Europe’s banks must stop making muppets of savers 29 May 2012 Lenders in Spain and elsewhere have flogged their own bonds to unsophisticated retail customers. Such investments look ill-advised, at least. It also makes it harder for governments to impose pain on creditors, leaving taxpayers on the hook. The practice should be banned.
Euro banks rescued with fudge, not cash 28 May 2012 First, Ireland’s banks got promissory notes. Now Greek banks and maybe Spain’s Bankia will get bonds. The bonds are then pledged with the central banking system for cash. That allows governments to avoid raising money from investors. But it’s not a comfortable long-term solution.
Bankia’s whopping bailout is double-edged sword 26 May 2012 The Spanish lender’s capital hole is a higher-than-expected 19 bln euros. Government support will shore up one of the country’s systemic institutions. But the scale of the cleanup implies other banks also need more cash. It is unlikely that Madrid can fill the gap alone.
Prosecutors gain early edge in Raj Gupta trial 25 May 2012 Judge Rakoff largely adopted their version of a preliminary jury instruction a week after allowing them to introduce wiretaps. The former McKinsey boss and Goldman director hasn’t put on his case yet. But he’ll need some breaks soon if he’s going to beat insider trading charges.
Time for banks to gang up on rating agencies 25 May 2012 If Moody’s downgrades several large investment banks, short-term funding may dry up and collateral demands increase. In spite of well-known flaws, ratings remain hard-wired into global finance. The latest review gives bankers the perfect excuse to curb agencies’ power.
Blankfein enjoys rare moment of public approval 24 May 2012 The Goldman Sachs boss emerged from the firm’s annual meeting not just unscathed but praised. The Wall Street bank had already headed off a vote to split the chairman and CEO roles. With protestors scarce and a regular past critic absent, Blankfein had an easier AGM than rivals.
Goldman renewable energy dash more than greenwash 24 May 2012 The Wall Street firm says it will deploy $40 bln over a decade. It isn’t above self-serving spin, but it’s also never far from the money. With solar and wind power nearing competitive cost levels, clean energy could burnish Goldman’s bottom line as well as its green credentials.
UK watchdog should starve "free" banking 24 May 2012 The UK’s chief bank regulator-in-waiting is right that apparently costless accounts are misleading. But forcing customers to pay for services that are currently free is a political non-starter. Capping hefty penalties that banks use to finance their operations is a better idea.
JPMorgan’s board could use some new blood 23 May 2012 It takes a lot for Citi and BofA to make JPMorgan look out of step. Jamie Dimon’s Paleolithic board does just that, though. Last week’s governance protest vote and the CIO losses highlight the need for new directors with relevant financial experience to keep the CEO on his toes.
Wells Fargo makes boring banking look brilliant 22 May 2012 The west coast-based bank has long commanded better multiples than more complex rivals. Now its returns look solidly better, too. With JPMorgan’s trading loss renewing focus on reforming Wall Street, shareholders may find the lure of simpler, sleepier banks too exciting to miss.
JPMorgan hits Washington’s reset button 22 May 2012 U.S. senators who oversee the banking sector slammed regulators on Tuesday for apparent lapses related to JPMorgan’s trading losses. Other Dodd-Frank tweaks that had been moving along are grinding to a halt. Glimmers of hope for clear bank rules look all but squashed for now.
JPMorgan loss kicks succession race into high gear 21 May 2012 Wall Street is buzzing about the possibility that the bank’s trading losses will cost CEO Jamie Dimon his job. While highly unlikely, the whale fail’s cleanup has put two potential successors clearly in the running - it’s not yet two ferrets in a sack, but the contest has begun.
Direct bank recaps won’t give Spain quick fix 21 May 2012 Putting euro zone cash directly into Spanish lenders, bypassing the state, may seem a magic solution to one of the euro zone’s knottiest problems. But political and technical hurdles first need climbing. Madrid may need a more conventional bailout for its banks.
Barclays kills two birds with one Rock 21 May 2012 The UK bank is placing its 20 pct stake in BlackRock. Swapping shares in the asset manager for cash escapes new regulatory charges and boosts capital as the euro zone crisis hots up. But it’s a shame Barclays didn’t exploit stronger markets in March for this long expected trade.
Three lessons JPMorgan could learn from HSBC 21 May 2012 Both banks have large liquidity reserves to manage. But HSBC sticks largely to government bonds, clearly discloses the income they generate, and has two senior executives monitoring risk. In the wake of JPMorgan’s trading snafu, it’s an approach Jamie Dimon should consider.
Botched bailout rebounds on Bankia 17 May 2012 Both Spain’s government and the newly-nationalised bank’s chairman deny depositors are fleeing. Yet the latest share price plunge inflicts further pain on clients who participated in the lender’s IPO last summer. That makes it harder for the government to restore confidence.
Ethical economy: Bad ideas spawn Lesser Depression 16 May 2012 When Lehman failed, there were good reasons to think the pain would be brief and concentrated. Almost four years on, the rich world has not fully recovered. Policymakers are following flawed expert advice. A rethink on both unemployment and debt is urgently needed.
Greek banks’ twin crutches are rickety 16 May 2012 With deposit flight accelerating post the election fiasco, the country’s banks are kept afloat by the promise of a recapitalisation from bailout funds and further emergency liquidity assistance. But both crutches would be kicked away if Greece pulls out of its bailout programme.
JPMorgan shareholders give Dimon slap on wrist 15 May 2012 The U.S. mortgage hangover eclipsed last week’s trading losses at the bank’s annual meeting. And subdued investors were mostly supportive of Dimon. But they didn’t let him off entirely: 40 pct voted to split the chair and CEO roles. While falling short, it’s still a protest vote.
Goldman extracts pound of flesh from Chesapeake 15 May 2012 The troubled U.S. gas company has received the Wall Street firm’s expensive imprimatur as a lender on its now upsized $4 bln loan. At an onerous rate of interest, the cash buys Chesapeake time to finish asset sales. Barring an outright default, Goldman has the best of the deal.