Deutsche poorly handles predicted profit warning 4 Oct 2011 The German bank has ditched the 10 bln euro 2011 pre-tax profit target the market long discounted. Unsurprisingly, it blames depressed investment bank revenue. But it also cites a mysterious tax hit. Such opacity is unhelpful at a time of intense investor scepticism toward banks.
France and Belgium can’t assume Dexia is a one-off 4 Oct 2011 State shareholders have pledged to ease the stricken bank’s liquidity problems by guaranteeing its debt. But shaky sovereigns have less firepower than they did in 2008, and other lenders may need similar help. Euro zone banks need a more comprehensive funding solution.
Banks may be underestimating the fury of consumers 4 Oct 2011 Barack Obama’s criticism of BofA’s debit card fee has understandably irked a sector weary of Washington’s meddling. But Jamie Dimon’s rants, Wall Street protests and the financials sell-off are all feeding into resurgent anti-bank sentiment. The industry should watch its step.
Plan B for UK bank lending might just work 4 Oct 2011 George Osborne has so far resisted calls to soften his programme of spending cuts. But the UK chancellor’s so-called “credit easing” signals a major shift in his efforts to get banks to lend. As ever, though, success will hinge on whether demand for new loans actually exists.
Ermotti faces few credible rivals for UBS job 4 Oct 2011 The ex-UniCredit banker is interim CEO while the Swiss lender conducts a broader search. Hands-on experience, risk management, private banking charm and leadership are all required skills. Ermotti may not tick all boxes, but a bias for locals means there are few alternatives.
Dexia rescue would need more than just capital 3 Oct 2011 The Franco-Belgian bank’s shares have slumped amid fears it needs a second bailout in three years. Helping Dexia cope with a big haircut to its Greek debt is the first challenge. But any package also needs to tackle its reliance on short-term funding, and its unwieldy structure.
New Morgan Stanley woe is a drama lacking a crisis 3 Oct 2011 The Wall Street firm was facing skepticism about its turnaround even before the third quarter turned crummy. Its latest misery, though, is driven not by substance but by numerical confusion. It should pass – unless the fear driving the herd mentality turns into outright panic.
Dodd-Frank’s latest dumb unintended consequence 29 Sep 2011 BofA is to charge $5 a month for debit cards to recoup fees lost as part of the financial reform bill. That seems high, but the rule was nothing more than a sop to retailers at the expense of banks. It fails to make the system safer and it’s now a quantifiable tax on consumers.
UK bank reform shouldn’t forget living wills 29 Sep 2011 Ring-fencing retail banks, as the Vickers commission has proposed, may help tackle the “too big to fail” problem a bit. But resolution plans are a more important way of safely winding banks down. If Vickers’ focus diverts attention from this, it could be harmful.
Anna Nicole gives Wall St. a lift from the beyond 27 Sep 2011 The late Playmate’s U.S. Supreme Court case made it easier to shift suits from bankruptcy to federal court. That may help JPMorgan’s case over Lehman’s demise and ding the Madoff trustee’s search for redress. The centerfold may have given as much to the law as to Playboy readers.
Bank funding tightens noose around Greek necks 27 Sep 2011 As the country nears default, deposits are flowing out of Greek banks again. Worse, collapsing government bond prices are making it harder to borrow from the ECB. That leaves lenders dependent on the Greek central bank – increasing the strain on struggling domestic finances.
Spain should not rush savings bank sales 27 Sep 2011 The country’s bank rescue fund is preparing to offload a bust lender with the help of generous guarantees. But a deal would transfer any upside to buyers, while leaving the state on the hook for most future losses. With more bank nationalisations to come, Spain should hold on.
Global SWAT team needed to close tax loopholes 26 Sep 2011 Tax-based financing deals like those between U.S. and UK banks being targeted by U.S. authorities use legal mismatches to reduce tax bills. They are lucrative, but have no economic value. Such questionable arrangements might be best tackled in a focused multilateral forum.
Pro-cyclical Wall Street protesters missed moment 26 Sep 2011 Those marching against finance have failed to build on the rallying cry that began five years ago. Since the crisis started, shareholders and regulators have already pummeled the banks. These rabble-rousers should have arrived earlier - or waited for greed to truly return.
UBS shouldn’t wait to put Weber in the chair 26 Sep 2011 The former Bundesbank chief is not due to take over as chairman until 2013. But the rogue trading loss and departure of chief executive Ossie Gruebel has left the Swiss bank reeling. Provided his former employer agrees, UBS should put Axel Weber in charge as soon as possible.
Gruebel’s principled departure leaves UBS adrift 24 Sep 2011 The man brought in to save the Swiss bank felt the need to take responsibility for the rogue trader. But interim boss Sergio Ermotti only just arrived in April. If an estimable veteran like Gruebel couldn’t rid the deep rot from UBS, the future of the investment bank looks dim.
Misguided share buybacks at least help Wall Street 23 Sep 2011 Companies don’t often time stock repurchases well for their own accounts. But the roughly $500 bln expected this year couldn’t come at a better juncture for ailing investment bankers. IPOs and other new equity deals have slumped, so even paltry fees on buybacks will be welcome.
UBS, Yahoo and HP have made failure traditional 23 Sep 2011 The Swiss bank’s $2 bln rogue trading loss echoes its U.S. mortgage misadventures while persistent strategic drift led the two tech companies to chuck out their bosses. All three have self-images that are badly out of date. Few companies can recover from this cognitive disorder.
Bank paperwork snafus trap Uncle Sam in mortgages 23 Sep 2011 Fannie Mae and Freddie Mac’s past failures make them easy targets. But the pile of lawsuits against private sector banks, notably over mortgage servicing, suggests they’re not yet ready to replace the government - at least until legal action, time and effort scrape away the rot.
Fed’s Twist puts Wall Street in a spiral 22 Sep 2011 Extra stimulus pushed 10-year Treasury yields to a new low and could leave them under 2 pct for a while. That doesn’t just crimp interest margins for retail banks; it also squeezes already struggling debt traders. Financials now look nothing but a super-long-term investment.