Europe’s terrible banks look their best in years 25 Nov 2015 Capital levels, profitability and lending rose in the six months to June, the European Banking Authority says. Bad loan ratios are almost double those of U.S. banks, and more EU quantitative easing could be bad for business. Even so, lenders are proving surprisingly healthy.
Abengoa’s creditors face certain pain 25 Nov 2015 The heavily indebted engineering firm is seeking creditor protection after a new investor backed out of injecting fresh equity. Abengoa is probably viable, but only with a lot less debt. That makes debt-for-equity swaps and writeoffs the likely next step.
CalPERS gets what it pays for from private equity 24 Nov 2015 The U.S. pension giant revealed that $24.2 bln of net gains from the asset class over 25 years came at the cost of $3.4 bln in so-called carried interest for fund managers. Private equity is pricey and hitherto opaque, but CalPERS’ analysis so far helps justify the fees.
Icahn Xeroxing the HP breakup playbook for Xerox 24 Nov 2015 The activist took a 7.1 pct stake in the faded technology icon, which appears to be in a state of permanent restructuring. The $10 bln copier maker has some decent assets inside a disappointing whole. Finding buyers for some, and milking others for cash, looks logical.
Time for Germany to let EU banking union fly 24 Nov 2015 The European Commission wants a mutualised deposit insurance scheme for banks by 2024. Berlin may be averse to the idea of financing non-German busts. But there are some safeguards, and unpicking the link between banks and states would better avoid trouble in the first place.
Allianz coal ban will change investment climate 24 Nov 2015 The German insurer is to pull $4.3 bln out of investment in coal companies, ditching its scepticism against blanket anti-carbon policies. This rethink suggests big asset managers are taking climate change seriously. Other carbon-heavy industries like oil and cement may be next.
A Panglossian guide to valuing Telecom Italia 20 Nov 2015 Telecom Italia’s tough home market and high debt might struggle to elicit a buy from even Voltaire’s eternal optimist. Purchases from French billionaires Vincent Bollore and Xavier Niel have driven up the price. The shares could be worth more, but only with heroic assumptions.
Japan’s investor revolution is delayed, not dead 20 Nov 2015 Shareholders are souring on the hope that Japan Inc. can become better-run and more profitable. That’s too gloomy. Last year’s returns on equity were humdrum and there have been big disappointments. But real change is underway and the pressure for more is huge.
Starboard’s Yahoo flip-flop misses the point 19 Nov 2015 The pushy investor now wants the $31 bln tech company to offload its main business instead of its Alibaba holding. A switcheroo won’t erase a discount and residual tax liability on the stake. However it’s engineered, the real problems for Yahoo boss Marissa Mayer will remain.
Royal Mail is delivering in traditional style 19 Nov 2015 Shares in the UK postal service rose 6 pct on Nov. 19. Half-year revenue was flat but Royal Mail is squeezing costs. Hats off to CEO Moya Greene. Through old-fashioned hard work, the business is looking more and more sustainable. Still, the headwinds are unrelenting.
VW’s dieselgate may be Lonmin cash call decider 19 Nov 2015 The South African platinum miner wants to raise $407 mln to fund restructuring. The 46-for-one rights issue means investors that fail to subscribe will be diluted almost out of sight. Much of the investment decision rests on demand for catalytic converters as VW cleans itself up.
Public investors lasso Square to tame the unicorns 19 Nov 2015 Jack Dorsey’s payments firm has priced below its indicated range and at less than half the value of its last funding round. A two-timing CEO, rising competition and losses provided ammunition for old-school mutual fund managers demanding big discounts to lofty private valuations.
Wells Fargo shows rivals how CEO succession’s done 18 Nov 2015 JPMorgan boss Jamie Dimon has pushed out or lost possible heirs. BofA and Citi have created chaos at the top. But the most valuable U.S. bank has positioned Tim Sloan to replace John Stumpf while also grooming other long-serving executives to step in. It’s a lesson in leadership.
Chancellor: The illusion of debt-fuelled earnings 18 Nov 2015 Low borrowing costs enabled acquisitive drugmaker Valeant to ratchet up EPS with leverage. Earlier episodes of financial engineering - like Japan’s zaitech and the 1960s conglomerate boom - came unstuck after rates rose and stocks fell. It won’t be any different this time.
Record fine is least of Toshiba’s problems 18 Nov 2015 The scandal-hit Japanese group faces a record regulatory fine, a newspaper says. A $60 mln levy would be embarrassing but easy to bear. That leaves Toshiba free to face its real challenges: regaining investor confidence and restructuring laggard businesses as fast as possible.
Hyatt’s M&A fail is small win for good governance 17 Nov 2015 The U.S. hotelier lost to Marriott in the $12 bln takeover of Starwood. One factor was the Pritzker family’s tight grip on Hyatt. It conceded the flaw by offering to alter its super-voting share scheme in the bid. The rejection provides a warning to other feudal companies.
VW victims eclipsed by firms that bet on lawsuits 17 Nov 2015 A firm backed by hedge fund Elliott is bankrolling a case claiming the carmaker duped shareholders. There are other customer and investor actions, too. The financial muscle makes huge awards more likely. But the real losers may take a back seat if court fights are just business.
Dialog shareholders should short-circuit Atmel bid 17 Nov 2015 The Anglo-German chipmaker’s $4 billion-plus bid for its U.S. peer has been opposed by activist Elliott Management. Both sides have put forward doubtful theories to make their case. But Elliott is right on one thing: the integration risks look too big.
Cox: Quarterly reporting to get a major rethink 17 Nov 2015 From BlackRock’s Larry Fink to presidential contender Hillary Clinton, “quarterly capitalism” has become a four-letter word. Big publicly traded asset managers could change habits by abandoning their own three-monthly results. Watch for that in the coming year.
EasyJet’s brio bodes ill for Lufthansa, Air France 17 Nov 2015 On the back of an 18 pct jump in pre-tax profit in 2015, the UK budget carrier is ordering more planes to step up growth and expand into new routes. The confidence is merited. High-cost legacy carriers are too bogged down by labour unrest to fight more nimble low-cost rivals.