Cement megadeal heralds industrial merger comeback 6 Apr 2014 Holcim and Lafarge are set to unveil a $55 bln cement behemoth. This “merger of equals” rests on skilful construction to assuage French politics. The ambition of combining two sector leaders amid big antitrust obstacles shows that CEOs are ready to take M&A risk to boost returns.
JPMorgan commodities sale shows trading’s opacity 19 Mar 2014 The bank is selling what is probably a low-return unit with regulatory headaches to privately held Mercuria. The lack of financial details makes the price hard to judge, but at $3.5 bln the buyer seems to be paying top whack. With commodities under pressure, that’s a bold move.
Swiss banks learn that some crimes don’t pay 13 Mar 2014 Credit Suisse has followed UBS into the spotlight for helping Americans dodge taxes. The banks will suffer reputational and regulatory damage that far outweighs any financial gains. Cross-border U.S. business was only 1 pct of client assets per firm and not very profitable.
Edward Hadas: The ongoing ethics struggle of banks 5 Mar 2014 The boss of Credit Suisse blamed a few private bankers for recent U.S. legal problems. The Employees Association wants management to take more responsibility. Such blame-casting misses the point. In too many businesses, the culture encourages ignoring the voice of conscience.
Credit Suisse boss gets easy ride in Senate 27 Feb 2014 Brady Dougan was only lightly chastised about his firm helping Americans dodge taxes. Senator Carl Levin was at least as angry with Swiss and U.S. authorities. And investors don’t expect much more pain. To execs at Goldman and elsewhere, it must have looked like a cakewalk.
Credit Suisse stuck in a hit-and-miss phase 6 Feb 2014 The Swiss bank has cut leverage and may beat long-term balance-sheet targets. Its legal bills look bearable too. But the operational restructuring is still a work in progress. Until that’s fixed, the wobbly performance of the fourth quarter could be repeated.
UBS’ next task: avoid U.S. overreach 4 Feb 2014 The Swiss group’s revamp into a wealth manager with a smaller investment bank tacked on has paid off. UBS’ capital position is solid and over 20 bln Swiss francs of tax assets give it options. But management should heed the risks of breakneck expansion - especially in the U.S.
The “R” word becomes taboo for global elite 24 Jan 2014 Business leaders gathered in Davos are palpably more optimistic than a year ago. But they are embarrassed about declaring “recovery” with any confidence. That’s because they know it’s a revival that excludes many citizens. And it’s still fragile.
Swiss housing bubble-poppers are bolder than UK’s 23 Jan 2014 Switzerland’s central bank has intervened for the second time in a year to check house price inflation. Mortgage stocks are growing quicker than in the UK. But the Swiss regulator’s willingness to deploy macro-prudential tools is at odds with British inactivity.
ABB can power past power outage 22 Jan 2014 A day after France’s Alstom shocked markets with a profit warning, ABB has followed suit. But while the French engineer faces structural challenges, its Swiss peer’s trouble is more contained. Still, ABB’s high valuation leaves its shares vulnerable to unpleasant surprises.
Amec engineers $3.2 bln strategic shift 13 Jan 2014 The UK engineer is set to buy U.S.-listed rival Foster Wheeler. The structure is solid: a slim 12.8 percent premium, decent cost cuts, and payment half in stock to keep debt down. Investors just need to be satisfied that a big push into downstream energy makes sense.
Europe’s pay populism makes a useful distinction 27 Nov 2013 Swiss voters rejected broad salary limits for top executives. Yet the Dutch are plotting a banker bonus cap that makes existing EU curbs seem generous. The discrepancy is understandable. While pay shouldn’t be regulated, the taxpayer-rescued finance industry isn’t showing much restraint.
Bad banks give low returns but high rewards 22 Nov 2013 State support for UBS and ING has made just 9 pct and 3 pct internal rates of return respectively. That’s not a commercial success. But the governments’ actions prevented a far worse outcome. That taxpayers are back in the black is an added bonus.
Credit Suisse shows resolution has some way to go 21 Nov 2013 The bank is rearranging itself so it can deal with crises by issuing loss-absorbing debt from its Swiss holding company. In theory, that should mean fewer geographical silos. But nationally focused regulators mean Credit Suisse is also becoming more compartmentalised.
Swiss banks could handle a 6 pct leverage ratio 7 Nov 2013 Switzerland’s finance minister reckons UBS and Credit Suisse should have an equity-to-assets ratio of 6-10 pct. While that’s miles above Basel’s 3 pct minimum, both banks could manage 6 pct, a Breakingviews calculator shows. Above that, Credit Suisse would have the bigger problem.
UBS’ regulatory thwack looks like flesh wound 29 Oct 2013 The Swiss bank’s shares tumbled after its regulator forced it to hike risk-weighted assets to address any future litigation costs. As with Barclays, the unpleasant surprise means UBS has to delay return targets. The good news is that UBS is unlikely to need a rights issue.
Credit Suisse shoved into another restructuring 24 Oct 2013 The Swiss bank’s Q3 was marred by a bigger fall in fixed income than at most U.S. peers. It is taking the axe to its capital-intensive rates trading business in response. Achieving decent returns from lower risk is a constant struggle. But reducing pay faster would help.
Wealth retreat reflects bank chiefs’ big fear 26 Sep 2013 Barclays and rival Credit Suisse have sharply cut back where they offer wealth management. After HSBC’s mega $1.9 bln fine, bank executives are terrified of falling foul of anti-money laundering and tax rules. Rising monitoring costs mean the axe has to fall somewhere.
Deutsche’s gains look smaller than UBS’s 30 Jul 2013 The German bank made impressive progress on capital and leverage in Q2, and has plans to go further. But it is still hostage to capital-market shocks and litigation. While shares in Swiss peer UBS are more expensive, its turnaround and strategic re-shaping are more convincing.
UBS $885 mln payout is big win for FHFA’s DeMarco 26 Jul 2013 Among the most reviled regulators inside the beltway, Fannie Mae and Freddie Mac overseer Edward DeMarco merits Washington’s respect. One of the 18 suits filed under his watch against lenders who sold the agencies dodgy mortgages hit pay dirt. And there’s probably more to come.