Spain may give UK banking the challenger it needs 12 Mar 2015 Sabadell has offered to buy old-new UK bank TSB for 1.7 bln stg. Half-owner Lloyds has to sell anyhow. The Spanish lender would add foreign reach, while a fully owned TSB could focus on growth, not dividends. That could help it compete against a rash of newly listed peers.
Retail is detail again as UK grocers fight back 12 Mar 2015 Morrisons has written down store values by 16 pct and will slash dividends by two-thirds. It has already sliced shop prices. That follows similar, sensible moves by bigger rivals Tesco and Sainsbury. Quality of execution will now determine winners and losers.
Deutsche Bank’s main stress test still to come 11 Mar 2015 The German lender flunked Fed stress tests for risk management, along with Santander. It’s bad but not disastrous news – first timers often fail. However it may hand ammo to those at its forthcoming strategy day who’d prefer Deutsche hacked back its outsized investment bank.
Mark Carney’s triple-bind is recipe for BoE stasis 11 Mar 2015 The UK economy is doing pretty well, which argues for a rate hike. But sterling’s export-denting rise against the euro is a reason to consider extra stimulus. And risks to the housing market abound either way. The Bank of England chief may just leave policy on hold for a while.
UK can get by without homegrown investment banks 11 Mar 2015 Downsizing at RBS and Barclays means Britain has lost two full-scale universal banks. That may upset the odd corporate relationship and dent national pride. But a successful UK-owned broker-dealer is like Andy Murray winning Wimbledon: nice to have, but not essential.
Wood Mackenzie’s pipeline defies oil rout 10 Mar 2015 The research firm is fetching $2.8 bln, or 17 times EBITDA, from U.S. analytics company Verisk. WoodMac has gushed profit for several buyout firms. The global energy squeeze presents a risk for the new owner, but demand for data seems to persist regardless of crude supply.
Credit Suisse buys some insurance with Pru CEO 10 Mar 2015 Hiring Tidjane Thiam to replace Brady Dougan should bring a fresh perspective to capital and cost conundrums. The former consultant may encounter skeptical dealmakers and regulators. Even so, his decision to leave the fast-growing UK insurer is a vote of confidence in banking.
WPP is good value in a pricey sector 9 Mar 2015 The ad giant’s pretax profit increased 12 pct last year. Earnings and dividends are set to rise at a similar clip in 2015. WPP’s markets are improving and its finances are strong. The news is good for CEO Martin Sorrell. The shares are hardly cheap, but momentum is plain to see.
UK retreat from RBS is more important than value 6 Mar 2015 Chancellor George Osborne now wants to return the bank rapidly to private hands after May’s election. Both strategy and governance have been flawed. Britain is wary of starting to reduce its 79 pct stake at a loss. But that’s a price worth paying to put RBS on a stable footing.
Aviva’s dividend and future get more sustainable 5 Mar 2015 The UK insurer’s 2014 results showed rising excess cash from operations. That’s reassuring, given tricky times for the sector and a 21 pct dividend hike. While the integration of Friends Life is a risk, Aviva doesn’t look to be doing the deal to cover up operating weakness.
Barclays’ trading woes offset pay restraint 3 Mar 2015 The UK bank has cut investment bank bonuses by a quarter, atoning for a PR gaffe last year when pay rose despite a drop in profit. But 2014 results show returns in the unit are also lower. To maintain its turnaround, Barclays may have to shrink the misfiring division further.
John Browne’s Russian truce points to oil M&A boom 2 Mar 2015 The former BP boss will head L1, a $10 bln energy fund owned by oligarch Mikhail Fridman. The duo once sparred over BP’s assets east of the Urals. Their alliance today highlights the deal opportunities created by oil’s rout - even if L1’s Russian roots are a problem.
Edward Hadas: UK voters deserve some dreamers 2 Mar 2015 The runup to May’s poll should be open season for attacking conventional wisdom and promoting radical agendas. But the pamphlets emerging from the fringe are strangely tame. Outsiders are wasting their licence to operate beyond the rules of pragmatism.
Lloyds investment case hinges on its next dividend 27 Feb 2015 The UK bank’s first payout since 2008 is an encouraging milestone. But it’s largely symbolic. The critical valuation issue is whether Lloyds’ pledge to pay out at least half its future earnings represents a floor or a ceiling - and whether the regulator allows fatter payouts.
Simpler is better for Reed Elsevier 26 Feb 2015 The dual-listed media giant is fixing a baroque corporate setup. That should lure new investors and cut the discount on its Dutch shares. A simultaneous rebrand as “RELX” is ungainly – but at least this helps distance the largely digital group from the printed past.
RBS turnaround enters critical period 26 Feb 2015 The British lender is cutting its once-mighty investment bank further after a full-year loss of $5.4 bln. That’s the right strategy, but it will hit short-term profitability. Worse, RBS’s state owners may not make investor returns their priority after the May election.
HSBC tax storm exposes flawed succession policy 25 Feb 2015 The UK bank’s chairman and CEO just about survived a grilling from domestic lawmakers over the Swiss tax debacle. The wrongdoing happened when Douglas Flint and Stuart Gulliver had lesser roles. But a bank that picks insiders to chair the board makes a rod for its own back.
UK jail-a-banker rules will hike board pay 25 Feb 2015 That’s the likely upshot of Britain’s new regime to hold financiers accountable for wrongdoing. Regulators have stopped short of applying the rules to all non-executives, but half of most boards still risk incarceration. As a result, they will probably demand more money.
London’s FTSE can extend its record-breaking run 24 Feb 2015 At long last, Europe’s big name equity index has entered new territory. Yet while the FTSE 100 is higher than ever, and is hardly risk-free, it is also attractive. It is cheaper than the leading U.S. and pan-European benchmarks and has alluring diversity.
HSBC’s operating woes trump Swiss tax furore 23 Feb 2015 CEO Stuart Gulliver’s offshore accounts bring new scrutiny of past fiscal fiddles. They also raise the bar for future good behaviour. The main concern for investors, though, is the bank’s lacklustre financial performance. Even a reduced 10 percent ROE target is some way off.