Plan B for UK bank lending might just work 4 Oct 2011 George Osborne has so far resisted calls to soften his programme of spending cuts. But the UK chancellor’s so-called “credit easing” signals a major shift in his efforts to get banks to lend. As ever, though, success will hinge on whether demand for new loans actually exists.
UK reaches for wrong levers on growth 3 Oct 2011 George Osborne is under pressure to bolster UK growth by amending deficit-cutting Plan A. But the finance minister’s idea of further “credit easing” sees him cross the line into monetary territory. He would do better to adjust fiscal policy without compromising austerity.
U.S. refuge for equities comes at quite a price 3 Oct 2011 In stock markets, correlations are about the only thing going up. But while U.S. and EU equity indexes are moving in the same direction on more trading days, European shares have also slumped to a 20 pct discount to U.S. peers. That may overstate the security offered stateside.
It’s FTSE or bust for Russian miners in London 30 Sep 2011 Polymetal has become the latest to seek a full premium listing in London. The precious metals miner is upping its free float to get into the FTSE 100, expanding the universe of investors and boosting liquidity. It’s a reminder that the attractions of just listing GDRs are fading.
Euro zone-only Tobin tax could make sense 30 Sep 2011 Prompted by France and Germany, the European Commission has proposed a tax on financial transactions. It would be more efficient if it were implemented globally. But even limited to the EU or the euro zone, its benefits could outweigh the risks.
LSE-SGX move on metals exchange would make sense 30 Sep 2011 Joint bids tend to be hard. But the London and Singapore bourses may benefit by partnering in a possible $1.6 bln bid for London’s metals exchange. LSE gets a partner that already handles metals futures; SGX gets local know-how. That matters in a potentially hot auction.
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.