De-globalisation of finance looks here to stay 27 Jan 2012 The crisis has reversed a decades-old trend of increasingly international finance. Shrinking banks are shedding foreign businesses, while regulators and governments are encouraging a more national identity. The splintering so far isn’t hugely harmful, but protectionism is a risk.
EU’s latest bank recap may help 2008 victims 26 Jan 2012 Euro zone lenders have to raise 115 billion euros in extra capital, if necessary from governments. The European Commission may help by relaxing penalties for receiving state aid. That could give banks bailed out in the last crisis scope to tweak painful restructuring plans.
Britain is ducking the key question on high pay 26 Jan 2012 There are two reasons to cut bosses’ pay: shareholders suffer and the gap between the top and the middle is too large. In its pay proposals the UK government is focusing on the first issue, but the second is more important – and ministers are dodging it.
Greenhill proves stronger than 2011 knocks suggest 26 Jan 2012 The boutique’s year was marred by people quitting, a panicked response and the tragic death of two senior bankers. But its Q4 results were solid and annual advisory revenue grew as much as at bigger rivals. That should give comfort that Greenhill is well placed to compete.
Banks gain unlikely allies in Volcker rule battle 25 Jan 2012 Canada and Japan are worried the U.S. crackdown on prop trading will undermine their government bond markets. It’s another example of the unintended consequences of regulation. But it’s also hard to see why U.S. taxpayers should subsidize borrowing rates for foreign states.
Even unity can’t solve U.S. foreclosure problem 25 Jan 2012 Banks, as well as Fannie, Freddie and FHA, want to unload an expected 3.2 mln repossessed homes. Investors want to buy them and the regulator wants to help. Despite this rare general accord between Washington and Wall Street, financing and competition are proving tough obstacles.
UniCredit saga shows EU banks’ strange new world 25 Jan 2012 Despite a rocky start, the Italian bank’s 7.5 billion euro rights issue looks to be on course. The European Central Bank has eliminated worries about short-term funding. But a full recovery will come when UniCredit can issue plentiful senior unsecured debt. That’s not close.
Commerzbank bonus case is echo of a greedier era 25 Jan 2012 More than 100 ex-Dresdner bankers are heading to court over a 50 mln euro bonus promise. The case tests whether Commerz was entitled to slash payouts after buying the ailing German lender. But even if staff win, new rules on guarantees and clawbacks make future claims harder.
Bonus for RBS boss hangs on two provisos 24 Jan 2012 Stephen Hester should get his annual bonus – but only if Royal Bank of Scotland can clearly justify the award. The state-controlled lender, and its chief executive, also need to show they understand the toxic political dimensions: and give any proceeds away to charity.
Credit Suisse engineers a bonus with less promise 24 Jan 2012 The Zurich-based group is known for tinkering with its payout schemes. In 2008, it foisted toxic bonds on senior bankers. Its latest innovation, bonus bonds referencing the firm’s derivatives book, looks positively pedestrian by comparison. There’s certainly no obvious upside.
Bank CEO pay suggests Wall Street may be waking up 23 Jan 2012 The latest stock awards to Jamie Dimon, James Gorman and Vikram Pandit can’t be called austere but also don’t ignore the post-crisis contempt over excessive bonuses. So far, there’s nothing that should outrage investors or employees. But there are also still cash payouts to come.
Latest U.S. bank stock surge could prove fickle 20 Jan 2012 The big six, including Goldman and Citi, have added $100 bln of market value of late despite meager Q4 earnings. Receding fears over Europe helped valuations align better with balance sheet and income realities. But no further rally is warranted as more bad surprises are likely.
UK fee disclosure shows bankers rule the M&A roost 20 Jan 2012 Buyers of UK-listed companies now have to come clean about how much they paid to bankers, lawyers and PR firms. It’s too early to say whether transparency will change behaviour. But one thing’s clear: when it comes to M&A fees, bankers grab almost all the spoils.
Next World Bank chief is easy to find 19 Jan 2012 He already has the job. Though a news report says the White House is considering Larry Summers and others to run the agency, there’s no reason to replace Robert Zoellick when his term ends in June. He has shown a flair for fundraising, diplomatic skill and economic prescience.
BofA boss on thicker ice than Morgan Stanley’s 19 Jan 2012 Two years after they began their new jobs, Brian Moynihan needed one-offs to turn a Q4 profit while James Gorman was dragged down by them. But Gorman is now out of excuses for any further underperformance. Moynihan may still have some room to hide behind his predecessor’s legacy.
Commerzbank Houdini act tests regulators’ resolve 19 Jan 2012 The German lender thinks it can conjure up 6.3 bln euros of capital to meet the European Banking Authority’s target. Fiddling with regulatory ratios isn’t the same as injecting fresh equity, but the EBA lacks the power to intervene. That won’t help confidence in Europe’s banks.
Sale of Lehman dregs shows risks of ECB largesse 19 Jan 2012 Three years after Lehman’s collapse, the Bundesbank is selling 2 bln euros of risky debt it was stuck with when the U.S. bank failed. The euro zone’s central banks are now lending far more to banks, and loosening lending terms. The sale is a timely reminder of the risks involved.
Goldman bankers rank ahead of shareholders again 18 Jan 2012 Lower taxes and compensation helped the firm run by Lloyd Blankfein to beat Q4 estimates. But 2011 return on equity was still a sad 3.7 percent. Applying JPMorgan’s pay rate would have boosted investor returns by half. Instead, Goldman bankers retain a dubious league-table crown.
Shotgun marriage no solution for Spain’s Bankia 18 Jan 2012 The lender may need more capital if Spain’s new government pushes ahead with plans to boost buffers for dud property assets. One solution is a merger with stronger rival CaixaBank. But it’s hard to see why Caixa’s shareholders should accept risks the state is so keen to avoid.
Wells Fargo stakes claim to top CEO pay for 2011 17 Jan 2012 Boss John Stumpf already earns more than most of his big bank rivals. He’s on course to best them all for last year. U.S.-focused Wells cranked out better asset, equity and stock returns than its more global peers - but not so great as to warrant gifting Stumpf a bumper payout.