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.
BankUnited sends ominous sign with its white flag 17 Jan 2012 The Florida lender rescued from the dustbin by private equity was supposed to forge an exemplary path by rolling up small banks, finding efficiencies and creating more competition. But crummy business, picky regulators and rivals too delusional to sell have left it up for grabs.
Citi punts shareholder hopes further downfield 17 Jan 2012 CEO Vikram Pandit has built a solid balance sheet and will have a surfeit of cash to return to shareholders in time. But he’ll need consistently decent earnings. Even allowing for last year’s slowdown, though, Citi’s Q4 performance remains anemic. Investors will have to wait.
JPMorgan deserves a little more investor love 13 Jan 2012 Though Q4 results weren’t great, the House of Dimon is lending more, cutting losses and banker pay and beating its cost of capital. It should also be able to lift its dividend. And yet JPMorgan stock languishes below book value. It’s time for shareholders to overcome their fear.
Bonus squeeze hurts investors more than bankers 13 Jan 2012 Investment bankers are braced for slimmer payouts. But with most banks’ revenue forecast to fall faster than pay, employees will take home a bigger share of the pie than shareholders. Given the industry’s meagre return on equity, investors are bound to demand a fairer deal.
RBS has tough fight to put value in wholesale arm 12 Jan 2012 The state-owned UK lender is cutting its investment bank, again, and merging it with its international payments unit. The new division aims to make more than the 12 pct group cost of capital. It must, to have any value, but it’ll be hard given regulatory and political headwinds.
Asia’s MDs lose their pink-slip immunity 11 Jan 2012 BofA’s cull of over a dozen high-ranking bankers in the region partly reflects unique problems. But rivals also want to cut costs as well as headcount, making seniority no safeguard. As Asian fees fall, only those with strong cash engines can hang on and hope the cycle turns.
Loss of Bhattal may signal Nomura retreat 10 Jan 2012 The retirement of ex-Lehman banker Jesse Bhattal, a year after being promoted to the top job, curtails the Japanese firm’s quest to be a globally relevant investment bank. Weak markets and the unexpected resilience of bulge-bracket rivals presented Bhattal with a Herculean task.
U.S. presidential race has a lone bank-buster 9 Jan 2012 GOP hopeful Jon Huntsman’s desire to break up big banks sets him apart from other candidates in his party, and even President Obama. But his financial reform plan would require a fickle Congress to go along and poses practical difficulties. Dodd-Frank actually does the trick.
Santander’s capital hike shows value of self-help 9 Jan 2012 The Spanish lender has met EU demands for a 15 bln euro capital boost six months early. Bigger bad loan provisions and extra buffers for systemic banks mean it is not yet in the clear. But with rival UniCredit’s rights issue under pressure, avoiding a big cash call is a distinct advantage.
Goldman’s first Islamic foray too clever by half 9 Jan 2012 Sharia scholars have blessed the Wall Street bank’s unusual $2 bln bond. But that approval falls away if the bonds change hands at anything other than par, and that deters potential investors. Given the inevitable scrutiny, Goldman should have been less ambitious.
Currency deals put Swiss central bank on the spot 5 Jan 2012 SNB chairman Philipp Hildebrand’s wife swapped 400,000 Swiss francs for dollars weeks before the currency was pegged to the euro at a lower rate. The bank doesn’t see anything wrong with this. But the affair leaves a bad taste, and will embolden the SNB’s critics.
Bankers lack leverage this bonus season 4 Jan 2012 A few at Jefferies seem to have got their way. But sluggish revenue and new regulation mean virtually all of Wall Street needs to cut costs. With no banks in major hiring mode, only the biggest rainmakers can talk their way into healthy payouts. Most don’t have a leg to stand on.
UniCredit cash call scariest for other euro banks 4 Jan 2012 The Italian lender’s shares slumped after pricing its 7.5 bln euro rights issue at a predictably steep discount. But UniCredit will get its cash. If the selloff persists, those sweating will be the underwriters who are on the hook – and rival banks planning similar cash calls.