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.
Too big to fail anxiety fuels Jamie Dimon circus 13 Jun 2012 One thing binds the politicians, pundits, protesters and investors outraged by the $2 bln loss of a well-capitalized, profitable private company. Nobody believes taxpayers are really off the hook for Wall Street’s failures. The real casualty of the debate is the Dodd-Frank Act.
Credit Agricole drafts strong man for Greek trial 13 Jun 2012 Xavier Musca, a former French treasury chief and until last month Nicolas Sarkozy’s chief of staff, is joining the mutual lender as its second-in-command. Hiring one of the key euro crisis negotiators is no accident: the bank is facing a potential disaster in Greece.
Jamie Dimon should come out swinging in Senate 12 Jun 2012 JPMorgan’s dumb trades exposed its risk management as fallible. But it’s an issue primarily for shareholders, not politicians. The notion that rules and watchdogs should prevent banks from losing money engenders the false sense of security that girds too-big-to-fail thinking.
EXCLUSIVE-Credit Suisse toxic bonus keeps giving 12 Jun 2012 Bankers paid in risky assets in 2009 are being asked to use the funds to buy up to $1 bln more from Credit Suisse books. The deal would free up capital for the Swiss group and give senior staff a chance to juice solid but captive returns. Tough love has seldom been so lucrative.
Beijing a fitting base for new Goldman vice chair 12 Jun 2012 Bankers often prefer Hong Kong’s lower taxes and easier living. But for the Wall Street firm, locating new Asia chair Mark Schwartz in mainland China is a shrewd move. Beijing looks poised to open and grow its capital markets. Those who can help are likely to be rewarded.
UK banks’ euro zone firewall needs government help 12 Jun 2012 Despite a recent re-tooling, the Bank of England still can’t provide lenders with three-year loans like those offered by the European Central Bank. That could leave lenders exposed if the euro zone cracks. It may be up to the UK government to support long-term bank credit.
JPMorgan should consider whale of a bonus 11 Jun 2012 Not in terms of size, but linked to the losses by the London trader with the marine mammal moniker. Payouts using derivatives tied to the disastrous hedges would force JPMorgan bosses to eat their own cooking. It won’t repair the damage, but would deliver some justice.
Citi looks too accident-prone to make it to 300 11 Jun 2012 Founded in 1812, within a century Citi was the largest U.S. bank with global operations and a top underwriting business. Since its first near-death experience in 1837, Citi has had several costly expansions and four more near-fatalities. Reaching 2112 intact is hard to imagine.
Spain still vulnerable post mega bank bailout 10 Jun 2012 Madrid has finally got a credible plan for its lenders: it will receive up to 100 billion euros from its euro partners. But the state’s debt will rise as a result and the economy is still shrinking. It may yet require a full bailout. That would really test the single currency.
Review: Low finance can get into trouble, too 8 Jun 2012 High-concept trading and complicated derivatives aren’t necessary to lure bank bosses into deadly ego-traps. A new book chronicling Washington Mutual’s failure shows how unbridled ambition and poor controls led the lender from caution to disaster.
Spain underwhelms with new central bank chief 8 Jun 2012 The government has gone for central bank veteran Luis Maria Linde, a relative unknown who is too old to even finish the mandate. As the Bank of Spain badly needs to repair its battered reputation, former ECB board member Jose Gonzalez-Paramo would have been just the ticket.
UK limbers up for next EU clash 7 Jun 2012 As the British PM prepares to take his “make up or break up” message to Berlin, his finance minister is demanding safeguards if the zone forms a full banking union. Other countries won’t like either the UK’s lectures or special treatment for its lenders.