019 BBVA and Santander trade at relatively low valuations relative to their above-average returns. That’s partly justified by thin capital positions. The pair are boosting this margin of safety, but only slowly. Domestic economic and political risks mean they may have to do more.
CEO mess overshadows Santander’s stellar outlook 30 Jan 2019 The Spanish lender reported an 11.7 pct return on tangible equity last year thanks to rapid growth in Brazil. Chairwoman Ana Botin may be able to increase that to 14 pct in the medium term, if she can avoid further missteps, like the bizarre choice to hire and drop Andrea Orcel.
Context makes Santander’s Orcel fail even worse 18 Jan 2019 The Spanish bank expected UBS to honour a portion of its would-be CEO’s deferred pay. But recent executive moves at Deutsche Bank and Barclays saw new hires compensated in full. Andrea Orcel’s acceptance of a cut was a concession – making it all the odder Santander backed out.
Orcel U-turn leaves Santander with reddest face 15 Jan 2019 The Spanish bank backed out of appointing Andrea Orcel as chief executive after balking at the former UBS executive’s pay package. The Italian is left without a job, and the Swiss lender has embarrassed its client. Santander Chairman Ana Botin, though, looks rash and naive.