Dresdner bonus ruling thankfully won’t spark trend 9 May 2012 Investment bankers at the defunct German bank have won their legal battle against Commerzbank, their rescuer in 2008, for non-payment of 50 million pounds of bonuses. It’s a depressing relic of a bygone age. Fortunately, bonus reforms since the crunch make copycat cases unlikely.
Euro zone carry trade has limited shelf life 9 May 2012 Spanish and Italian banks are still loading up on sovereign bonds with cheap ECB loans. There is room to buy more. But local banks can’t fund Madrid and Rome indefinitely, and with funding markets still dysfunctional, money could run out sooner than expected.
Commerzbank success is Pyrrhic victory for EBA 9 May 2012 The German lender has filled a 5.3 bln euro capital hole seen by Europe’s banking regulator in December. But Commerzbank’s solution has largely come via balance sheet tweaks rather than by raising new equity. It will do little to improve investors’ shaky confidence in the sector.
Temasek’s triple personality bodes well for returns 9 May 2012 The Singaporean state investor is developing the trading eye of a hedge fund, a private equity taste for financial engineering, and the pay structure of an investment bank. That should improve its sub-par performance, though it won’t always sit well with Temasek’s political ties.
Spain finally owns up to its banking mess 8 May 2012 Madrid has dropped its resistance to bailouts and is preparing to inject 7-10 bln euros into Bankia. Propping up the big former savings bank is necessary, but it’s only the first step in what is hopefully a definitive cleanup. Spain cannot afford any more half-baked reforms.
Markets give HSBC a first-quarter reprieve 8 May 2012 The bank’s pre-tax profit rose by a third, quarter-on-quarter, fueled by a rebound in fixed income trading. HSBC is getting closer to the cost targets CEO Stuart Gulliver set a year ago. But with markets far from normalised, he can’t count on a prevailing tailwind.
Wall Street bigwigs show good side of greed 7 May 2012 Lloyd Blankfein, CEO of long-term greedy Goldman Sachs, and hedgie Steven Cohen are among those aboard the Intrepid in New York discussing how to help U.S. veterans. Though it’s occasionally just PR, even away from the spotlight many among the 1 pct do try to spread the wealth.
Qatar brokers nifty exit for Egypt’s EFG Hermes 7 May 2012 State-backed QInvest is cherry-picking the assets of one of the Mideast’s top investment banks. The new JV will give EFG shareholders a payout worth one third of the bank’s market cap. It’s an elegant way to salvage value from a troubled Egyptian bank.
Too much transparency could muddy trading waters 4 May 2012 Wall Street critics tout more disclosure as a universal good. Often, they’re right. But new rules for the $700 trln derivatives market could prove the exception. These risk handing savvy traders some easy profits while pushing up costs for others. That loophole needs plugging.
State stranglehold on RBS now only slightly looser 4 May 2012 The UK bank is close to repaying emergency funding from 2008, and met expectations in Q1 despite revamping its investment bank. But government insurance, a block on paying dividends and a huge public shareholding remain. RBS’s main task is to start unpicking this triple lock.
China throws a juicy bone to foreign brokers 4 May 2012 The likes of Goldman Sachs and Morgan Stanley will be able to own 49 percent of their China securities ventures, from 33 percent. It still doesn’t match the heavy lifting they do, but is progress. Given the securities market’s potential, the extra investment should be worth it.
French banks hope to end balance-sheet shrinking 4 May 2012 BNP and SocGen’s results showed the strains of aggressive deleveraging in the first quarter. BNP should reach its Basel III capital target this year, 18 months ahead of its smaller rival. But it’s also more vulnerable to a possible worsening on the euro front.
Shareholder spring takes aim at exec pay black box 3 May 2012 UBS and Aviva are the latest firms to feel the executive pay backlash. As the stream of votes against boards’ remuneration swells, shareholders have a golden opportunity to secure meaningful reforms. Moves that clarify performance targets will be top of the agenda.
Ethical economy: What companies are good for 2 May 2012 The debate on executive pay is often just a shouting match, in part because there’s no agreement on what bosses are actually paid to do. The “shareholder value” approach provides a simple answer, but one that it is both practically and morally wrong. Aristotle had better ideas.
UBS offers glance at stabler, less exciting future 2 May 2012 The Swiss group turned in a respectable Q1, ignoring accounting quirks. The private bank is attracting clients, the investment bank is steadying, and the balance sheet is shrinking. UBS has more to do on capital and costs. But its rejig is further advanced than many rivals.
Lloyds investors’ long wait may soon be over 1 May 2012 The UK bank used the first quarter to speed up non-core disposals and nail down 2012 funding. Further mis-selling provisions, a misfiring branch sale and a miserable UK economy remain dark clouds. But if a few regulatory decisions go Lloyds’ way, it could soon restore dividends.
Hugo Dixon: Does Europe need a banking union? 30 Apr 2012 A centralised system of supervision and bailouts is increasingly viewed as necessary to break the link between troubled lenders and their equally troubled governments. This is neither necessary nor likely. But a more limited solution may be feasible.
Shareholder rage at bank pay reaches tipping point 27 Apr 2012 A third of shareholders failed to back remuneration reports at both Credit Suisse and Barclays - after a similar protest at Citi. It may finally shame banks into dividing the spoils more equally with investors. But governments and customers will also want their pound of flesh.
Nomura stabilises, but at a low base 27 Apr 2012 Earnings jumped in the last quarter, lifting the Japanese bank to a full-year profit. Healthier equity markets at home and better global trading both contributed, while past cost-cutting should help in the coming year. But Nomura’s weak returns mean it has much more to do.
Weak exports bring double whammy for Chinese banks 27 Apr 2012 Chinese lenders kept the country from a crisis in 2008. But now they’re facing a squeeze. Deposits are harder to find, thanks to the decline in the automatic inflow from the shrinking trade surplus. Meanwhile, losses are rising on loans to smaller businesses hit by poor demand.