Lloyds looks like big winner from UK bank shake-up 12 Sep 2011 The lender was at risk of bearing the brunt of the report by Britain’s banks commission. But it has escaped the need to sell more branches, while a widely-drawn “ring-fence” should limit the impact on earnings. By contrast, RBS and Barclays may face an investment banking squeeze.
French bank meltdown begs for government action 12 Sep 2011 SocGen’s plan to dump assets and staff to soothe investors’ concerns couldn’t prevent a meltdown of French banking shares. The government says talk of nationalisation is “premature”. But with another downgrade looming, it might have to step in to avoid a panic.
UK bank commission sticks to its guns 12 Sep 2011 Forcing lenders to ring-fence crucial operations and hold more capital should make the system safer - at a hefty cost to the industry. For banks, delaying implementation to 2019 is some consolation but sorting out the details of the new rules could leave them in limbo for years.
Four crucial calls for the shape of UK banks 9 Sep 2011 Britain’s banking commission is expected to recommend “ring-fencing” vital operations in its final report. The current focus is on the timing of the changes. But the width, height and flexibility of the fence will be equally critical to deciding the industry’s future structure.
French banks’ funding flames fuelled by Basel 9 Sep 2011 SocGen and BNP are telling investors their funding is secure, despite the pull-back by U.S. money market funds. But tough Basel liquidity requirements would force them to issue stacks of pricier debt, shrinking returns. Unless the rules are relaxed, the banks’ woes will persist.
Dexia sued for rare thing it can’t be blamed 8 Sep 2011 The Belgian-French bank is being sued by some French local authorities after loans pegged to the strong Swiss franc soared in cost. Dexia may escape the blame for what looks a case of caveat borrower. Its real problems are its messy funding, and sovereign debt exposure.
Goldman Sachs should consider its own breakup 7 Sep 2011 The Wall Street firm helps companies like Kraft boost their shares by splintering into pieces. So it’s logical that some inside Goldman have run the numbers on their employer. Should Goldman’s stock price linger below book value for long, a breakup could be hard to resist.
Moynihan edges toward control – and responsibility 7 Sep 2011 The BofA boss didn’t just inherit Ken Lewis’s mess but also his people. Ousting Sallie Krawcheck and Joe Price to consolidate power partly addresses this. His predecessor’s failings aren’t his fault, but Brian Moynihan will now be more squarely on the hook if he can’t fix them.
UK bank upstart seeks two-step path to Lloyds deal 6 Sep 2011 NBNK is mulling an offer for the UK assets of National Australia Bank. A successful deal could give the bid vehicle an advantage in acquiring the branches Lloyds is being forced to sell. But in tough markets, convincing investors to cough up the cash looks a challenge.
U.S. mortgage suits inflict super-damages on banks 6 Sep 2011 The latest U.S. regulatory assault for mis-selling mortgage securities has dragged down bank stocks. But damages previously sought from UBS, and the performance of the underlying loans, suggest the impact of this particular banking nasty is now more than priced in.
Beijing’s role in CCB share sale is troubling 5 Sep 2011 China’s main foreign reserve fund has reportedly bought shares sold by Bank of America in the Chinese lender. The price looks low, and the shares yield more than US Treasuries. But increasing state exposure to banks, and using reserves to stabilise their share prices, isn’t wise.
China small-stock boom puts big banks in the cold 2 Sep 2011 The likes of CICC and Goldman Sachs have dropped off China’s IPO league tables. A shift to second-tier stock markets favours nimbler and smaller underwriters. With Shenzhen’s boards raising twice what the main Shanghai exchange did this year, the big guys must adjust.
U.S. bank boss ouster undermines cult of CEO 1 Sep 2011 Surprise changes at the top, especially ones with mealy-mouthed excuses, don’t typically go down well with investors. But BNY Mellon became about $1 bln more valuable after the departure of boss Bob Kelly. Evidently investors, like the board, considered him entirely dispensable.
More U.S. mortgage help isn’t needed 1 Sep 2011 There’s talk of yet more help for careworn borrowers. Washington has already made Herculean efforts. Some were valuable, but there’s no magic bullet and the modest returns are diminishing. It would be better for lawmakers to deploy precious capital, real and political, elsewhere.
IMF looks less wrong than Europe on bank capital 1 Sep 2011 The global fund has enraged euro zone politicians with draft findings showing a 200 bln euro hit for European banks from sovereign debt. True, the IMF’s methodology may be too conservative. But compared to the inadequate EU stress tests, the findings are probably more reliable.
Underwriters’ caution weakens Greek bank deal 1 Sep 2011 Investment banks are hesitating about underwriting Alpha and Eurobank’s 1.25 bln euro capital hike. The share issue carries unusual risks given the difficulties facing Greece and its lenders. But if the experts are struggling to price the risk, other investors won’t be inspired.
Shadow banking in China needs restraint 1 Sep 2011 Banks in China may be lending hand over fist, but they’re not alone. Companies, ill-understood trusts and even individuals have pushed credit growth to more than double Beijing’s official target. Reining in this lending will be painful but it would be worse to let it run riot.
Spin-off trend isn’t just for investment bankers 31 Aug 2011 Companies from HP to Kraft to Conoco are splitting up. It’s tempting to think only Wall Street’s advisory ranks, who helped create these conglomerates in the first place, really benefit from such fads. But a few examples - Marathon Oil and Motorola - suggest investors can, too.
CCB sale underlines BofA’s slow road to recovery 30 Aug 2011 Offloading some $8 bln of the Chinese bank’s shares is a double boost to capital. Along with Buffett’s investment and future earnings, it should help put BofA back on track. But none offers a quick fix. Economic and mortgage woes will leave shareholders dangling for some time.
Mother Nature threatens another mark on markets 30 Aug 2011 Just days after a rare earthquake, Wall Street faces a more serious disturbance from Hurricane Irene. The storm may still fizzle out. But it’s heading for a region with $12 bln of daily output and could cripple finance’s capital at a time when investors are already jumpy.