Rio’s snap succession makes bad news look worse 17 Jan 2013 The miner’s investors were expecting a big writedown, although maybe not $14 bln, including $3 bln on a 2011 African coal deal. But even though the new CEO, Rio iron ore chief Sam Walsh, is experienced and capable, the decision to replace Tom Albanese immediately looks rushed.
Governments on right side of credit cycle for once 17 Jan 2013 Investors are lapping up contingent capital securities in bailed-out banks. Dublin sold on a CoCo from its bank rescue. Belgium’s KBC is issuing the bonds to recapitalise. The boom is helping Ireland and Belgium recoup bailout costs. They should take the money while they can.
Boeing flagship glitches look like mere turbulence 16 Jan 2013 The grounding of two Japanese airlines’ Dreamliner fleets is a warning: Boeing needs a fix to ensure a smooth future for the much ballyhooed and delayed 787. But the problems aren’t so far bigger than the Airbus A380’s teething troubles. Investors’ mild reaction seems right.
Goldman and Wall Street finally wake up on pay 16 Jan 2013 The firm led by Lloyd Blankfein gave more to investors by taking from bankers. Morgan Stanley is deferring all bonuses for top staff and should be trimming payouts. Jamie Dimon is taking a hit for the whale debacle. These are encouraging signs of a new attitude on compensation.
JPMorgan board goes soft on Jamie Dimon over whale 16 Jan 2013 The bank’s 132-page report into the trades that cost it $6.2 bln dishes out blame to several now departed managers. But it just echoes the chairman and CEO’s own mea culpa. The $10 mln docked from Dimon’s pay will sting but the board could do more, like removing one of his hats.
Don’t look to MLPs for window into IPOs 16 Jan 2013 Three master limited partnerships, one led by Carl Icahn, are poised to kick off the year’s new listings. Higher taxes on the rich make the sector more appealing to some buyers. That’s why MLPs are expanding beyond pipelines - and why they won’t reflect broad investor sentiment.
Renault job cuts test France’s industry fetishism 16 Jan 2013 The French carmaker is to shed 14 pct of staff in its home market in one of the worst slumps in decades. Workers that keep their jobs face pay cuts. Pressure on costs will be pervasive. This will hurt in a country that remains fixated on industry as a symbol of economic might.
Facebook creativity isn’t too destructive yet 15 Jan 2013 The social network unveiled a new tool that allows users to find people, photos and interests more easily. It should make Facebook’s site stickier and could eat into Yelp, LinkedIn and IAC. But the search results will still be limited and there’s also no clear revenue windfall.
JPMorgan risk scrutiny better late than never 15 Jan 2013 Two U.S. watchdogs have put the bank on notice over risk management following last year’s $6 bln trading loss. CEO Jamie Dimon has tried to put the episode behind him. The regulators may be late to the game, but they’re right to focus on improving how complex banks are managed.
Regulators must grab chance to bin EU capital ruse 15 Jan 2013 The Basel Committee is probing how banks risk-weight assets. Its first step should be to name and shame the EU countries where sovereign debt can still be free of capital charge. If wary bank investors got clarity, they might start trusting Europe’s banks a little more.
Anglo opts for high-risk, high-reward in platinum 15 Jan 2013 The embattled miner deserves credit. Its long-awaited platinum restructuring was more aggressive than expected. The task for the incoming CEO is to execute without more of the labour unrest that hit output in 2012. The shares’ subdued response suggests investors are rightly wary.
HMV failure shows limits of consumer sentiment 15 Jan 2013 Amazon and the Internet doomed the British CD and DVD retailer, which has called in administrators. There’s sadness when a brand comes to end after a century, and former customers may have had fond memories of shopping at HMV. But sentiment alone doesn’t become positive cashflow.
UK bank capital reforms are double-edged sword 14 Jan 2013 The BoE’s new Financial Policy Committee could soon be able to make banks hold extra capital for sector-specific risks. That’s an improvement on the current system. But if the FPC isn’t joined up with other national and global agencies, it could create more confusion.
Fiat pegs Chrysler as most undervalued carmaker 14 Jan 2013 CEO Sergio Marchionne’s latest offer to buy a stake in Chrysler from the UAW trust sets the U.S. manufacturer’s worth at $6 bln. True, it lacks the cash and margins of Ford or GM. But it’s a purer play on a recovering U.S. market. Fiat can safely value Chrysler more generously.
Generali’s radical words not yet echoed by deeds 14 Jan 2013 Italy’s biggest insurer is seeking 4 bln euros more capital by 2015 via selling assets. New CEO Mario Greco is rightly trying to move Generali away from its Italian power-broking past. But a really radical move would have been a sale of non-core stakes and a rights issue now.
Banks will pay either way for gaming UK tax change 14 Jan 2013 Companies have long sought tax boons for staff by fiddling with payout dates. Now Goldman Sachs and others are looking at delaying bonus payments to capture a reduction in personal tax rates. But it’s not good corporate citizenship, reputations will suffer and staff will feel it.
Shifting trade winds catch Li & Fung off-guard 14 Jan 2013 It used to be that China produced and the U.S. bought. That’s changing, but at an uncertain pace. A profit warning that wiped 16 percent off the value of Hong Kong supply chain company Li & Fung shows that keeping pace is costly, and there’s plenty of room for error.
Wells Fargo productively bides time 11 Jan 2013 The San Francisco-based bank generated a record $5.1 bln quarterly profit even as its net interest margin tumbled another 10 basis points. Wells Fargo, like its peers, can’t lend out the deluge of deposits fast enough. It’ll be an ongoing challenge until the Fed reverses course.
Commerzbank faces timing dilemma over rights issue 11 Jan 2013 The German lender looks undercapitalised on new Basel III rules, has state aid to repay, and the shares are up a third since November. Financially, it should raise capital sooner rather than later. Politically, Germany’s 25 pct stake and looming elections argue the opposite.
RBS Libor bonus ploy reflects second-tier status 11 Jan 2013 The UK bank’s reported plan to pay half its expected Libor fine from its bonus pool sends a noble message to shareholders and taxpayers. But RBS’s ruse is unlikely to be followed by Barclays and UBS. Both are still more in thrall to their investment banking talent.