Libor rigging looks like victimless crime 29 Jun 2012 Barclays’ deception is bad for the banking industry, but the artificial quotes probably didn’t significantly distort borrowing costs or the economy. There may have been big losers in this scandal, but they aren’t likely to be found too far afield from other banks’ trading desks.
Bob Diamond can easily afford his bonus sacrifice 29 Jun 2012 The Barclays boss is waiving his annual bonus for 2012, at a potential cost of 3.4 mln stg. His total pay is a moving target, but at most the bonus sacrifice will torch around half the overall package. Factor in previous awards and the scale of the sop is even smaller.
UK mis-selling case adds to anti-bank frenzy 29 Jun 2012 Britain’s regulator has slapped lenders for flogging interest rate hedges to unsophisticated small businesses. Compensation claims will be another drag on earnings, while new business will be squeezed. Amid the furore over rigging interbank rates, it’s another reputational blow.
Barclays’ board should replace Bob Diamond 28 Jun 2012 A $450 mln regulatory fine, on top of rows over tax and bonuses, has tarnished the CEO’s track record and undermined efforts to revamp the UK bank. Diamond has many strengths and his shoes will be hard to fill. But as long as he is in charge, Barclays will struggle to move on.
Libor fallout could trash UK bank earnings again 28 Jun 2012 Profits were savaged in 2011 by huge provisions for mis-selling duff insurance. The hit for Barclays and any other miscreants from rigging interbank rates could be just as painful in 2012. With earnings tight and regulatory burdens to come, no wonder bank shares are tanking.
Barclays overtakes Goldman for email idiocy trophy 27 Jun 2012 The UK bank’s Libor fixers didn’t just chummily collude on email and add reminders to their calendars. They went a step further by warning each other not to tell anyone. Goldman merely discussed the poor quality of securities it was dumping. A new leading knucklehead is born.
Barclays’ Libor penalty goes beyond the financial 27 Jun 2012 The UK bank has been fined $450 mln for trying to rig the interbank borrowing rate and CEO Bob Diamond is waiving his bonus. The reputational damage is bigger than the financial hit. And the full ramifications of the scandal aren’t yet clear - for other banks, or for Diamond.
Split wouldn’t fix all News Corp’s shortcomings 26 Jun 2012 Spinning off the scandal-hit publishing arm could make the core movie and broadcasting businesses more focused and valuable. So outside investors should approve. But News Corp’s political rehabilitation may be slow, especially if the Murdoch family keeps control of both parts.
Blaming London for bank botches is too convenient 25 Jun 2012 Say what you will about JPMorgan’s stupid trades, the bank has at least owned up to its failings. That’s more than can be said for U.S. authorities, who are instead pointing fingers at their UK counterparts. It should light a fire under dragging global coordination efforts.
RBS tech mess will entrench UK’s "free" banking 25 Jun 2012 A systems glitch has deprived thousands of the UK lender’s customers of basic banking. Their highly visible pain is a public relations disaster. British banks need depositors to pay more directly for services. That makes sense, but it’s a tough sell - and it just got tougher.
Even crazy cheap debt can be cheaper still 21 Jun 2012 In a world of rock-bottom rates, some corporate issuers are finding ways to save even more. Time Warner Cable, a U.S. company with only U.S. customers, just sold $1 bln of 30-year paper denominated in sterling. The textbook arbitrage may save it 25 basis points. It’s easy money.
Alliance Boots boss pulls off quite a coup 21 Jun 2012 Normally when you sell a company for a fat premium, you lose control. But Stefano Pessina has extracted both a rich price from Walgreen and will end up as by far the largest shareholder in the merged group, with a 15-16 percent stake.
London bankers get swift kick from Boots deal 20 Jun 2012 The UK pharmacy chain’s sale is a bitter pill for the City to swallow. Big banks that backed KKR’s 2007 mega-buyout of Boots were stuck with the debt as the crisis struck. Adding insult to injury, none were hired to advise it on the Walgreen deal. The timing couldn’t be worse.
UK exec pay reforms set sound standards 20 Jun 2012 Companies will have to put a single number on CEO pay, and shareholders will have the last say on remuneration policy. This isn’t government meddling, it is empowering owners to hold managers to account. Good bosses should welcome the changes, which could legitimise their awards.
HKEx’s offer for the LME stretches the numbers 20 Jun 2012 The Hong Kong bourse may pay 1.4 bln pounds for the London metals trader. HKEx hopes its investment will yield 10 pct-plus by 2017. A Breakingviews calculator shows Chinese LME trading volume would have to grow over 40 pct a year and become half the business. That’s a tall order.
KKR gets rich prescription for top-of-market LBO 19 Jun 2012 Walgreen’s two-stage acquisition of European rival Alliance Boots should more than double the investment KKR and its partners made at the height of the 2007 boom. What the U.S. drug chain’s investors will get for their money - as much as $16.2 bln - is harder to fathom.
UK will have to get fiscal as euro crisis hurts 19 Jun 2012 David Cameron, the UK prime minister, wanted manufacturing, exports and ’rebalancing’. But April’s trade deficit was the worst for seven years. Euro zone crisis is damaging UK growth. The government is pushing banks to lend more. But fiscal stimulus is likely to become necessary.
Chris Hohn’s Lloyds plan isn’t pure self-interest 19 Jun 2012 The activist investor wants the UK bank to turn 10 bln pounds of contingent convertible debt into equity. Hohn would probably profit from the move. But if the notes are redundant, turning them into higher-quality capital would benefit Lloyds - and might help the government too.
State meddling won’t solve UK bubble-pricking bind 19 Jun 2012 The Bank of England’s new Financial Policy Committee will be required to support government policy. That raises questions about its ability to take unpopular decisions. But answering to ministers won’t address the bigger problem: how the body can combat excessive risk-aversion.
Everything Everywhere LBO: someday, somehow? 18 Jun 2012 At $12.5 bln or more, a buyout of the UK mobile operator would need to draw on pretty much every funding source going. It won’t happen right now, and EE’s parents do not seem keen. But with lots of junk bonds, and maybe unusual equity partners, a takeout could make sense.