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.
Spain misses golden chance with bank tests 28 Jul 2011 The problem in Spain was not excessive softness on sovereign exposure, but on property. So long as the nettle isn't fully grasped, confidence in the sector will remain low and the government itself will be vulnerable to infection.
Fixed income doubts will hamper Credit Suisse 28 Jul 2011 Slow markets, tough capital rules and a strong franc led the Swiss bank to cut 2,000 jobs. But it still wants to be a big fixed income player, despite falling revenue. Its ibank will struggle to make its cost of equity. The 15 pct ROE goal for the group is a tall order too.
S&P throws up another securitization roadblock 28 Jul 2011 Commercial mortgage financing has had a tough road to recovery. Pulling a $1.5 bln bond deal thanks to a Standard & Poor's rating snafu won't make it any easier. It's reassuring to see raters being more rigorous, but sideswiping deals in the process should make investors wary.
PIGS turn European banks into lemmings 27 Jul 2011 Most lenders spent the past year slashing their exposure to the euro zone periphery. Yet stress test disclosures show a number ramped up their holdings. Technical factors are partly to blame. But some banks have also been forced to inflate their portfolios for their own survival.
Santander must do more to protect itself from Spain 27 Jul 2011 Profit at the Spanish bank fell short of expectations because of a oneoff charge in the UK. But Spain is the real worry spot, even if it is a fraction of Santander's global business. It should bulletproof its business at home by increasing provisions.
UBS right to concede trading ambitions to Deutsche 26 Jul 2011 The Swiss bank won't make its midterm 15 billion Swiss franc pretax profit target. The German lender repeated its 10 billion euro pretax goal. Deutsche's bet on being a global trading powerhouse looks like paying off. UBS should shape its ibank to support the private bank.
Joe Ackermann shouldn’t be Deutsche Bank chairman 25 Jul 2011 The chief executive of Deutsche Bank is to be succeeded by Anshu Jain and Juergen Fitschen. But Ackermann remains in line to lead the German lender's supervisory board. He would be a poor choice. He could prove to be an interfering backseat driver.
Bank of Ireland’s new backers aren’t loopy 25 Jul 2011 The Irish lender is getting 1.1 billion euros from asyetunnamed overseas investors. BoI still has big funding problems, but its main difficulty is its weak sovereign. If Ireland's politicians can keep their credibility, buying in now makes longterm sense.
Vocal shareholders quieted but not silenced 25 Jul 2011 A U.S. court quashed a rule making it easier for investors to challenge corporate boards. It's a right worth fighting on for but the SEC's plate looks pretty full. All isn't lost, though. The watchdog provided an alternative, if clumsier, path to oust unwanted directors.
Banks escape Greece with a minor trim 22 Jul 2011 Large lenders have signed up to a plan that gives them a 21 pct haircut on their Greek bonds. Though ratings agencies will declare it a default, the outcome is better than the 50 pct loss markets had been pricing in. But unless Greece recovers, the pain has only been postponed.