No moral high ground in banks’ fight with U.S. law 2 Jul 2014 It’s reasonable to question America’s ability to use the dollar’s global status to impose its foreign policy on a recalcitrant world – and then go after lawbreakers like BNP Paribas. But the financial industry, whether offshore or on, isn’t credible enough to make the case.
Jamie Dimon’s illness puts succession center stage 2 Jul 2014 The JPMorgan CEO has throat cancer – curable, he says, but serious nonetheless. Being so open with shareholders is to be applauded. The board must now ensure the U.S. financial behemoth is ready for whenever Dimon leaves, a task it has fallen short on in the past.
Twitter takes Wall Street brain drain to new level 1 Jul 2014 The microblogging site enticed former Goldmanite Anthony Noto to become its CFO with a $60 mln-plus signon bonus. That easily prices banks out of the battle for talent. It also poses a threat to private equity and hedge funds – where Noto was heading before Twitter chirped up.
Tax-arbitrage M&A requires a deep discount 1 Jul 2014 U.S. companies seeking to relocate by mergers were a big part of the $1.8 trln first-half deal boom. The benefits of such ill-conceived combinations will be fleeting. Tax reform is already being discussed. And the more inversions there are, the more likely the law is to change.
U.S. cooks up penalties with anti-foreign flavor 1 Jul 2014 New research shows that overseas firms like BNP Paribas do in fact pay bigger fines and plead guilty more often than U.S. companies. One reason may be that prosecutors target only the most serious cases abroad. But the gaps feed suspicions that America is playing favorites.
Rob Cox: Solving the second-class stock conundrum 1 Jul 2014 Entrepreneurs want super-voting rights to execute their vision without bother from uppity investors. “Class V” shares, with ballot power that lapses over time, would be a way to minimize this violation of democratic capitalism. A decade, say, would give founders their chance.
How merger momentum could explode past $4 trln 1 Jul 2014 With about $1.8 trln of M&A so far, 2014 is shaping up to be the biggest year since 2007. If deal volume returns to its typical proportion of global market capitalisation, it would hit $4.5 trln next year. So much activity so quickly, though, probably means more value destroyed.
BNP’s Prot should go 1 Jul 2014 The French bank has pleaded guilty to criminal wrongdoing and will pay a near-$9 bln fine to U.S. authorities. Chairman Baudouin Prot was CEO when BNP Paribas was helping clients evade U.S. sanctions. His position is untenable. In the name of accountability, he should resign.
Market gives BNP benefit of doubt on U.S. fallout 1 Jul 2014 Shares in the French lender have fallen more than 15 pct since it warned in February of U.S. action against sanctions abuses. Factor in market falls, and a near-$9 bln fine, and investors value the hit to BNP Paribas’ reputation and business at below $3 bln. That looks generous.
BNP’s reputation hit harder than its finances 30 Jun 2014 The French bank’s $8.8 billion fine for sanctions violations is bearable: it may even be able to keep paying dividends. A much-feared dollar-clearing ban is also likely to be defanged. But BNP’s guilty plea will batter its reputation as a conservative and cautious institution.
NYSE vs Nasdaq is IPO trading at the margins 30 Jun 2014 Decisions like Alibaba’s about where to list captivate investors even though exchanges no longer compete on vital matters like liquidity. The Facebook debacle did briefly revive a debate over technology. In the end, though, little things like ticker symbols can swing the vote.
General Motors recall goes beyond 8 mln more cars 30 Jun 2014 The U.S. automaker has now called back 29 mln vehicles, almost as many as it has made in America over 10 years. The latest batch includes ignition faults from 1997. That’s four years earlier than previously thought and suggests a recent high-profile autopsy needs a rework, too.
Captain of industry makes sense for U.S. military 30 Jun 2014 Dysfunction at the agency for veterans has become a major blight for Obama. Enlisting a former CEO of P&G to run it answers criticism of the president’s track record with business. It just isn’t clear that Bob McDonald was the best choice from the corporate talent pool.
Linn pumps more risk into energy partnerships 30 Jun 2014 A $2.3 bln acquisition of gas wells by the largest drilling MLP is the latest example of how a sector once dominated by ultra-safe pipeline owners is becoming increasingly adventurous. Exposure to volatile U.S. gas prices puts the stable cash flow desired by investors in danger.
Soros takes sub-quantum leap into activism 27 Jun 2014 His $29 bln hedge fund has famously confronted governments. But facing off with a U.S. oil and gas company is novel. Whether a test of a new – and recently profitable – strategy or a sign of change at the family firm, it gives underperforming bosses another scourge to fear.
Wall Street’s good-bad cops turn up heat on banks 27 Jun 2014 The OCC is warning again of risky lending that the Fed has in part fueled with low interest rates. The regulatory clash, and some of the OCC’s edicts, may look confusing. But it’s encouraging to see watchdogs keeping a closer eye on risk and putting lenders on the spot.
U.S. drought could spark economic water warfare 26 Jun 2014 Scarce rains have left California and the U.S. Southwest dry just as industries from beverages to semiconductors grow concerned about the availability of H20. That presents a flood of opportunity for water tech firms and Great Lakes states like Indiana, Michigan and Wisconsin.
Averting bond fund runs requires only easy fixes 26 Jun 2014 These vehicles now manage $3.3 trln, double five years ago. Investors can pull their money out quickly, which means a rush for the exits could cause panic. Imposing redemption fees is one solution. Holding more cash and restricting rapid withdrawals would be more effective.
Alcoa tries to fly over Chinese aluminum glut 26 Jun 2014 The manufacturer is paying some $3 bln to buy private equity-owned Firth Rixson and expand its aerospace parts business. The deal looks pricey, but it does jet in handy cost savings and, potentially, fast growth in a high-margin business free of irrational Chinese competition.
Shell’s pipeline sale is but a good carve-up start 26 Jun 2014 The $260 bln Anglo-Dutch oil company is spinning off its small U.S. midstream business into a tax-advantaged master limited partnership. It should fetch a valuation multiple four times what Shell itself gets. Separating refining from exploration would bring far bigger rewards.