Crosby’s mea culpa shows need for pension clawback 9 Apr 2013 The former HBOS chief executive wants to hand back his knighthood and 30 pct of his pension. At least he has taken the initiative. But he will still have a mammoth retirement income. Regulators need ways to recoup executives’ entitlements if they leave behind a mess.
Thatcher’s economic revolution was not bloodless 8 Apr 2013 Her ultra-high interest rates and strong pound devastated industry, then her 1986 reform gutted the City of London. But her tax cuts and defeat of the unions restored Britain’s economic vitality. Her government was Schumpeterian: it destroyed and created.
HBOS top brass reap what they sowed 4 Apr 2013 A report by the UK’s banking commission lays the blame for the lender’s collapse squarely on its two chief executives and its chairman. James Crosby, Andy Hornby and Dennis Stevenson may yet escape fines. But the report makes the scale of their responsibility clear.
Deal prospects make Vodafone look cheap 4 Apr 2013 Speculation about the mega-mobile operator is rife. There’s talk of a U.S. exit, a takeover by partner Verizon, or a breakup bid. Optimistically, shareholders could get a third more value - or nearly 32 bln pounds. But getting there would entail huge deals, with headaches to match.
New review of old Barclays roughs up Diamond era 3 Apr 2013 The Salz review of Barclays’ culture pulls few punches. The bank grew too fast, vested power at the top and became difficult to manage, it says. Hard-nosed Barclays bankers may scoff at the findings. But it provides helpful ammunition for those who want to change the bank.
R.I.P. the FSA: the watchdog with little bite 2 Apr 2013 So farewell then, the UK Financial Services Authority. You gave the world “light-touch” regulation and suffered the consequences. The belated zeal you found to issue fines and tackle insider trading was too little, too late. Few - bar the odd fraudster - will mourn your passing.
BP already facing test of new Russia strategy 2 Apr 2013 After the sale of TNK-BP, the UK major owns 20 percent of Rosneft. Now BP must avoid becoming just another trampled Russian minority shareholder. It could start by using its new clout on Rosneft’s board to push for fair treatment of TNK’s minority investors.
UK’s new bank capital tsar starts as good cop 27 Mar 2013 The Bank of England has ordered banks to raise 25 bln stg by the year end. But its required 7 pct core Tier 1 ratios fall short of some continental banks. The weak economy may have been a factor. And going softer makes a share sale of RBS or Lloyds easier before the election.
Pru pays price for ignoring M&A advice 27 Mar 2013 Adviser Credit Suisse pressed the UK insurer to tell the FSA about plans to buy AIA in 2010, but the Pru dodged regulators’ questions about strategy and financing issues - when deal talks were in full flow. CEO Tidjane Thiam may survive the resulting censure. His bonus shouldn’t.
Kazakhmys and ENRC risks go further than governance 26 Mar 2013 Sharp falls in the stock price of London-listed ENRC and its 26 pct shareholder, Kazakhmys, may make the companies look cheap. But investors need to dig deep to see any value. ENRC’s iffy governance is only part of the problem. Operational and strategic questions are rife.
U.S. deals Europe poker industry a betting hand 25 Mar 2013 New laws allow gamblers to take seats at America’s online poker table. Investors got burned in the gaming craze that took hold last decade and ended in the U.S. arrest of two CEOs of foreign companies. The stakes remain high but the odds facing Europe’s croupiers are shortening.
Review: Seeing through bankers’ woolly thinking 22 Mar 2013 Banks like to argue that higher capital ratios kill lending. A new book by economists Anat Admati and Martin Hellwig exposes this as self-serving. But getting lenders to bear their true costs to society will mean overcoming vested interests that extend beyond the industry.
Central banks have key role to play fixing Libor 21 Mar 2013 Benchmark interest rates are public goods, as the Bank of International Settlements contends. The yardsticks can also be huge: bonds worth $10 trln reference the London interbank rate. It is only right that a state-sponsored authority such as a central bank oversees rate setting.
New UK mortgage help misses lesson of U.S. debacle 21 Mar 2013 British Chancellor George Osborne hopes to boost housing by guaranteeing home loans. It sounds like the beginnings of an approach that saddled taxpayers across the Atlantic with huge losses at Fannie Mae and Freddie Mac. Letting a Limey Muck take root would only build trouble.
UK rightly tackles company pension power imbalance 21 Mar 2013 For years, pensions regulation has seemed to treat firms purely as entities to pay retirement payouts. A line in George Osborne’s budget heralds a more realistic approach: regulators should consider employers’ growth prospects too. Scheme sponsors and pensioners can both cheer.
UK edges towards "anything goes" central banking 20 Mar 2013 The Bank of England is printing money and tolerating above-target inflation. Until now, this arrangement was considered exceptional. Under the BoE’s new remit, announced in the budget, it will count as pretty much normal. It’s an invitation to an inflationary adventure.
UK budget takes two steps forward and one back 20 Mar 2013 Finance Minister George Osborne is making new savings to fund investment projects and tax cuts for business and low earners. That’s the right policy. The moves are marred by a plan to boost construction by risking taxpayer funds on new homes. But overall, his budget does no harm.
UK cannot afford a budget giveaway 19 Mar 2013 George Osborne is public enemy number one. Critics want him to reverse austerity. He would do better to reinforce it in health and education. But that’s a political no go. The best he can do is provide a mini stimulus via more housebuilding and tax cuts for the low paid.
Sainsbury’s cunning "no horse" strategy pays off 19 Mar 2013 Unlike most peers, the UK supermarket didn’t find equine DNA in its food products. Its reward was a 3.6 pct jump in like-for-like sales in the fourth quarter. If Sainsbury can also deal with a squeeze on real UK incomes and price wars, it could deserve more investor support.
BoE’s King is caught in the trilemma trap 15 Mar 2013 The UK central bank governor has decreed that sterling has fallen far enough. That’s easy to say, especially as Mervyn King is on the way out. But currencies fall when monetary policy is inflationary and capital flows freely. Words only slow the decline, or discredit the speaker.