United Kingdom

BBC ersatz trader has serious markets message

29 Sep 2011

A clip of a trader admitting to dreaming of financial doom as a money spinner has spread like wildfire. The Gordon Gekko wannabe doesn’t work on Wall St but his vulgar amorality offers a description of trading that strikes a chord with a public still smoldering over bailouts.

UK bank reform shouldn’t forget living wills

29 Sep 2011

Ring-fencing retail banks, as the Vickers commission has proposed, may help tackle the “too big to fail” problem a bit. But resolution plans are a more important way of safely winding banks down. If Vickers’ focus diverts attention from this, it could be harmful.

Machines beat humans as Man Group stumbles

28 Sep 2011

The world’s largest listed hedge fund saw its assets shrink 8.5 percent in the current quarter, sending its shares tumbling. While its computer-driven trading fund is recovering, star managers have struggled. It’s a reminder that in volatile markets, fat fees are hard to justify.

UK rebalancing is a generation’s work

27 Sep 2011

Layoffs at Britain’s largest manufacturer sound like “de-balancing”, but BAE’s woes are more a sign of how hard it is to move the economic centre. Finance-bashing may be fun for politicians, but isn’t helpful. Rebalancing economies and societies requires much more than slogans.

Global SWAT team needed to close tax loopholes

26 Sep 2011

Tax-based financing deals like those between U.S. and UK banks being targeted by U.S. authorities use legal mismatches to reduce tax bills. They are lucrative, but have no economic value. Such questionable arrangements might be best tackled in a focused multilateral forum.

Foster’s gets full measure from SABMiller

21 Sep 2011

Boozy rows between the Australian and UK brewers are history. Like most hostile M&A, this has turned friendly with a sweetener from SAB. Torrid markets and the absence of rival bidders mean Foster’s has done especially well to extract a punchy $10 bln-plus cash offer.

Man U investors can always vote with their feet

20 Sep 2011

The soccer club may list in Singapore with “stapled” securities that could entrench the Glazer family’s control. But though new investors may not get the voting power they’d like, that can be reflected in the price. If the idea sounds too tricksy, would-be backers can say no.

Shareholders need more power over boardroom pay

19 Sep 2011

The UK’s maverick business minister used his party conference as a platform to launch a government rethink on executive pay. The move isn’t as politicised as it might seem. Vince Cable has investors in mind, and the aim is to promote transparency and pay-for-performance.

UK, ECB spat highlights derivatives arms race

15 Sep 2011

The UK says the ECB’s policy on central clearing breaks EU law. The ECB’s requirement that euro-denominated products be cleared in the euro zone may be as much control-freakery as realpolitik, but London has reason to fear it could damage the City’s grip on derivatives dealing.

UK bank reform will accelerate funding pain

14 Sep 2011

Britain’s banking commission wants big lenders to hold extra buffers of debt that can be written down in a crisis, and for depositors to be repaid before other creditors. UK bank funding costs will rise. But the hit should be manageable - as long as other countries follow suit.

UK will get QE2 – but may need fiscal help too

14 Sep 2011

Britain’s growth problems are being made still worse by euro zone crisis. The case for a second round of money printing is likely to convince the Bank of England this winter. The question is whether unconventional monetary policy will be enough to ward off recession.

Lloyds looks like big winner from UK bank shake-up

12 Sep 2011

The lender was at risk of bearing the brunt of the report by Britain’s banks commission. But it has escaped the need to sell more branches, while a widely-drawn “ring-fence” should limit the impact on earnings. By contrast, RBS and Barclays may face an investment banking squeeze.

UK bank commission sticks to its guns

12 Sep 2011

Forcing lenders to ring-fence crucial operations and hold more capital should make the system safer - at a hefty cost to the industry. For banks, delaying implementation to 2019 is some consolation but sorting out the details of the new rules could leave them in limbo for years.

Four crucial calls for the shape of UK banks

9 Sep 2011

Britain’s banking commission is expected to recommend “ring-fencing” vital operations in its final report. The current focus is on the timing of the changes. But the width, height and flexibility of the fence will be equally critical to deciding the industry’s future structure.

Tony Hayward joins risky Kurdish oil rush

7 Sep 2011

The ex-BP boss’s M&A vehicle has landed its first target, a $4 bln merger with Kurdistan’s top oil producer. The deal is part regulatory arbitrage, and part a bet that Iraqi politics will turn good for oil firms. On conventional metrics, it’s a bargain. But it brings major risks.

Weakening UK growth creates tax cut Catch-22

7 Sep 2011

The UK chancellor is toning down hopes for UK growth. Tax cuts, as suggested by some economists, would help growth and are desirable. But the deficit reduction plan looks behind the curve, making it hard for Osborne to justify cuts. Faster spending cuts would have helped.

UK bank upstart seeks two-step path to Lloyds deal

6 Sep 2011

NBNK is mulling an offer for the UK assets of National Australia Bank. A successful deal could give the bid vehicle an advantage in acquiring the branches Lloyds is being forced to sell. But in tough markets, convincing investors to cough up the cash looks a challenge.

U.S. mortgage suits inflict super-damages on banks

6 Sep 2011

The latest U.S. regulatory assault for mis-selling mortgage securities has dragged down bank stocks. But damages previously sought from UBS, and the performance of the underlying loans, suggest the impact of this particular banking nasty is now more than priced in.

Exxon’s Russian coup rubs salt in BP’s wounds

31 Aug 2011

The U.S. oil group’s Arctic exploration agreement with Rosneft mimics BP’s aborted deal but without the $16 bln share swap. Instead, there’s Russian access to U.S. drilling projects. Assuming no hidden snags, Exxon could become the big winner from BP’s botched Russian strategy.

Vodafone’s Greek tie-up tests mobile M&A limits

31 Aug 2011

Vodafone is proposing a small Greek wedding. The resulting mobile-market duopoly might be hard for Europe’s competition police to swallow, even given Greece’s exceptional problems. But consolidation means big savings. A go-ahead for Vodafone here could spur larger European deals.