HSBC stuck on a treadmill but getting fitter 4 Nov 2013 Despite flat income, underlying pretax profit rose 10 pct in the third quarter. Lower costs, fewer bad debts and a lack of big fines helped. HSBC’s long-term fortunes depend on GDP growth and interest rates. In the meantime, shareholders can at least expect steady dividends.
Austerity hasn’t held back UK growth 4 Nov 2013 British GDP has almost returned to its level of six years ago. Post-crash austerity isn’t really to blame for the slow catchup: largesse and boom created an unnatural peak. Recovery now is much better than expected. But monetary stimulus excesses are the new worry.
RBS thankfully bins bad-bank spinoff folly 1 Nov 2013 The UK bank will not dump its worst assets into an independent entity, its state shareholder has decided. Raising capital via a speeded-up runoff of non-core assets and a sale of U.S. businesses always made more sense. It’s a shame the government took so long to work it out.
Banks share the blame for Britain’s credit drought 1 Nov 2013 Since 2008, lending to small UK firms has slumped. Banks always cite a lack of demand. A new study into market leader RBS’s lending practices suggests supply is, as you might expect, equally to blame. Alas, its recommendations are too late for companies that have gone bust.
Conoco shows rivals splitting up is great to do 31 Oct 2013 The driller had a bumper Q3 thanks to hiving off refining and pipelines 18 months ago. Shares in Conoco and its two spinoffs have also bested its full-service brethren, despite similar overall performance. The benefit of a breakup is getting harder for Exxon and Shell to ignore.
Three Simons may be enough at Robertson Robey 31 Oct 2013 Simon Warshaw is to join his namesakes Robertson and Robey at their advisory boutique. The latest Simon is as big an M&A hitter, and offers the same ties to UBS as Robey has to Morgan Stanley. But the firm still needs to decide how big it can get without becoming unwieldy.
Vodafone’s India bet starts to look less bad 31 Oct 2013 The British telco is set to take full control of its Indian unit amid hopes it is turning a corner. The indicated price, based on terms set two years ago, implies a value of $10.6 bln. That’s less than Vodafone paid for previous stakes, and less than implied by peer valuations.
Barclays’ deleveraging phase has only just begun 30 Oct 2013 The UK bank raised equity in the third quarter and made progress on existing plans to cut leverage. But it could yet be hit by further fines and regulatory demands for higher capital ratios. Unless Barclays wants to curb dividend payouts, it may have to cut its investment bank again.
BP’s memo to the market: we are cheap 29 Oct 2013 The UK oil major has bumped its dividend and is buying back stock despite falling profit and hefty capex. BP is trying to show strength to a market that values its shares at a discount to peers. To be convincing, BP may have to show it can also generate sturdy earnings growth.
UK takes token step into Islamic finance 29 Oct 2013 The government is finally making good on a promise to be the first Western nation to sell a sukuk, the Islamic finance name for a bond. It could establish a benchmark for other British issuers, but at 200 million pounds, the deal’s main payoff is political, not financial.
Use Aristotle to de-fluff business-society debate 28 Oct 2013 Talk among corporate chiefs about social responsibility is frequently mere rhetoric. Their focus on short-term profit is socially divisive and often economically counterproductive. They have much to learn from the Greek philosopher’s ideas of virtue as a habit of excellence.
Hugo Dixon: The City has huge scope to expand 28 Oct 2013 Finance has rightly been in the sin bin for the last six years. And the cleanup job isn’t finished. But Mark Carney, the new Bank of England governor, is correct to stress that a vibrant City is good for Britain, Europe and the world – provided it’s properly organised.
Carney shows touching faith in financial regulation 25 Oct 2013 The Bank of England governor’s broadly sensible new liquidity regime is part of an “open for business” approach to banking. But if the UK prospers as a global financial hub, it will be tied to a volatile sector. And Carney may overestimate the ability to deal with crises.
Dr Martens can run faster with private equity 24 Oct 2013 Permira is back in an old stomping ground: fashion. It is paying $485 mln for punk rock’s favourite bootmaker. The price tag is rich, but the target has a strong brand and a growing global footprint. The only spot of bovver would be if the moneymen hurt DMs’ rebel image.
UK risks return to 1980s labour battles 23 Oct 2013 A major chemical plant is to close after failing to resolve an industrial dispute, while postal workers are following teachers in a walkout. Job and wage flexibility have helped the UK through recession. The country cannot afford a new Thatcherite period of confrontation.
Ferrovial hedges regulatory risk at Heathrow 23 Oct 2013 The Spanish infrastructure group has sold an 8.7 percent stake in the company that controls Heathrow to a top UK pension fund, USS. Ferrovial gets a good price and remains the airport’s largest investor. Bringing in a local partner makes sense for such a regulated asset.
Time for Reckitt to quit prescription drugs 22 Oct 2013 The household goods group is wondering what to do with its heroin substitute. A full disposal would be the best outcome. Sales are sliding, generic competition is mounting, and the business sits oddly with the rest of Reckitt. Still, the parent will be lucky to get 2 bln stg.
Blueprint for new BoE could start with rebrand 22 Oct 2013 The Bank of England has hired McKinsey and Deloitte to review strategy and operations. It’s a chance for the 319-year-old institution to review its KPIs to better leverage its USP and remotivate its key stakeholders.
Merlin has attractions for IPO investors 22 Oct 2013 A float could value the global theme-park operator at 4 bln stg, including debt. It’s spent ages backed by private equity and done lots of M&A. Yet the IPO case is solid. Growth should come from exporting proven tourist formats - such as waxworks and aquariums - to new markets.
ARM’s smartphone buying blip may be shortlived 22 Oct 2013 The UK microchip designer set new records for licences sold and free cashflow in its third quarter. Yet ARM shares fell. That is down to softening demand for smartphones. But with ARM blueprints now in all manner of devices, it has the strength to rebalance its revenue streams.