European mobile mergers won’t kill competition 1 Feb 2016 The European Union is reviewing a UK merger between O2 and Three. Other deals are in the works. More concentration raises the spectre of higher bills for consumers. But past tie-ups suggest that’s not inevitable at all.
Brexit index: The “Out” risk is real 1 Feb 2016 Britons are warming to the idea of Britain leaving the European Union, says a new Breakingviews Brexit index. It crunches nine different metrics to show the “Out” camp is gaining ground. The inputs include asylum applications, consumer confidence – and Daily Mail front pages.
UK banks get capital clarity, plus BoE charity 29 Jan 2016 The Bank of England wants the largest UK lenders to hold only a touch more capital to lessen their systemic threat to the domestic economy. Given no big players will be hit badly, it looks like the latest reduction in bank-bashing. But the system also will be less opaque.
Barclays 2008 blessing still has elements of curse 29 Jan 2016 The UK bank’s former adviser Amanda Staveley is suing over aspects of an 11.8 bln stg capital raising. For Barclays, the financial positives from dodging a state bailout outweigh the negatives. But shareholders now also see reputational and ethical issues as more important.
Murdoch’s second season could be good for Sky 29 Jan 2016 Four years after resigning at the height of a phone-hacking scandal, James Murdoch is back as chairman of the pay-TV group. That may rattle minority investors, but Murdoch has proven himself. It would be an odd move if Fox planned to buy the 61 percent of the company it doesn’t own.
Shell/BG vote is a bet on oil prices bouncing back 27 Jan 2016 More than 80 percent of Shell shareholders approved the tie-up with gas group BG on Jan. 27. That implies they think oil will recover to $60 a barrel, twice its current level. Cost savings help support the deal, but it still requires an optimistic frame of mind.
RBS bad news is actually a small positive 27 Jan 2016 The state-owned UK bank has pre-announced a host of charges that will deplete capital and knock 2.5 bln stg off earnings. But RBS has a buffer. The closer it gets to addressing its main uncertainty – U.S. mortgage litigation – the closer dividends and reprivatisation will look.
UK takes middle road with new bank conduct tsar 26 Jan 2016 Andrew Bailey, new head of the Financial Conduct Authority, is likely to be less antagonistic towards the financial firms he polices than predecessor Martin Wheatley. His record on bank pay suggests he can be tough when needed, but his appointment looks largely pragmatic.
Brexit trial run gives glimpse of post-vote mess 26 Jan 2016 With the focus on UK efforts to renegotiate relations with Brussels, less attention is going to what might happen if Britons did actually vote to leave the European Union. A wargame in London featuring former EU politicians gave a hint. Investors may want to cover their eyes.
Google UK tax truce more significant than it looks 25 Jan 2016 The search engine will pay 200 mln pounds in UK taxes for a decade in which it made 24 bln pounds in revenue. Google could have paid 10 times the tax based on profit margins elsewhere. But this is a sign that, however slowly, international standards are changing cosy habits.
UK business faces its own In-Out dilemma on Europe 21 Jan 2016 The British prime minister wants companies not to “hold back” on Britain’s future in Europe. Such a call must be heeded with caution. If the pro-EU debate hinges on what’s good for business – or even worse, the City – it may backfire.
Pearson buys some time with latest shakeup 21 Jan 2016 The educational publisher’s shares gained 10 pct on the back of a big restructuring plan despite a warning that earnings would suffer this year before stabilising at the end of 2017. The post-FT reality check is welcome, but it’s far from clear Pearson can return to growth.
London’s Magic Circle invites U.S.-style danger 20 Jan 2016 Freshfields is the latest member of the city’s legal elite to create more second-class partners. Stars get bigger pieces of the pie, ensuring they don’t defect to richer rivals. That can lead to resentment from other lawyers. Defunct Dewey showed how the pay gap causes trouble.
Shell/BG investors can ignore pre-match nerves 20 Jan 2016 The Anglo-Dutch oil major’s Q4 earnings will fall at least 42 percent - weaker than expected. BG had some bright spots, bolstering Shell’s case to buy its smaller rival. Low oil prices give the $47 bln tie-up an inauspicious start, but the deal probably will still go through.
Facebook forerunner misses out on $300 bln legacy 19 Jan 2016 Friends Reunited, a UK site started in 2000 and once valued at 175 mln pounds, is shutting down. Social networking and the online subscription model were both ahead of their time. The combined market value of Facebook, LinkedIn and Twitter attest to the lost opportunity.
Oil lows give Osborne chance to raise UK fuel tax 19 Jan 2016 British finance minister George Osborne may struggle to keep his promise of delivering a 10 billion pound budget surplus by 2020. But lower oil prices could help. Raising fuel taxes for the first time since 2011 would be unpopular, but could help Osborne deliver.
Dixon: EU’s latest challenge – rule of law 18 Jan 2016 The Polish and Greek governments may be flouting the rule of law. This doesn’t just undermine democracy: it is bad for investment. Brussels is in a quandary. It doesn’t want to pick quarrels. But if it turns a blind eye, bad behaviour could spread.
NAB sets suitably low bar for Clydesdale float 18 Jan 2016 The Australian lender will IPO its UK arm for as little as 0.6 times tangible book value, a discount to rivals even after recent price falls. Clydesdale’s restructuring means it may eventually deserve better; its current numbers and buy-to-let exposures suggest it doesn’t yet.
Shell/BG optimism outweighs oil pessimism 15 Jan 2016 If oil languishes at $30, then Shell’s bid for BG probably destroys value. But if investors were that pessimistic, they wouldn’t be holding Shell shares. With the long-term strategic merits of the deal intact, it should still gain shareholder approval.
Tesco recovery starts with some gorilla tactics 14 Jan 2016 The UK retailer’s sales have bounced back to growth. The reason is that Tesco is cutting costs sharply, shoring up its dominant market share. It’s an essential part of a retail turnaround, but doesn’t immediately help the bigger goal of generating cash to reduce its indebtedness.