French banks face tough 2012 after rocky 2011 16 Feb 2012 After a tumultuous second half, BNP Paribas and SocGen may be happy for now to prioritise balance sheet repairs over returns. But despite abundant ECB liquidity, the double threat of an economic slowdown and a bank-bashing new president means 2012 may not be more comfortable.
Fed’s Capital One/ING deal delay raises questions 14 Feb 2012 The watchdog has finally approved the bank’s proposed $9 bln marriage to ING Direct. The largest post-crisis bank deal warranted added parental concern. But they are a good match and pose little threat. Keeping them waiting at the altar seemed borderline heartless.
New hedge fund thriller mixes fact with fiction 14 Feb 2012 Robert Harris’s novel “The Fear Index” features a futuristic evil genius computer that may be closer to reality than fiction, writes Chrystia Freeland. The rise of intelligent machines in this portrayal of the hedge fund universe offers a glimpse at the possibility of a jobless economy.
Why the league-table bonanza at Glencore-Xstrata? 14 Feb 2012 Seven banks is a pretty full roster for a long-awaited, friendly, all-share merger. Fortunately there are still some other banks out there that can write unconflicted research or advise interlopers. But if more advisers means a bigger bill for fees, investors won’t be chuffed.
Volcker muddies debate about his own rule 13 Feb 2012 The former Fed chairman’s eleventh-hour comments serve as a decent primer for why banning prop trading is a good idea. But he doesn’t address any of the practical concerns big banks have raised. And Volcker’s argument about the downside of liquidity seems a dangerous red herring.
ECB’s adrenaline fix has dark side for banks 13 Feb 2012 Cheap three-year loans have prevented bank failures and lifted markets. But the broader economic benefits are uncertain, stopping the medication will be hard and the longer the ECB keeps its dominant role in the system, the less banks look like private sector institutions.
Barclays results hand ammunition to bank-bashers 10 Feb 2012 Strong figures would have helped CEO Bob Diamond justify big payouts. But the UK bank’s 2011 return on equity was just 6.6 percent, and it has postponed next year’s 13 percent target. Even though Barclays cut its bonus pool by a quarter, it won’t defuse the ongoing row.
UBS claws out fitting path for investment banks 9 Feb 2012 The Swiss bank is nixing some 2010 stock bonuses after a rogue trading-driven loss last year. The firm may end up paying some cash out again to keep bankers happy. But exercising the clawbacks sends the right message to highly paid staff - and trims UBS’s sky-high comp costs.
ECB’s new funding tool reveals bank pain hierarchy 9 Feb 2012 The central bank is loosening its collateral rules for banks, but just seven euro zone countries have been given the green light to participate. That allows the ECB to aim its three-year loans where they’re needed most. But it also shows which banking systems are most stressed.
Credit Suisse’s pain is clearer than its gain 9 Feb 2012 The Swiss bank has posted its first quarterly loss since 2008. Weak markets were partly to blame, but cost cuts and balance-sheet shrinkage also hurt. The firm thinks it will ultimately get ahead of the pack by restructuring now. But payback still depends on business picking up.
Goldman conflict a tough sell for El Paso moaners 8 Feb 2012 Some of the oil pipeline’s shareholders are taking the bank to court, alleging foul play in advising both Kinder Morgan and El Paso in their $38 bln tie-up. Questioning such conflicts is right, but proving investors were short-changed by a 37 pct premium will be a struggle.
Spain’s bank overhaul is not as big as it looks 8 Feb 2012 Lenders must set aside another 25 bln euros against bad property loans. But demands for higher capital requirements and new generic provisions can be partially met from existing reserves. Despite the government’s claims, Spain’s real estate mess has still not been cleaned up.
Itaú’s $6.8 bln Redecard bid may depend on Lazard 7 Feb 2012 The big Brazilian bank’s offer for the 49.9 pct of the card processor it doesn’t own looks fair - but it’s no knockout. Minority shareholders may push for a sweetened price. With its money manager owning almost a tenth of Redecard, Lazard could make or break any deal.
UBS rightly accelerates strategic shift 7 Feb 2012 Just weeks into 2012, the Swiss bank is warning of a tricky Q1. New CEO Sergio Ermotti is cutting assets and jobs in the investment bank faster than expected, to re-orient UBS toward private banking. UBS has special challenges, but this augers ill for the industry all the same.
EBA has tight deadline to avoid paper tiger status 6 Feb 2012 Lenders are using sleight-of-hand to meet the European Banking Authority’s demands for higher capital ratios. But the body has no real power to challenge their tricks. Unless it can play a canny political game, the latest tests may undermine confidence in both banks and the EBA.
Lazard lays bare need for better pay transparency 6 Feb 2012 The bank hit expectations for revenue but missed them for earnings. The reason: how it handles deferred bonuses. The matter is becoming a complex calculation that Wall Street firms could use to massage results. Lazard, at least, breaks out the details. Rivals should follow suit.
Hugo Dixon: How to end the banker backlash 6 Feb 2012 The system is rigged in financiers’ favour, allowing them to earn more than they deserve. Though one-way bets have been reduced, banks are still too big to fail. Until that ends, they will be vulnerable to the kind of lynching suffered by the current and former bosses of RBS.
Become a U.S. regulator and see the world 3 Feb 2012 America’s financial watchdogs may get to monitor any deals done with any U.S. clients by any bank globally, if the Volcker Rule has its way. To do their duty, regulators will need more staff. Is this how a help-wanted ad might run? And, below, the warts-and-all first draft?
Two cheers for Spanish banking reform 3 Feb 2012 The country’s lenders must set aside another 50 billion euros against real estate losses this year. That’s a good start, but bad loans are still rising. Though Spain’s bigger banks can cope, the state will still be on the hook for part of the cleanup.
Goldman shooting its messenger may bring good news 2 Feb 2012 The bank is replacing veteran PR chief Lucas van Praag. His colorful ripostes to the press often turned a tin ear to public sentiment, but also reflected Goldman’s culture. Though the firm’s problems go beyond its image, a new mouthpiece suggests more changes could be on the way.