How to respond to rising London house prices 27 Sep 2013 Some day, the return of normal financial conditions might cool down the capital’s soaring property market. While waiting, policymakers should fight against the possible consequences: economic drag, social injustice and cultural degradation.
Review: the puzzle of Fred Goodwin’s rise and fall 27 Sep 2013 Royal Bank of Scotland rode the boom to briefly become the world’s biggest lender. Then it collapsed, making its former boss a pariah. In “Making It Happen”, Iain Martin examines hubris and self-delusion - and finds the blame spreads far beyond one domineering CEO.
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.
Odds shorten on big change at Ladbrokes 26 Sep 2013 A profit warning sent shares in the British bookmaker down 8 pct. The big headache is the trickier-than-expected switch to a new digital platform, but margins are weak across the board. It’s been a horrid few months. The chances of a takeover or a management cull are rising.
ICAP’s Libor lesson: client service has limits 25 Sep 2013 The interdealer broker has been fined $87 mln, and three ex-employees have been charged for aiding Libor-rigging at banks. Going too far to help clients can be a problem in all areas of finance. But the regulators’ reports depict an industry that was especially susceptible.
No quick fix for long-term bonus plans 24 Sep 2013 Fidelity says European executives should wait five years to benefit from long-term bonus plans, even if share grants vest sooner. That makes intuitive sense. But companies may have to pay more to secure top talent as a result. Case-by-case implementation would be wise.
Foxtons makes fittingly brash London market debut 20 Sep 2013 The estate agent’s IPO got its full price and a 649 mln stg valuation. The stock popped 21 pct. BC Partners even sold a majority stake, a bit of a no-no for private equity nowadays. It’s London property all over: a sale at the asking price and the buyer still gets a quick flip.
JPMorgan’s management failings beggar belief 19 Sep 2013 Many of the Whale fail’s gory details were already known. But U.S. and especially UK watchdogs have given the most jaw-dropping account yet of how the bank mismanaged the trading book, responded to the crisis and misled its regulators. CEO Jamie Dimon has even less wiggle room.
Smooth Lloyds sale is mixed omen for bank ECM 17 Sep 2013 The sale of 6 pct of the UK bank was perfectly timed and expertly sized. But demand from U.S. funds for jumbo positions was also a factor in its success. Future equity capital markets deals from UK banks may need strong domestic retail and institutional support to do as well.
Warehousing rules put LME’s new owner on the spot 16 Sep 2013 Hong Kong’s securities exchange paid a fortune for the metals marketplace last year. It’s been a bumpy start with plans to reform price-distorting warehouse rules proving divisive. Yet China-fuelled expansion will fail if market participants lose faith in LME prices.
Barclays’ Qatari penalty makes rebranding harder 16 Sep 2013 The bank has been fined 50 mln stg by the UK regulator for making 322 mln stg of undisclosed payments connected with its 2008 capital raising. Barclays is contesting the fine and the sum is not huge. But it’s hard to reinvent the brand when the reputational blows keep coming.
Lloyds’ shares look a better bet than Barclays’ 16 Sep 2013 The two UK banks are the focus of forthcoming share offerings. Barclays is selling 5.8 bln stg of new stock in a rights issue; the government is set to sell down its stake in Lloyds. Barclays is risky but cheap; Lloyds is more steady but pricier. Still, Lloyds looks better value.
British banking elite find a new revolving door 16 Sep 2013 Top Credit Suisse banker James Leigh-Pemberton is to run UKFI, the caretaker of Britain’s bank stakes. His past bailout role makes him a natural choice. Like the Takeover Panel, a stint here now offers senior bankers a classy alternative to boutiques, boards, good works or golf.
Review: A blunt-edged hatchet job of free markets 13 Sep 2013 Bryan Gould, a moderate socialist, was prominent in the UK’s 1980s Labour Party. His new critique of modern market economies identifies truly culpable targets. But his solutions are hard to square. They also illustrate the Left’s disappointing response to the financial crisis.
UK house prices need less rigging – not more 13 Sep 2013 Britain’s home valuers are rightly worried about a bubble, and suggest that annual growth of 5 pct should trigger a policy response. But if there’s a problem, the answer is to remove the props that are artificially inflating prices, not to set thresholds for applying the brakes.
M&A court battle is more than entertainment 13 Sep 2013 Star banker Ian Hannam’s appeal against a 450,000 stg market-abuse fine highlights some questionable M&A practices. Any good dealmaker needs to be wily, driven and well connected. But you can’t spin too hard, or share too much. Hopefully this case will clear up some grey areas.
2008 retold: EU bank bail-in saves taxpayer bacon 12 Sep 2013 Thank God for Northern Rock. The collapse of the UK lender last year focused European minds, enabling a common bail-in regime, the OMFG, in double-quick time. That’s allowed 12 banks to hike their capital positions by 250 bln euros - none of which has come from public coffers.
Big dividend should deliver Royal Mail IPO success 12 Sep 2013 The state-owned British mail group is finally going public. At a mooted 2.5 to 3 bln stg market value, investors could enjoy a 7 pct dividend yield. That’s a sensible recognition postal companies are income stocks, not growth stories, even if there is potential in e-commerce.
Verizon herds investing sheep in grand fashion 11 Sep 2013 Bond buyers are piling into the telco’s record $49 bln debt sale. A 10-year yield above 5 pct and an investment-grade rating make it appealing. A big part of the lure, though, is the creation of a supersized, super-liquid benchmark. It’s an offer that just can’t be refused.
UK needs to live with a rising pound 11 Sep 2013 Sterling is on the march, reflecting better UK growth, lower unemployment and a lack of quantitative easing from new Bank of England head Mark Carney. The worry is that this comes before the UK economy has rebalanced towards exports. But it’s hard to see what policymakers can do.