BofA-UBS job swap offers symbolic snapshot 25 Apr 2012 The U.S. group has poached old-school investment banker Alex Wilmot-Sitwell from UBS, just after bold dealmaker Andrea Orcel went the other way. As the Swiss lender shakes up its culture, BofA is also reshaping Merrill. The moves are emblematic of firms adapting to a new reality.
TARP success doesn’t make it good finance 25 Apr 2012 The government’s $700 bln bailout plan stabilized the U.S. banking system and carmakers, but taxpayers won’t see any direct returns from the investment. Treasury’s fuzzy math wouldn’t fly with any sensible portfolio manager. What it calls a profit looks more like a $230 bln loss.
BTG Pactual looks fairly priced at $14 bln 25 Apr 2012 The Brazilian investment bank’s IPO values it at three times book, way ahead of U.S. rivals. Better margins, returns and comp levels justify that. But its volatile trading desks, an ambitious regional expansion drive and CEO Andre Esteves’ tight control are reasons for caution.
Credit Suisse still shrinking its way to stability 25 Apr 2012 The Swiss bank returned to the black in the first quarter, even though revenue was below the same period of 2011. Cost-cutting helped, and balance sheet shrinkage lifted returns. But Credit Suisse has more to do to meet its capital targets. Choppy markets won’t offer much help.
Jailing IPO bankers is a step too far 25 Apr 2012 Hong Kong talk of allowing lawsuits against negligent sponsors sounds fair. Reputation isn’t the safeguard it was. But the regulator’s idea of adding criminal liability may just damage the market’s efficiency. And it misses the real problem: investors lap up overpriced deals.
RBS scrapes barrel with reverse stock split 25 Apr 2012 The UK bank’s planned cut in its share count may help it look more like a normal bank. But unlike a similar ploy by Citi last year, punitive EU state aid penalties mean RBS can’t restore dividends as well. As such, the move underlines that managers have few other levers to pull.
JPMorgan sends big gun after small bounty 24 Apr 2012 Deploying its global head of investment banking, Jeff Urwin, to run things from Hong Kong may help Jamie Dimon catch up with regional leaders UBS and Goldman. But given Asian deal fees are just a fraction of the total pool, Urwin’s frequent flyer miles will probably grow faster.
DBS deal tests Indonesia’s deep Singapore-phobia 24 Apr 2012 Even a 52 percent premium may not secure the Singaporean bank’s $7.2 bln takeover of Bank Danamon. A deal would benefit all sides and burnish Indonesia’s image as a hot investment destination to boot. But looming elections and longstanding mistrust may trump commercial logic.
What would a Spanish bailout look like? 24 Apr 2012 Spain is too big to bail like Portugal or Greece - but it can be saved. Spain needs a three-way package: aid for its banks, support for its bond market and a revised fiscal programme. It could be controversial, but the alternative, a contagion spiral, would be worse.
China bank pay is the wrong target for reform 24 Apr 2012 In what looks like a response to public complaints, some Chinese bank chiefs have had their pay cut. Others are getting raises, but still earn a pittance. Yet the industry’s earnings grew 36 percent in 2011. It would be better to address the lack of competition that enables the banks to do so well.
GE offers Citi starting point for fixing CEO pay 20 Apr 2012 Investors voted against Vikram Pandit’s comp largely due to his wooly incentive plan. Facing similar discontent last year, GE added decent hurdles to better align boss Jeff Immelt’s pay to the conglomerate’s performance and shareholder returns. Citi should go a step further.
Spain’s banks could use some disaster insurance 20 Apr 2012 Lenders have merged and raised fresh capital, but investors still worry about contagion. The euro zone could help by offering to insure balance sheets against extreme losses. Though this wouldn’t solve Spain’s deficit problems, it would provide some breathing space.
Bob Diamond is next victim of "shareholder spring" 19 Apr 2012 Barclays is attempting to placate angry shareholders by linking half its CEO’s 2011 bonus to a return on equity target. The concession may help the bank avoid a Citigroup-style revolt. But it begs the question why Diamond’s entire payout isn’t subject to the same condition.
Morgan Stanley merits immunity from Moody’s blues 19 Apr 2012 The credit rater is considering a three-notch downgrade of the Wall Street firm. But Morgan Stanley’s first-quarter results show it’s making good progress with its turnaround. It also now boasts a huge three-year liquidity buffer. Given that, a rating cut would be bizarre.
BofA doesn’t deserve much more love from investors 19 Apr 2012 The 60 pct rally in the bank’s shares this year easily bests its peers. But its Q1 results, though better, leave much to be desired. Its return on equity is still in the dumps even after stripping out the noise. At around half of book value, its stock now looks fairly valued.
How Greece could tart up its battered banks 18 Apr 2012 The stricken state is toiling with its EU masters to avoid totally nationalising its lenders. That requires striking the right balance between giving incentives to naturally wary investors and avoiding free lunches. A mix of guarantees and sweeteners looks the best way forward.
Citi say-on-pay defeat puts bank bosses on notice 17 Apr 2012 Last year’s executive compensation was a bit too high, but didn’t warrant the investor opposition it received. CEO Vikram Pandit’s generous retention plan is probably what grated. Either way, it’s a good sign that shareholders are using the vote to send a strong message.
Bank dominoes need to be better spaced 17 Apr 2012 Many were in danger of toppling after Bear and Lehman fell. Limiting their exposure to a single counterparty, as Dodd-Frank does, should help prevent another similar chain reaction. Big banks may not like it but this too-interconnected-to-fail measure is worth implementing.
Goldman should relish being lost in crowd for now 17 Apr 2012 The firm is used to standing out, but couldn’t match JPMorgan’s Q1 investment banking returns. Goldman’s prudent approach to risk and taxes, however, may offset concerns over treating clients like muppets. It could be welcome relief after a spate of governance and image problems.
Temasek tinkering could put StanChart in play 17 Apr 2012 The Singaporean fund’s latest asset reshuffle has revived talk about its $10 bln stake in the emerging market lender. Banks from the U.S. to Japan would like to get their hands on StanChart. But with the exception of China’s biggest lenders, most would struggle to pull it off.