Cheap wind energy can deal final blow to Hinkley 8 Aug 2016 Electricity from offshore wind farms costs a third less than in 2013. It now undercuts power costs at the two new nuclear reactors planned in the UK. With prices falling further and low project risk, the case for pulling the plug on the Hinkley Point plant is building.
RBS’s grand relaunch in danger of running aground 5 Aug 2016 Since CEO Ross McEwan took over in 2013, the state-owned UK bank has been slowly sorting its issues. But Brexit, low rates and ongoing high conduct charges are big problems. Throw in new losses from the tortuous Williams & Glyn disposal, and RBS looks hobbled for years to come.
UK’s new bank crutch betrays post-Brexit jitters 4 Aug 2016 The Bank of England's Term Funding Scheme is a reasonable attempt to make UK lenders pass on now-cheaper funding. The bigger their loan book, the cheaper their borrowing. But opting not to restrict cheap funds to specific sectors reveals how concerned the BoE is about a slowdown.
Mark Carney’s sledgehammer isn’t up to the job 4 Aug 2016 The Bank of England boss deserves credit for trying. He has halved the policy rate, will resume asset purchases, and done his absolute best to limit the perverse effects of ultra-low rates. But the economic shock of Brexit is probably bigger than anything his toolbox can handle.
RSA and Aviva have hedge against Brexit gloom 4 Aug 2016 Both UK insurers can dodge post-EU referendum blues. Falling rates pose a risk to their half-year positions, but operations are solid and sterling's slide helps groups with big overseas earnings. Losing EU market access is also less of a threat than it might appear.
Standard Chartered thrives on low expectations 3 Aug 2016 The UK bank will take longer than planned to hit pretty modest return targets. Yet shares surged. Relief that the turnaround is on track and a bombed-out valuation explain why. If it can sell $7 billion of toxic assets for a good price, investors may even be pleasantly surprised.
Struggling HSBC has grounds for its payout pledge 3 Aug 2016 The UK bank is holding its dividend and buying back shares, despite scrapping a timetable for hitting an RoE target in a world of lower-for-longer rates. A sky-high dividend yield would usually imply an imminent payout cut. But stronger capital gives HSBC grounds to hold firm.
UK banks’ light at the end of PPI tunnel darkens 2 Aug 2016 British lenders smarting from Brexit and EU stress tests face redress for mis-sold loan insurance lasting a year longer than expected. An actual cut-off date beats none at all. But the delay means fines relating to commission mis-selling will further inflate PPI's $32 bln cost.
Qatar picks good time to extend hazy strategy 1 Aug 2016 The Gulf state's airline has topped up its share in British Airways-owner IAG to 20 pct. The move generates little extra practical benefit, and the rationale is still less than convincing. But the weak pound and a fall in IAG's shares make it a relatively pain-free step to take.
Weaker banks are in EU’s core, not its periphery 1 Aug 2016 A dozen lenders had sub-10 percent post-stress capital ratios and a 400-plus bps loss in the EBA's stress test. Only a third are from troubled "periphery" states like Italy. Perhaps core states should become less sniffy about a Europe-wide deposit protection scheme.
Theresa May may have saved EDF from itself 29 Jul 2016 The state-owned French utility’s 12 bln pound investment in nuclear reactors at Hinkley Point could unravel after the UK’s new prime minister initiated a surprise review of the high-risk, high-cost project. Pulling the plug would do UK taxpayers and EDF shareholders a big favour.
Carrefour’s edge on Tesco is no French paradox 28 Jul 2016 The Gallic retailer’s first-half revenue grew 2.9 percent, and it has better sales and profit margins than Tesco. That’s not surprising: the UK has strong price deflation and Carrefour had a head start in battling the discounters. Yet Tesco’s online nous may narrow the gap.
UK banks can take heart from May’s radio silence 28 Jul 2016 The UK prime minister has so far avoided references to the financial sector. The silence may herald industry taxes to plug Brexit-linked revenue losses. But it might not, and UK lenders have less to fear on capital demands, structural separation and interest rates.
Dixon: Stock markets too sanguine about Brexit 28 Jul 2016 Investors think the UK will settle easily into a new deal with the European Union. More likely there will be cabinet wrangles, tortuous negotiations with the EU, and an unsatisfactory conclusion.
Rolls-Royce has more kerosene in the tank 28 Jul 2016 First-half results at the British engine maker were bad, but not as bad as feared. With cost cuts on track and full-year guidance confirmed, boss Warren East is getting a grip. The stock is already trading on a lofty multiple, but can go further if earnings recover.
Lloyds dividend machine gets post-Brexit dent 28 Jul 2016 The UK bank has cut back the volume of capital it expects to generate following Britain’s vote to leave the EU. Lloyds is a less risky bank than post-2008. But it is exposed to a domestic slowdown, and its dividend story now looks less compelling.
StanChart’s chairman now comes in two parts 27 Jul 2016 IMF director Jose Vinals will head the UK emerging market bank’s board. Others too have hired chairmen from the public sector, but StanChart could use a seasoned banker to oversee the recovery of its commercial arm. New deputy Naguib Kheraj may have to do some heavy lifting.
Amazon drone lift-off is a mixed blessing for UK 27 Jul 2016 The online retailer got permission from the British government to test drone deliveries, while the U.S. is more cautious. Industrial use of drones could do wonders for Amazon’s spiralling costs. But safety issues and job automation mean there may be losers too.
Barnier’s Brexit gig better than it looks for UK 27 Jul 2016 Brussels' ex-financial services tsar is to lead EU talks over Britain's exit. Michel Barnier has at times raised British hackles, but he largely treated the City of London fairly. Arbitration won't be smooth, but the identity of the negotiator could have been worse.
Fast is the enemy of good in UK trade talks 27 Jul 2016 Britain is eager to sign up willing free-trade partners for when it detaches from the EU. China, a dab hand at drawing up lopsided pacts, could be a quick win for Theresa May's government. The risk is that the United Kingdom ends up with a deal that binds rather than benefits.