Other banks may take most of the UBS Libor pain 14 Dec 2012 The Swiss lender is set to pay $1 bln for fiddling interbank rates. That’s more than twice as much as Barclays, which lost a CEO over the case. After many reputational blows, UBS has less to lose. But fellow Libor miscreants will be looking at an even more hostile world.
Barclays’ Hector Sants hire risky for both parties 12 Dec 2012 The UK bank has appointed the ex-FSA chief executive to a key compliance role. If Barclays moves on from its Libor woes, Sants’ image as a regulator who stood up to it before the scandal will be cemented. If it doesn’t, the bank will look crafty and he will look a stooge.
Too big to fail looks on its way to being licked 12 Dec 2012 The Bank of England and FDIC sound pretty confident they could resolve a massive bank failure. It’s hard to know without a test case. But by making bigger U.S. banks pay more to fund themselves in the capital markets, investors may be showing they agree with the watchdogs.
Carney shows central bankers are all at sea 12 Dec 2012 The incoming Bank of England governor says monetary authorities could use “nominal GDP targeting” in exceptional times. In central bank world, that’s a bold idea. In reality, it’s just a dubious technical tweak to current policy. The trade’s intellectual armoury looks empty.
Delta buys premium Heathrow seat for economy fare 11 Dec 2012 Being Richard Branson’s junior partner cost Singapore Airlines two-thirds of its investment in Virgin Atlantic. Delta, however, is buying the 49 pct stake at a discount to what slots at London’s premier airport usually command. That should help the new joint venture take flight.
Record fine shows some banks are too big to indict 11 Dec 2012 HSBC’s $1.9 bln fine may look big, but for the bank it’s small beer. Regulators reportedly wanted to go the whole hog and indict the UK lender, but backed down on systemic risk fears. Yet another sign that four years after Lehman’s collapse, finance is far from fixed.
Bank fines go from irritant to hefty business cost 11 Dec 2012 HSBC’s $1.9 bln money-laundering bill is the biggest ever, but StanChart and ING have been forced to hand over a similar proportion of earnings. Legal expenses and tougher internal compliance add to the burden. Even if such giant fines are infrequent, the bar is now set high.
Good timing favours rise of Roman’s empire of Man 10 Dec 2012 Ex-Goldmanite Emmanuel Roman is replacing Peter Clarke as head of the world’s largest listed hedge fund manager. Clarke is paying the price for a disastrous share price collapse. Markets will need to behave, but the timing may suit Roman nicely. Not for the first time.
Bank crisis plans strike discordant note 10 Dec 2012 U.S. and UK regulators are sensibly singing from the same hymn-sheet on how to deal with failing global banks. Yet they sound out of tune with other regulatory calls for subsidiarisation. More global conducting is needed to create workable cross-border resolution schemes.
How could HP find a $5bln gap in Autonomy’s value? 10 Dec 2012 Hewlett-Packard paid $11 bln for the UK software maker. Now it effectively says it would have paid $5 bln less had it known about dodgy revenue recognition and hidden hardware sales. But the U.S. tech giant won’t explain its numbers. Breakingviews does some reverse-engineering.
Bond in driving seat in Aston Martin investment 7 Dec 2012 Its high-yield bond, that is. A $240 mln injection from Investindustrial should boost research and growth at 007’s favourite carmaker and spare some of its Kuwaiti owners’ blushes. But creditors are the immediate winners. After a rough ride, the bonds have roared back towards par.
Starbucks belatedly discovers new tax zeitgeist 7 Dec 2012 Making tax rules fair used to be lawmakers’ job. Clever tax lawyers battled over how much was owed. Starbucks’ decision to pay quasi-taxes in the UK shows that companies must worry about fairness now. Across finance, the definition of acceptable conduct is shifting.
Barclays bet lives up to rich billing for Qatar 6 Dec 2012 Qatar has earned a 19 pct IRR on its complex 3.4 billion punt on Barclays at the height of the crisis. That’s a decent return for the then huge risk. But an ongoing probe into fees related to the capital-raising marks an unanticipated, non-financial cost.
UK budget looks right – if the growth forecast is 5 Dec 2012 George Osborne stuck to the austerity script, but shifted some money from rich to poor and added a little infrastructure spending. He could hardly have done more. The big question is whether his forecaster, the OBR, is right. Will UK growth return while Europe struggles?
British bank levy hike even sillier than feared 5 Dec 2012 The coalition again upped its charge on bank balance sheets to cancel out the gift of lower corporation tax. But the levy will now raise more than the 2.5 bln stg originally sought. That looks gratuitous and short-sighted given that banks are meant to be growing domestic lending.
Tesco will expose itself by removing U.S. fall guy 5 Dec 2012 The UK-based supermarket group has finally admitted that its American dream has gone sour. But the likely exit from the U.S. will focus investor concern on a much bigger issue: the health of its core grocery business in Britain and its hotchpotch of other international markets.
Boris Johnson intervention reduces Brexit chances 4 Dec 2012 London’s mayor says he will campaign to keep Britain in the EU provided it can negotiate a pared-down relationship based on the single market. Although Johnson is overestimating the UK’s negotiating strength, he is one of the few people who could sell Europe to sceptical Britons.
Logic won’t topple London from euro perch 3 Dec 2012 The French central bank governor wants euro trading to be done in the euro zone, not in offshore London. The argument is sound. But Christian Noyer should know that finance doesn’t work that way. After all, he is pushing Paris as an offshore currency market - and good luck to him.
UK bank steroids are working for the wrong reason 3 Dec 2012 Net lending by domestic banks rose only a bit in Q3. That’s a disappointment given the Bank of England is offering super-cheap funding to boost lending to the real economy. But the central bank support is probably having a benign side-effect - the softening of painful deleveraging.
UK bank capital probe puts heat on RBS 3 Dec 2012 The Bank of England has publicly questioned whether domestic lenders are adequately provisioned against future losses. Making definitive judgments about who this affects isn’t easy. But RBS’s 66 bln pound commercial property book is one place to start asking questions.