Barclays’ JPMorgan impression may fall flat 29 Apr 2020 The UK bank, like CEO Jes Staley’s former employer, is preparing for the worst with a huge bad-debt charge. Peer Deutsche is looking through the virus pain. Barclays’ move could be a sign of strength, but investors may see it as evidence of the lender’s risky mix of businesses.
British Airways jobs cull sends EU bailout Mayday 29 Apr 2020 The airline owned by IAG is axing a quarter of its staff amid the virus fallout, rather than seek state aid. The move highlights the limits of using government funds in the face of wrenching change. It’s ominous for Paris and Berlin, who may dole out $17 bln of taxpayer cash.
Coronavirus can spur ad companies’ transformation 29 Apr 2020 Groups like Publicis and WPP are grappling with the collapse in demand. The crisis may help them shift from traditional advertising into data-led services. Painful cost cuts can speed tough decisions. But it will be hard to judge the success of the shake-up until demand recovers.
Cards played well in three-handed casino deal 29 Apr 2020 Blackstone is buying 10% of Australia’s Crown Resorts from Lawrence Ho’s Melco. The buyout shop antes up at a discount while the Macau operator sensibly folds a busted bet. And amid a crisis, Crown gets staked by a shrewd backer. It may take time, though, for the pot to grow.
Wall Street awaits Chinese oil crash post-mortem 29 Apr 2020 The country’s fourth-largest lender fumbled a crude product, leading to $1.4 bln in losses. Regulators have pushed wealth management assets onto commercial bank balance sheets, with uneven results. Foreigners mulling market entry should watch how watchdogs tackle the mess.
China’s tough Luckin line faces deaf U.S. ears 29 Apr 2020 Authorities raided the embattled coffee chain’s office, partly to limit collateral damage from the accounting scandal. Beijing also may be trying to placate impatient U.S. regulators. It will take far more, though, to satisfy hawks demanding China Inc delistings and divestments.
Google’s falling ad star puts focus on the cloud 28 Apr 2020 Revenue growth at Alphabet’s core division slowed to 12% in the three months to March, with a bigger dip expected this quarter. Still, its $117 bln cash pile buys time and its growing cloud-computing unit helps offset the drop. But a big obstacle is Amazon, a rival on both fronts.
U.S. oil bailout should pay to still the drill 28 Apr 2020 The White House is mulling how to keep the fossil-fuel industry afloat. Emergency loans or equity stakes have many drawbacks. Compensating companies for keeping black gold in the ground has risks, too. But it would give Uncle Sam a semblance of control over demand and price.
Boeing faces MAXed-out negative feedback loop 28 Apr 2020 Boss David Calhoun has boosted cash by cutting costs and borrowing billions. Government aid would help, too. But getting more 737 MAXs out the door – whether ones already on order or new sales – is key. Beaten-down airlines, though, are unlikely to want many of them.
Big Tech will emerge from virus too big to fail 28 Apr 2020 Amazon is an essential service keeping families supplied in a pandemic. The Apple-Google alliance on contact tracing will aid efforts to reopen economies. Facebook’s reach has disrupted virus disinformation. Their size is an asset in a crisis, making it harder to break them up.
Italy gives glimpse into post-pandemic dealmaking 28 Apr 2020 Politicians in Rome want to wed gas-grid operator Snam with power network Terna. Creating a 25 bln euro group would offer few cost savings and blur their industrial missions. It’s a sign that governments will want bigger, less-risky, more-diversified “champions” in the future.
Corona Capital: Trouble in the Levant 28 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Protests erupted in Lebanon as its Covid-19 lockdown worsens the country’s economic problems. It may be a harbinger of broader virus-related discontent.
HSBC’s dividend policy is ripe for reform 28 Apr 2020 The UK mega-bank is well-capitalised despite a 48% slump in pre-tax profit and five-fold rise in bad-debt provisions. That’s partly because regulators told CEO Noel Quinn to halt payouts. It’s an opportune moment to link them to earnings and provide flexibility in future crises.
Investors are rightly wary of Santander’s strength 28 Apr 2020 Spain’s largest lender reported a 9% return on equity in the first quarter despite 1.6 bln euros of provisions against likely losses from Covid-19. Lower costs and robust capital will buoy boss Ana Botin. But a drawn-out recovery would justify the bank’s lowly valuation.
BP’s dividend sangfroid may not last long 28 Apr 2020 The oil giant held its payout steady in the first quarter, despite crude prices falling off a cliff. CEO Bernard Looney has enough cash to keep it up this year. But debt has spiked and oil is now even cheaper. At the very least BP should let investors take dividends in shares.
Stars align for China tech’s stay-at-home project 28 Apr 2020 Controversial surveillance startup Megvii is mulling a local IPO, and exchanges are rolling out welcome mats. It’s good timing given the suspicion U.S.-listed Chinese firms are falling under. Backers face lockup periods and capital controls, but will get better valuations.
Groceries are gluttony for India’s takeaway giants 28 Apr 2020 Couriers of prepared food are increasingly pushing into dried and fresh fare. It’s a bigger prize in a market dominated by home cooking. That could make SoftBank-backed Grofers, last valued at $650 mln, appealing to Zomato. Such meal combos are unlikely to deliver value, however.
Neiman’s squabble shows retailer valuation problem 27 Apr 2020 The Dallas-based department store is preparing to file for bankruptcy, hurt by $5 bln of debt and a pandemic that has halted shopping. Whether and how many high-end patrons return is a big unknown for anyone bailing them out. A deal offers the most value but least certainty.
Leo Strine’s Wachtell plunge ups deal-advice ante 27 Apr 2020 The outspoken ex-Delaware chief justice is joining Wall Street’s most profitable law firm. Ditching mergers is one live issue. And the role of stakeholders beyond shareholders will only become a hotter topic. Strine and his new colleagues are at the sharp end of both debates.
GE boss’s options are to shine or shrivel 27 Apr 2020 Larry Culp’s recent goal of reducing the company’s $59 bln of debt to a manageable level this year is toast: It relied on cash flow from the airlines unit. He could hunker down, but that risks making GE weaker. Selling, say, a stake in the healthcare business would be wiser.