Brazilian banking star puts $15 bln value to test 1 Mar 2012 In three short years, André Esteves has dealt his way to a six-fold increase in the price of his BTG Pactual. Wall Street can only dream of such riches. Former owner UBS must be quietly weeping. But the planned IPO will reveal just how solid the investment bank’s foundations are.
Kinder deal conflicts deserve a second hearing 1 Mar 2012 A judge was right not to block the pipeline owner’s $21 bln acquisition of El Paso over the skewed motives of Goldman, Morgan Stanley and the target’s CEO. But it’s also a good idea for shareholders to keep the fight going. Penalizing misaligned incentives is the best way to stop them.
Don’t penalize money funds for the sins of banks 1 Mar 2012 The SEC wants to step up regulation of money market funds. But their losses have been relatively trivial and mostly non-systemic, while providing savers with diversification from insured deposits. A better idea would be to clearly delineate their risks from those of banks.
Fed’s mortgage sales tighten Volckerian knots 29 Feb 2012 The central bank offloaded the last $6 bln of housing dreck from the AIG rescue. The deals can be construed as prop trading, but also show how big banks work well as market-makers. Maiden Lane exemplifies the conundrum confronting regulators as they draft the final Volcker Rule.
EU banks avoid overdose on ECB wonder-drug 29 Feb 2012 Demand for the central bank’s second fix of cheap three-year loans was a chunky 530 bln euros. But the beneficiaries include smaller banks keeping themselves afloat, not just big lenders recklessly bingeing. While the high take up carries risks, it is the lesser of two evils.
JPMorgan offers peek into trading magic circle 29 Feb 2012 Investment bank boss Jes Staley has broken Wall Street’s code by revealing new data on how much the firm rakes in as a market-maker. It won’t quell suspicions that some of it is really prop trading. But it sheds useful light - and may whet investors’ appetite for even more info.
StanChart doesn’t justify premium over HSBC 29 Feb 2012 Both emerging market lenders had a strong 2011, in different ways. StanChart is growing while HSBC restructures. But StanChart is relatively bigger in troubled India and Korea, while hiring has become expensive. Takeover hopes aside, the valuation gap is hard to justify.
No winners from Barclays tax crackdown 28 Feb 2012 The UK government has closed two loopholes used by the lender to avoid tax. That’s a setback for CEO Bob Diamond’s efforts to present the bank as a good corporate citizen. But by introducing retrospective legislation, ministers have made the UK tax system even more unpredictable.
New York Times adds grist to Jamie Dimon’s mill 27 Feb 2012 JPMorgan’s boss loves citing media pay to deflect criticism of banker comp. It’s not a great comparison. But paying the NY Times’s ex-CEO $4.5 mln for part-time work, 560 times more than the average Gray Lady reporter, looks egregious enough to raise eyebrows even on Wall Street.
HSBC looks like best of a bad bunch 27 Feb 2012 Scale, diversification and good management helped HSBC only so much in 2011. There were bright spots in Asia and parts of the investment bank. But the impact of the euro zone crisis was more powerful. While HSBC is bigger and better, it is, after all, still a bank.
Crisis fiction doesn’t measure up to strange truth 24 Feb 2012 “The Darlings,” by a former Goldman analyst and corporate lawyer, is one of the first novels set amid the upheaval of 2008. The glossy thriller delves beyond the greed engulfing a rich Wall Street family in scandal. But it fails to top the era’s many real tales of sorrow.
Shadow bank rush leaves periphery behind 24 Feb 2012 European banks are lending less to smaller companies, creating a big opportunity for credit funds, particularly in Europe’s core. But this is still a niche product and growth is being held back in the periphery by hostile laws, high costs and lenders’ economic worries.
Lloyds’ return to form will be worth the wait 24 Feb 2012 The UK bank failed to say when dividends may resume, warning instead of a weak operating environment. But its restructuring is going well and the core bank earns high returns. If the UK economy recovers, the investment case is much clearer than at rival state-backed RBS.
Too-coy India prompts Citi’s HDFC retreat 24 Feb 2012 New Delhi has long worried about hot money and fair-weather friends. But the protectionism deployed actually increases the dangers. Give foreign banks more skin in the game and they are less likely to retreat. Citi’s exit from India’s top housing lender tells that tale.
A Goldman governance fix could serve Blankfein 23 Feb 2012 The bank has resisted separating the chairman and CEO roles for years, but there may now be a convenient reason to do so. Becoming chairman only would allow Lloyd Blankfein to gracefully move on and put the onus on his presumptive successor, Gary Cohn, to carve his own path.
Greek banks head for supranationalisation 23 Feb 2012 The country’s lenders will get a 50 billion euro capital injection as part of the latest bailout. Normally this would mean nationalisation. But Athens’ saviours are putting in place buffers to stop Greek politicians meddling. While sensible, this could cause friction.
RBS’s unsustainable situation needs a bold plan 23 Feb 2012 The state-backed UK lender remains a financial and political embarrassment. The question is how to turbo-charge the shares and engineer a clean exit back to the market. Here’s an idea: get Brussels to ease curbs on dividends imposed with RBS’s rescue in 2008, and sell its U.S. arm.
RBS pulls off tricky bonus balancing act 23 Feb 2012 The bonus pool in the investment bank is sharply down. That’s politically convenient. But the comp ratio has shot back up to 41 pct, making RBS look like a competitive payer. Adjust for some quirks in the numbers and in reality not much has changed overall from last year.
Politicians’ pleading on Volcker rule looks foolish 23 Feb 2012 The finance ministers of Japan and the UK are making a big deal about new U.S. rules against proprietary trading. They want to keep American banks trading foreign sovereign debt. But if there is a problem, it’s a minor one. Politicians must have better things to worry about.
GM’s former finance arm better suited for IPO 22 Feb 2012 The business now known as Ally is now considering a sale - and it would fit well with some banks or even its previous owner. But the ResCap unit remains troubled. And at $25 bln, it’s no easy deal in this environment. Waiting for an opening in public markets is a better option.