Blaming London for bank botches is too convenient 25 Jun 2012 Say what you will about JPMorgan’s stupid trades, the bank has at least owned up to its failings. That’s more than can be said for U.S. authorities, who are instead pointing fingers at their UK counterparts. It should light a fire under dragging global coordination efforts.
Fiscal cliff “Cialis plan” deserves firm support 25 Jun 2012 That’s the love-pill codename for a bill Erskine Bowles, of Simpson-Bowles fiscal reform fame, is pushing in Congress to help Uncle Sam avoid severe dysfunction at year-end. Politicians fiddling with JPMorgan trades and Mexican guns could use a cure for when it’s urgently needed.
US hot money’s new crush: Canadian, Japanese banks 25 Jun 2012 It’s hard to blame US money market funds for seeking safer harbors than the turbulent euro zone. Yet Canadian and Japanese lenders - as well as the National Australia Bank - must remember not to become too enamored with the attention from their fair-weather friends.
RBS tech mess will entrench UK’s "free" banking 25 Jun 2012 A systems glitch has deprived thousands of the UK lender’s customers of basic banking. Their highly visible pain is a public relations disaster. British banks need depositors to pay more directly for services. That makes sense, but it’s a tough sell - and it just got tougher.
Credit Suisse puts central bank in its place 22 Jun 2012 The Swiss group’s board has reaffirmed support for CEO Brady Dougan - and rejected the SNB’s claims that it needs to raise capital. Squaring off publicly with a regulator is usually a bad idea. But with another authority in charge of capital, it’s a risk Credit Suisse can manage.
Bank regulators should get heavy on risk-weighting 22 Jun 2012 The financial and euro zone crises have shown the drawbacks of attaching varying weights to bank risk. Such models encourage unhealthy arbitrage. A tougher cap on the ratio of equity to total assets would limit abuse. So would banning risk measures that ignore extreme events.
Monte dei Paschi faces its moment of truth 22 Jun 2012 The world’s oldest bank will next week explain how it can close a huge capital gap identified by European regulators. Since its foolish takeover of rival Antonveneta in 2007, little has gone right for Italy’s third-largest lender. And there are no obvious solutions to its problems.
Japan needs more than apologies on insider trades 22 Jun 2012 Handing a $6 bln privatization to Nomura’s rivals after the bank apologized for leaking earlier share sales seemed like a government rebuke. But Nomura probably lost fair and square. Either way, Tokyo needs to make leaks illegal and trying to profit on them much more painful.
Icahn may owe Goldman, but the reverse is true too 21 Jun 2012 The banking titan is suing CVR Energy, an oil refiner the uppity billionaire just bought. Goldman defended CVR and alleges Icahn blocked payment of $18.5 mln of fees. Theirs is a classic Wall Street rivalry. Maybe Icahn reckons Goldman has made enough off his activism already.
Downgraded banks should rush to borrow 21 Jun 2012 Most don’t need the cash. And despite the 15 Moody’s ratings cuts - by three notches at Credit Suisse and two at Morgan Stanley - short-term funding and collateral weaknesses should have already been fixed. But jumping back into markets quickly is the best way to show up Moody’s.
Bankers need to follow the money into China 21 Jun 2012 Goldman’s new global vice chairman won’t be the last person to eschew the easier climes of Hong Kong. Mainland China is where foreign banks will add jobs, and where the majority of 2012’s IPOs in Asia took place. Attracting the right talent for the local market will be a challenge.
UBS royal pickle reveals Gulf M&A minefield 21 Jun 2012 The Swiss bank is fighting a claim that it failed to pay a Kuwaiti sheikh for advising on an $11 bln deal. Even if UBS suffers no lasting damage from the spat, it has exposed the extent to which big banks fall over themselves when schmoozing Gulf royals to win scarce business.
London bankers get swift kick from Boots deal 20 Jun 2012 The UK pharmacy chain’s sale is a bitter pill for the City to swallow. Big banks that backed KKR’s 2007 mega-buyout of Boots were stuck with the debt as the crisis struck. Adding insult to injury, none were hired to advise it on the Walgreen deal. The timing couldn’t be worse.
Lehman sideshow underscores regulatory gaps 20 Jun 2012 Unable to bag Dick Fuld & Co, the SEC has spent three years suing a money market fund for its exposure to the collapsed bank. But while Lehman wreaked havoc on markets, the Reserve Primary Fund made investors essentially whole. The folly is a reminder of the watchdog’s flaws.
Dimon double gives Congress wasteful distraction 19 Jun 2012 Lawmakers from both chambers spent a total of four hours grilling JPMorgan’s boss over a loss that never put taxpayers at risk. Congress should ensure banks are well supervised, but with a runaway deficit and anemic job and GDP growth, they have more pressing work to do.
Chris Hohn’s Lloyds plan isn’t pure self-interest 19 Jun 2012 The activist investor wants the UK bank to turn 10 bln pounds of contingent convertible debt into equity. Hohn would probably profit from the move. But if the notes are redundant, turning them into higher-quality capital would benefit Lloyds - and might help the government too.
Hugo Dixon: Euro banking union won’t come fast 18 Jun 2012 Parts of the monetary union’s banking industry are so rotten that taxpayers elsewhere can’t reasonably bear the burden of bailing them out. A massive cleanup is required first. Even if the crisis provides the impetus, banking union can only proceed in stages.
Letter to the Editor: R.I.P. too-big-to-fail 15 Jun 2012 Wilson Ervin, senior adviser to the CEO of Credit Suisse, takes issue with a pervasive belief that systemically important U.S. financial institutions can’t collapse. Responding to a recent Breakingviews article, he says there’s now a credible, workable way to wind them down.
Why it’s hard to shut down a Spanish bank 15 Jun 2012 EU Commissioner Joaquin Almunia said this week that it could make sense to liquidate a bank if the costs of keeping it alive with public money exceed the costs of closing it down. That sounds sensible. But in Spain, it’s not that simple.
Credit Suisse replaces UBS in Swiss doghouse 14 Jun 2012 The Swiss central bank has singled out Credit Suisse’s weak capital and called for a boost this year. That’s a shock for an institution used to favourable comparison with rival UBS. The regulator, not the central bank, has the last word. Even so, being a laggard brings risks.