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.
Spain looking to cut corners on bank bailout 24 Sep 2012 Madrid will soon get 100 billion euros to recapitalise the country’s ailing banks, but hints it may end up only using 60 billion. Spain doesn’t seem to grasp that it must be conservative to be credible. Some of its current assumptions look way too optimistic.
Wall Street’s newest piggy may cry all way home 21 Sep 2012 Politician Tim Pawlenty sent a stern message to financial institutions: “Get your snout out of the trough.” Bank lobbyist Tim Pawlenty will fight to make sure they keep feeding at it. The choice of an outsider suggests a fractured industry whose cause may struggle in Washington.
Regulatory pushback turns up heat on Marcus Agius 19 Sep 2012 Newly published letters from UK regulators cast doubt on evidence given by Marcus Agius, the former chairman of Barclays bank, to a parliamentary investigation into the Libor scandal. The fresh developments may make it tougher for him to rehabilitate his reputation.
Goldman’s Mr. 25 Standard Deviation hard to follow 19 Sep 2012 Despite his wacky crisis characterization, David Viniar played a big role saving Goldman from the mortgage rout and is the rare banker to succeed in the CFO role. Losing him hurts even if replacement Harvey Schwartz is no slouch. Viniar’s guidance from the board will be welcome.
ECB’s new clout could sort EU bank capital mess 19 Sep 2012 The European Commission thinks the euro zone’s rate-setter should vet the internal models used by banks to work out their capital ratios. The downside could be that some lenders need more capital. The upside could be that investors start to believe bank risk-weightings.
Inept Fannie/BofA deal highlights US mortgage mess 18 Sep 2012 A new report shows the agency paid too much to pull some loan servicing business from the mega-bank for doing a bad job. This double incompetence doesn’t just reflect badly on the two firms. It’s a reminder that the backbone of U.S. housing finance is in dire need of repair.
Brazil banks need better handle on consumer credit 18 Sep 2012 Banco Cruzeiro’s failure stems from fraud, but it specialized in loans to Brazil’s middle class - a group that grew by 40 mln in 10 years. That’s as short a record as U.S. subprime mortgages had in 2008. The comparison is extreme, but Brazil’s banks need both data and caution.
Banks can afford political risk of suing Dubai 18 Sep 2012 Three banks led by Royal Bank of Scotland are suing the ruler’s investment vehicle, Dubai Group, threatening to derail a two-year effort to agree a restructuring of $10 bln. That won’t help them win new business in the emirate, but the banks may still come out with better terms.
Falling income should be Occupy rallying cry 17 Sep 2012 A year after protests began on Wall Street, the movement lacks momentum and focus. Yet middle-class American incomes are going down. More than inequality itself, that’s reason to want change. Oddly, neither Occupy nor the Tea Party has grabbed what could be a defining issue.
Sberbank’s Russian discount looks undeserved 17 Sep 2012 Russia’s largest lender is selling 7.6 pct of its shares to new investors. A more diversified shareholder base would fit with the bank’s new international presence. Throw in a massive domestic market share, and Sberbank merits more than being lumped in with unloved Russian peers.
Hugo Dixon: Can EU defend supranational interests? 17 Sep 2012 Amidst the europhoria unleashed by the ECB’s bond-buying plan, it is easy to miss the immense challenges posed by two complex dossiers that have just landed on leaders’ desks: the proposed EADS/BAE merger; and how to create a banking union. Can they rise to the challenge?
Asia’s vanishing savings will bring new risks 17 Sep 2012 The region’s large trade surpluses have been blamed for hollowing out Western manufacturing and fuelling the debt binge that led to the financial crisis. Now the savings glut is fading as the global economy rebalances. Though that’s welcome, the shift poses new threats to Asia.