Bank "de-regionalisation" adds to euro zone risk 4 Oct 2012 Peripheral EU banks kept buying more of their own sovereigns’ debt between December and June, new data shows. With yields sky-high that’s a nice earner, and keeps governments happy. But if the euro zone breaks up, they will have tightened the noose round their own necks.
Bankers should be made to eat their own stew 2 Oct 2012 The EU’s Liikanen review says managers should receive part of their compensation in the form of their own banks’ bail-in bonds. Since such debt would plummet if the bank needed a rescue, it would make bosses more alive to the risks their institutions are running.
Ring-fencing could reinforce EU banking disunion 2 Oct 2012 EU banks should fence off their trading assets, a European Commission advisory group says. That looks more like the tough UK Vickers reforms than banks had expected. The risk is national regulators get even more tribal in protecting their own, instead of embracing banking union.
Maybe Jamie Dimon wasn’t so clever with Bear 2 Oct 2012 JPMorgan’s CEO looked shrewd four years ago by sticking the Fed with the collapsed investment bank’s worst-looking mortgage assets before agreeing to buy it. Not only did those securities wind up making money, but New York’s top lawman just showed how Bear’s legal risks persist.
Brazil’s lending war leaves both sides looking bad 1 Oct 2012 Browbeating Bradesco and Itaú into slashing credit card rates is President Dilma Rousseff’s latest victory in making lending more affordable. But banks may raise other fees instead. And they want to lend more to riskier customers. It’s hardly a path to a stable banking system.
U.S. banks securing some deserved debt relief 1 Oct 2012 A rule that forces them to book gains and losses on their own liabilities may at last be scrapped. At best, the accounting standard, implemented just ahead of the crisis, is a needless distraction - at worst, a way to mask a bad quarter. Its demise is overdue, but welcome.
Alpha stakes claim to be least-bad Greek bank 1 Oct 2012 The Athens-based lender is close to acquiring Emporiki, Credit Agricole’s Greek unit. The terms suggest Alpha will add market share muscle and gain synergies for minimal outlay. But investors are likely to fight shy until they know how Greek banks will be recapitalised.
Spain adds bank stress tests to saga of missteps 1 Oct 2012 Madrid will use less than two-thirds of its allotted 100 bln euro bailout to recapitalise its troubled lenders. But the government’s assumptions are on the rosy side, when they should have been conservative. The piecemeal approach to dealing with the crisis has struck again.
Review: The real way HBOS gave us extra 28 Sep 2012 A new study into the dramatic 2008 demise of one of the UK’s oldest banks lacks some of the fly-on-the-wall drama of other financial crisis tomes. But Ray Perman’s book compensates by skewering the revenue-before-risk approach that lost HBOS its independence.
BofA keeps stacking up the Ken Lewis bookends 28 Sep 2012 The bank is paying $2.4 bln to settle a lawsuit that it misled shareholders in the 2008 takeover of Merrill Lynch. It’s by no means the biggest cost of the ex-CEO’s disastrous takeover binge. But it’s still painful. And successor Brian Moynihan still has more tabs to pick up.
Morgan Stanley keeps a rainmaker by letting him go 28 Sep 2012 Simon Robey is to leave the bank’s London office after 25 years to set up solo. It’s probably more a statement of ambition than a criticism of the integrated model, as the veteran dealmaker will keep ties to his old firm. That sets this exit apart from other boutique escapes.
How to make money out of fixing Libor (legally) 28 Sep 2012 Administrating the reformed interest rate benchmark will be put out to tender, under new UK plans. But it is not clear how the reworked scheme will be funded. There may be some licensing income to be had, but user levies may be required if the new regime is to be self-supporting.
UK blazes the right trail on Libor reform 27 Sep 2012 The scandal-hit benchmark should be retained but regulated, streamlined, and based on market data, says Martin Wheatley’s official review. Picking the right body to oversee the reformed process is crucial. But the proposals are a sensible blueprint for restoring trust in Libor.
Letter to the Editor: Praise for Pawlenty 26 Sep 2012 Steve Bartlett, outgoing CEO of The Financial Services Roundtable, takes issue with a Breakingviews article questioning the choice of Tim Pawlenty as his successor. Bartlett argues that the former Minnesota governor is in fact a great candidate to run the lobby group.
$4 bln Santander IPO puts Mexico bulls to the test 26 Sep 2012 That’s a handy sum for the Spanish bank’s coffers. And at 2.2 times book value it might look reasonable for a Mexican retail finance business churning out 20 pct returns. But fervent competition, newbie borrowers and rising default rates could soon put that under pressure.
Euro bank recap battle line limits solidarity 26 Sep 2012 Germany, Finland and the Netherlands have made clear that there won’t be a free lunch for Spain, Ireland or other countries if they need euro zone cash to recapitalise their banks. All the more reason for Madrid to grasp rapidly other lifelines available to shore up its finances.
Temasek telco trade offers few clues for StanChart 26 Sep 2012 The Singaporean fund sold a $1.1 billion block of shares in landmark holding SingTel. The latest reshuffle raises further expectations that its 18 percent stake in the UK bank will be next. Though both have delivered good returns, offloading StanChart shares will be harder.
BBA ouster is right first step for Libor reform 25 Sep 2012 The British Bankers’ Association is resigned to losing its role setting and overseeing the critical interest rate benchmark. After this summer’s rate-fixing scandal, that’s no surprise. Still, it’s an encouraging sign that Libor reform will be meaningful rather than piecemeal.
Exit from Greek hell isn’t free for foreign banks 25 Sep 2012 Credit Agricole, SocGen and Millennium BCP are trying to offload Greek units to domestic lenders. But to do so, they are being forced to stump up capital to insulate the buyers from future losses. It forces them to be good citizens. But is also helps their loans to get repaid.
Hugo Dixon: Banks should learn to say "Just Go" 24 Sep 2012 A stream of scandals, weak activity, tightening regulation and poor shareholder returns mean that this year is a golden opportunity to make radical cuts in banker compensation. Those who complain should be told to pack their bags.