United Kingdom

No winners from Barclays tax crackdown

28 Feb 2012

The UK government has closed two loopholes used by the lender to avoid tax. That’s a setback for CEO Bob Diamond’s efforts to present the bank as a good corporate citizen. But by introducing retrospective legislation, ministers have made the UK tax system even more unpredictable.

Browne’s North Sea idea is more than nostalgic

27 Feb 2012

Buying into Fairfield Energy would befit the ex-BP boss, who managed a North Sea oil field in the 1980s. Yet there is sound commercial logic too. Oil prices, and opportunities to scoop up oil majors’ unwanted acreage, have increased since Fairfield pulled its IPO in 2010.

HSBC looks like best of a bad bunch

27 Feb 2012

Scale, diversification and good management helped HSBC only so much in 2011. There were bright spots in Asia and parts of the investment bank. But the impact of the euro zone crisis was more powerful. While HSBC is bigger and better, it is, after all, still a bank.

Lloyds’ return to form will be worth the wait

24 Feb 2012

The UK bank failed to say when dividends may resume, warning instead of a weak operating environment. But its restructuring is going well and the core bank earns high returns. If the UK economy recovers, the investment case is much clearer than at rival state-backed RBS.

RBS’s unsustainable situation needs a bold plan

23 Feb 2012

The state-backed UK lender remains a financial and political embarrassment. The question is how to turbo-charge the shares and engineer a clean exit back to the market. Here’s an idea: get Brussels to ease curbs on dividends imposed with RBS’s rescue in 2008, and sell its U.S. arm.

RBS pulls off tricky bonus balancing act

23 Feb 2012

The bonus pool in the investment bank is sharply down. That’s politically convenient. But the comp ratio has shot back up to 41 pct, making RBS look like a competitive payer. Adjust for some quirks in the numbers and in reality not much has changed overall from last year.

Shell pays up for a foothold in Mozambique gas

22 Feb 2012

The oil giant has offered $1.6 bln for gas explorer Cove Energy – a 70 pct premium but loose change for Shell. The assets are attractive and Shell has the know-how to exploit them. If Asian gas prices stay high and exploration projects deliver, the toppy price could be worth it.

BP’s Deepwater catharsis finally on the horizon

22 Feb 2012

A minority partner’s deal with the U.S. government is a promising sign ahead of a critical civil trial opening on Feb. 27. Extreme financial penalties look priced into BP stock whatever the verdict. So too is a big management discount. There’s lots of upside if BP isn’t thwacked, and its board restores credibility.

Happy stock highs belie bonds teetering on edge

21 Feb 2012

With the Dow Jones industrial average crossing the 13,000 level for the first time since before the crisis and Britain’s FTSE 100 index headed toward 6,000, equity investors are smiling. Many may be wondering if the run can be sustained. But debt buyers may face the real danger.

Lloyds’ bonus malus is test for clawbacks

20 Feb 2012

Ex-CEO Eric Daniels and others at the UK bank may be forced to forgo previously awarded bonuses. The clawback principle, introduced after the 2008 crisis, is sound and the move looks like justice. But any arbitrary application for pre-crisis sins would be problematic.

House prices look to have bottomed in UK

15 Feb 2012

British mortgage lending is still below 2001 levels, but no longer shrinking. Very low mortgage rates are making homes affordable for those with access to credit. The economy looks to be stabilising, though City cuts may affect London homes. The euro zone crisis is the biggest wild card.

JLR flotation would make sense for Tata Motors

15 Feb 2012

Jaguar Land Rover contributed 95 percent of the combined group’s profits last quarter. A minority listing of the UK firm would let Tata book a healthy return on its $2.3 bln purchase, and allow JLR to raise cheap capital overseas. There’s no need to keep this gem hidden.

Carlyle makes a mint in $1 bln cash-handling sale

14 Feb 2012

The buyout firm may make a near-40 pct annual return on Talaris, a maker of money-counting kit. Carlyle nurtured a corporate castoff, and bet against the supposedly rapid trend to a “cashless” society. The big win also alleviates the same fund’s embarrassing Greek blow-up.

Moody’s shows UK needs more austerity, not less

14 Feb 2012

The rating agency may downgrade the UK because of much weaker growth prospects. The government’s critics will demand less austerity. But the UK is still spending 120 bln stg more than its tax take. Policy is right. A downgrade looks unjustified provided the UK keeps cutting.

London real estate coming off steroids

13 Feb 2012

Lay-offs and bonus cuts in the capital’s financial sector are starting to skim the froth off rents. That would normally be a negative for bubbly house prices. But much depends on whether it dents London property’s status as a safe-haven investment for the global super-rich.

Barclays results hand ammunition to bank-bashers

10 Feb 2012

Strong figures would have helped CEO Bob Diamond justify big payouts. But the UK bank’s 2011 return on equity was just 6.6 percent, and it has postponed next year’s 13 percent target. Even though Barclays cut its bonus pool by a quarter, it won’t defuse the ongoing row.

Glenstrata deal needs rejig

7 Feb 2012

Some Xstrata investors say they will vote no to the mining merger with Glencore. But a deal may still be possible if both sides can agree a proper board and a sweeter premium for Xstrata. There’s a big incentive to talk: given the mess, neither can go back to the status quo.

Don’t bet against Glenstrata antitrust roadblock

7 Feb 2012

Many customers see Glencore and Xstrata as one, even before their all-share merger. But that won’t stop regulators everywhere poking into Glencore’s secretive business. Market share in copper and zinc isn’t the only concern: bigger miners exert pressure on governments too.

Xstrata holders right to fret over Mick’s rewards

6 Feb 2012

CEO Mick Davis’s contract promises millions from any takeover, even if he doesn’t hold out for the best price. True, Davis’s existing shares help align his interests with outside shareholders’. But investors should still examine any Glencore deal closely.

Glenstrata board faces huge credibility challenge

3 Feb 2012

A look at the business mix of a merged miner-trader suggests Xstrata’s Mick Davis would be CEO with Glencore counterpart Ivan Glasenberg as deputy. Whatever the two decide, investors will take some convincing that the pair will still be snuggled up come Valentine’s Day 2013.