SVB’s collapse casts long and global shadow 16 Mar 2023 The US bank’s failure sparked a mass selloff in bank stocks. In this Viewsroom podcast, Breakingviews columnists debate the causes of investor jitters, the long-term implications of intervention by governments and regulators, and the latest concerns about Credit Suisse.
SVB proves even smaller banks are too big to fail 15 Mar 2023 It’s 15 years since Bear Stearns showed large-scale failure is contagious. Yet US regulators still struggled with the collapse of a group half its size. If buyers cannot come to the rescue and depositors won’t bear any risk, then even lesser groups will need more protection.
European banks priced for profit dip, not crisis 14 Mar 2023 Lenders’ shares have plunged since Silicon Valley Bank failed, but only to January’s levels. Senior bankers like Lloyds CEO Charlie Nunn see no evidence of a US-style deposit rush in Britain. For investors, the fear is that interest rates don’t rise as far, crimping returns.
Bank-run defences could use some reinforcements 13 Mar 2023 Silicon Valley Bank wasn’t subject to requirements that compel most lenders to hold enough liquid assets to meet possible outflows. But the speed with which corporate clients pulled their money suggests those rules need tweaking. Doing nothing raises the risk of a bigger repeat.
Meme investors go to bed, take a bath 7 Feb 2023 Near-bankrupt U.S. retailer Bed Bath & Beyond will gain slightly less cash than it burned last quarter by issuing shares after an irrational stock rally. The structure – $225 mln now and up to $800 mln later – isn’t that clean. And delaying the inevitable has an opportunity cost.
Capital Calls: British jolt 17 Jan 2023 Concise views on global finance: The collapse of UK battery group Britishvolt leaves a gaping hole in the country’s auto manufacturing sector.
Tycoons school banks in Indian retailer debt mess 25 Nov 2022 Thirteen suitors are queuing up to buy Future Retail out of bankruptcy, boding well for creditors’ prospects of resolving $3 bln of claims. Despite new rules, the saga has benefited Mukesh Ambani’s Reliance at the expense of lenders. Big business still has the upper hand.
FTX collapse consigns crypto to fringes of finance 24 Nov 2022 Sam Bankman-Fried’s failed crypto exchange is a huge blow to the ailing sector. In this Viewsroom podcast, Breakingviews columnists discuss how firewalls helped protect banks, how the saga will embolden regulators, and what the future looks like for digital currencies.
FTX affords a turning point in venture governance 17 Nov 2022 New CEO John Ray uncovered patchy balance sheets and signs of looting at the bust crypto exchange. What he calls “a complete failure of corporate controls” means users may not get repaid. Formidable backers like Temasek and Sequoia would be crazy to make the same mistakes again.
Zombie firms shuffle away from reckoning 14 Nov 2022 Carvana, Peloton and others assumed capital would always be plentiful. It’s not, and they continue to burn cash with business models that need work. Yet these larger firms, on average, have two years of money left. With cost cutting, many may survive, if not thrive.
Sam Bankman-Fried did financial system a favour 14 Nov 2022 The curly-haired cryptocurrency kingpin pushed regulators and politicians to legitimise assets like bitcoin. A few more years and his now-bankrupt exchange FTX would have burrowed deeper into mainstream finance, amplifying the damage. His downfall sends the process into reverse.
Cinemas’ debt horror show compels a director’s cut 25 Aug 2022 Regal owner Cineworld is prepping to file for bankruptcy. Punters are slowly returning to theatres, but studios are taking their time to release “Top Gun”-style blockbusters. With less income and rising wage costs there need to be fewer screens, and fewer operators.
Comatose watchdogs evoke Great Recession flashback 14 Jul 2022 Crypto lender Celsius slipped through regulatory cracks at the state and federal level. Failures in isolation aren’t big enough to be systemic. But SPACs, too, are crumbling, and people are getting hurt. As sirens wail, like 15 years ago, financial police sleep through it.
PG&E victim payout experiment goes up in smoke 11 Aug 2021 In the utility’s bankruptcy, people who faced losses from wildfires received roughly $6.8 bln of stock in compensation. It’s now worth $4 billion. Handing a volatile asset to those who have already lost out is risky – especially if, as at PG&E, problems haven’t been fixed.
Capital Calls: Turkish gas, Generali, Garuda 4 Jun 2021 Concise views on global finance: President Erdogan’s “good news” on hydrocarbons smells off; the Italian insurer’s 1.5 bln euro bid for NN Group’s asset management unit may trigger a shootout; the Indonesian flag carrier’s long struggle to avoid bankruptcy is coming to a head.
Credit Suisse best bet is hardball over Greensill 18 May 2021 The bank’s clients want it to cover up to $2.3 bln of possible fund losses related to the collapsed financier. Doing so might stop them from pulling business, but it may also complicate legal wrangling and force CEO Thomas Gottstein to raise capital. Better to weather their ire.
Hertz Robinhood squad is right for wrong reasons 13 May 2021 The rental-car firm’s shares retained value through a restructuring process, partly thanks to retail investors' enthusiasm. After a bankruptcy-exit auction, shareholders are set to collect cash, shares and such worth over $1 billion. Next time, disappointment is more likely.
Latest Hertz saviors put hope over history 23 Apr 2021 The rental-car firm may exit bankruptcy covering some $6 bln in debt and, unusually, with something left for equity holders. An industry shortage of cars has helped valuations. Even so, new private equity owners would have to reinvent Hertz, yet again, to make the plan add up.
Review: Blockbuster’s demise had many culprits 16 Apr 2021 The lore is that Netflix killed the video rental chain. “The Last Blockbuster” examines the more nuanced truth through its final store. Reed Hastings’ company played its part, but corporate raiders, bad decisions and heavy debt all drove the once-mighty company into its grave.
UK’s Gupta merits net zero rescue in all senses 1 Apr 2021 The steel entrepreneur’s tottering industrial empire is a tricky candidate for a state bailout. But it could give the government a chance to decarbonise a major source of emissions. Done smartly, it may help Britain hit green goals and stabilise a perennially flaky sector.