Take Chinese bank earnings with a pinch of salt 26 Aug 2011 Bad loans are falling, capital buffers look healthy and earnings are shooting ahead - so why have China’s bank valuations fallen so far? Look deeper and there are signs that a slowing economy is hurting, potential problems lurk off the books, and small banks are struggling.
UK/Swiss deal good for taxpayers, banks and crooks 25 Aug 2011 Two years ago UK investors with untaxed assets in Swiss bank accounts looked like they would lose their anonymity. Instead, they will now pay almost the full tax rate to the UK, helping it cut its deficit. The Swiss banking model is protected - but dodgy money will remain shielded.
BofA blues is bottling up U.S. credit 24 Aug 2011 The Fed still wants to keep credit as easy as it can. But worries, rational or not, over Bank of America’s stability are getting in the way. If credit investors continue to fear for the nation’s largest bank by assets, that will outweigh any policy options Ben Bernanke might try.
America’s too big to fail just keep getting bigger 23 Aug 2011 The FDIC’s latest quarterly roundup suggests, in aggregate, that the U.S. banking industry is recovering. But dig into the details, and it’s pretty clear that massive institutions are continuing to thrive at the expense of the small fry. That’s not necessarily healthy.
BofA shareholders resigned to life on skid row 23 Aug 2011 Fears of a dilutive capital hike may prove overblown. Even so, BofA’s long-running mortgage saga has moved a seemingly endless list of litigants ahead of equity investors in the pecking order. Until the claims are resolved, the stock price looks set to stay in the gutter.
EU bank funding backstop may need fine tuning 23 Aug 2011 As euro zone liquidity becomes more strained, the European Central Bank’s ability to cover any gaps with an unlimited supply of euros and dollars is vital. Yet that support can backfire if investors spot which banks are getting help. Lessons from the UK could be helpful here.
Regulators have the ideal tool to boost banks 22 Aug 2011 Given the bitter fight to impose new rules, it might seem odd to go easy on banks now. But as markets tumble and economies stutter, the sector must be encouraged to lend. Setting the new “counter-cyclical” capital buffer at a low level could be a clever way to get credit flowing
Barclays’ star trader exit won’t be the last 17 Aug 2011 The UK bank is parting company with big-shot commodities trader Todd Edgar. Curbs on proprietary trading are one factor, and his contract terms may make it logical to go now. But with revenues in trading under pressure, the underlying trend is shrinkage in any case.
Investment bank cull won’t protect survivors’ pay 11 Aug 2011 Wholesale banks are cutting thousands of jobs. But business is tailing off faster. The only way to protect bonuses would be to pay out a higher proportion of revenues. With capital under pressure and investors wanting better returns, that would be hard to defend.
StanChart investors should not get carried away 3 Aug 2011 The lender’s income is growing at a double-digit clip and it is hiring, not firing. Even better, costs are under control. But StanChart’s premium valuation leaves little room for error. A first-half hiccup in India is a reminder that emerging market growth is seldom linear.
SocGen back to earth with profit warning shocker 3 Aug 2011 The French bank has admitted it probably won’t make its optimistic 6 bln euro net profit target next year. This may reflect slowing revenue rather than its exposure to euro zone contagion. But with markets already jittery, the warning could hardly have come at a worse time.
Italy draws banks into dangerous embrace 3 Aug 2011 As investors shy away from sovereign debt, Italy will rely on banks and insurers to help it through the turmoil. The country’s lenders are well-funded and can always borrow more from the European Central Bank. But until Rome restores confidence, banks will only get weaker.
Bank of Moscow’s debacle is profitable for some 2 Aug 2011 Russia’s $14 bln banking fiasco has proved costly for both the Russian state and its major shareholder, VTB Bank. But Vitaly Yusufov, the son of former Kremlin official Igor Yusufov, looks set to profit from the imbroglio. That raises questions about the handling of the affair.
Barclays’ targets still look a stretch 2 Aug 2011 Falling bad debts helped the UK bank meet forecasts for H1, and underlying return on equity has jumped to 9 pct. But to achieve its 13 pct goal in 2013, Barclays will need strong top-line growth as well. That’s challenging given euro zone woes and regulatory uncertainty.
HSBC supertanker will take time to turn around 1 Aug 2011 CEO Stuart Gulliver wants to make the bank more efficient, but emerging market wage inflation means costs are still rising. Factor in new capital rules, and HSBC’s return on equity is also well below target. It’s no surprise the bank is planning to slash another 25,000 jobs.
Markets could be making a Lehman-like mistake 29 Jul 2011 Investors have displayed remarkable calm over the US debt ceiling fiasco. Most seem convinced lawmakers will come to a lastminute agreement by Aug. 2. Default, after all, is unthinkable. But so, too, was the failure of Lehman. The markets' faith may again prove to be misplaced.
Republican infighting not fatal to reaching deal 29 Jul 2011 The political circus in Congress makes for marvelous spectacle. The Republican House speaker is fighting for an agreement to save his job, while some Tea Partiers claim God is telling them to prevent one. Markets are growing weary of the theater, but a finale looks near.
Madoff crusader views the dawn before the dark 29 Jul 2011 Trustee Irving Picard secured a $1 bln settlement for the fraudster's victims right before a federal judge gutted his $10 bln case against HSBC. He's done well for scammed investors. But now rulings in bigger cases look harder to win, his impressive run seems near an end.