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.
Fat cats have little to fear from Cameron curbs 4 Jan 2012 The UK prime minister wants the rich to feel the nation’s pain. Good luck to him. No one can fully explain why bosses’ rewards started to rise in the 1980s, or why they fell after the Second World War. Cameron’s half-hearted nudging is unlikely to turn the social tide.
Investment banking dreams may die in 2012 3 Jan 2012 Many firms cut jobs and slashed pay in 2011. But they’ll have to do more in the coming year to have any hope of boosting returns in the face of regulatory pressure and market headwinds. Smaller players like RBS, SocGen and Nomura may even conclude they’re better off quitting.
It’s back to the future for RBS’s investment bank 3 Jan 2012 The UK government has set out a vision for the state-owned lender’s wholesale arm - a small operation focused on domestic corporates. This might resemble the original County NatWest business in the firm’s ancestry; but could hardly be called a proper investment bank.
Imagined Goldman Sachs memo that wouldn’t shock 28 Dec 2011 It has been a rough year for Wall Street’s pre-eminent firm. Its stock has even underperformed the likes of Citi and Morgan Stanley. With regulatory and other headwinds still strong, big changes can’t be ruled out in 2012. Breakingviews envisions some of the possibilities.
Investors may find Citi’s the joke on them in 2012 27 Dec 2011 The bank now boasts a trimmer figure and some $65 bln of capital it should be in a position to start handing back, on top of any earnings. If Vikram Pandit can be the first CEO to steer Citi clear of crisis next year and beyond, he may even best JPMorgan in the payout department.
Where the investment banking jobs may be in 2012 27 Dec 2011 The industry is shrinking globally, but opportunities abound for enterprising financiers. Sovereign debt crises are forcing companies to hedge risk. Regional banks need consolidating. Private equity is awash in cash. And forex traders may have some new currencies to play with.
Main Street bonuses may again outdo Wall Street 27 Dec 2011 Investment bank chiefs bear most criticism over outlandish bonuses. But several of their Main Street cousins outdo them, paying big salaries or bonuses on terribly low hurdles. At least new U.S. say-on-pay rules better equip shareholders to push back.
Brazil’s Itaú is the bank to watch next year 23 Dec 2011 It bills itself as “The Global Latin American Bank.” Thing is, it’s not - or at least not yet. But solid finances, determined management, a robust stock-market value and a wealth of opportunities from the misfortunes of others could make Itaú’s bold ambitions come true in 2012.
SocGen’s wholesale arm gets new boss for new times 22 Dec 2011 Didier Valet, the French bank’s CFO, is to run its investment bank. The group is cutting staff and assets in the division as it struggles to meet new capital and funding rules. Outgoing Michel Peretie had been tasked to grow the business. But the time has come for a numbers man.
Bond market will grow at banks’ expense in 2012 22 Dec 2011 Tougher capital rules and funding strains have pushed up the cost of bank credit. That’s giving borrowers an extra push to find other sources of funds. Big companies will increasingly seek to tap the bond market. But small companies and consumers won’t find it so easy to switch.
ECB liquidity orgy heralds two-tier banking system 21 Dec 2011 The European Central Bank’s 489 billion euros of cheap three-year liquidity means EU banks can avert a short-term crunch. But the non-users will gain in the long term. Even if lenders don’t engage in a huge carry trade, private sources of funding could stay away for a while.
Global bank capital rules add “G-Sifi envy” to mix 20 Dec 2011 Labeling 29 lenders as globally systemic will introduce a new dynamic to finance in 2012. Banks on the list must hold more capital, yet gain a too-big-to-fail halo. Smaller competitors may try to join the club. It’s a race to the top, but not in the way regulators envisaged.