Barclays’ Hector Sants hire risky for both parties 12 Dec 2012 The UK bank has appointed the ex-FSA chief executive to a key compliance role. If Barclays moves on from its Libor woes, Sants’ image as a regulator who stood up to it before the scandal will be cemented. If it doesn’t, the bank will look crafty and he will look a stooge.
SolarCity IPO valuation approaches earth 12 Dec 2012 The U.S. solar panel installer slashed its expected sale price by more than 40 pct at the last moment. The old price, some six times 2012 revenue, always looked starry-eyed - even with the involvement of Tesla guru Elon Musk. The new price merely requires optimism.
UBS needs a refurb as well as a carve-up 12 Dec 2012 The wealth manager thrilled investors with plans to de-risk investment banking. Fixed income will give way to equities and advisory, leaving a mega-boutique resembling a jumbo Evercore Partners. The snag? The rump business needs some love to be a destination employer again.
Criminal charges aren’t corporate death sentences 11 Dec 2012 Arthur Andersen’s post-Enron demise made U.S. prosecutors skittish about indicting the likes of HSBC, which just settled for $1.9 bln. But new research suggests convictions don’t cause company failures. Banks may be special cases, but enforcers should question their assumptions.
Nat Rothschild’s Bumi plan still faces obstacles 11 Dec 2012 The financier said that top Bumi Plc shareholders back his plan for unwinding the disastrous mining tie-up with Indonesia’s Bakrie family. Investors cheered but the mechanics are murky and a clean break looks tricky. Even if it works, Rothschild’s reputation won’t recover fast.
AIG exit ties up one loose end for Geithner 11 Dec 2012 The Treasury secretary can rest a tad easier. He can now claim to have extracted the U.S. from its contentious $182 bln bailout of the insurer with a profit of $23 bln. But other Geithner legacies will weigh on his successor - notably an unreformed housing finance system.
Record fine shows some banks are too big to indict 11 Dec 2012 HSBC’s $1.9 bln fine may look big, but for the bank it’s small beer. Regulators reportedly wanted to go the whole hog and indict the UK lender, but backed down on systemic risk fears. Yet another sign that four years after Lehman’s collapse, finance is far from fixed.
Merkel wants banking union – a good, German one 11 Dec 2012 Germany’s refusal to rush through the details of the single banking supervisory mechanism is not driven by a hidden agenda to delay the decision forever. Berlin genuinely agrees on the need for pan-European financial oversight. It just wants one tailored to its interests.
Diamond Foods still can’t get its story straight 10 Dec 2012 The scandal-ridden U.S. snack producer dodged a delisting by issuing earnings in the nick of time. But even after Diamond’s yearlong cleanup effort, auditors still found weak controls. New capex claims also seem to contradict earlier ones. Investors shouldn’t be surprised.
Good timing favours rise of Roman’s empire of Man 10 Dec 2012 Ex-Goldmanite Emmanuel Roman is replacing Peter Clarke as head of the world’s largest listed hedge fund manager. Clarke is paying the price for a disastrous share price collapse. Markets will need to behave, but the timing may suit Roman nicely. Not for the first time.
Netflix row opens a Pandora’s box on disclosure 7 Dec 2012 The SEC warned it may sue the online video company and CEO Reed Hastings over a Facebook post. What he wrote hardly looks material and it reached more people than if he had said it on CNBC. It’s a bad test case on the question of investor protection in the age of social media.
Starbucks belatedly discovers new tax zeitgeist 7 Dec 2012 Making tax rules fair used to be lawmakers’ job. Clever tax lawyers battled over how much was owed. Starbucks’ decision to pay quasi-taxes in the UK shows that companies must worry about fairness now. Across finance, the definition of acceptable conduct is shifting.
Petrobras wrestles with local and global ambitions 6 Dec 2012 To play on the world stage, Brazil’s oil champion must branch out. That may be why it seems reluctant to sell Gulf of Mexico assets. Yet the company also needs cash for a domestic agenda that includes a $237 bln capex plan. With Brasilia’s meddling, Petrobras can’t have it all.
HP breakup is on tech world’s 2013 agenda 6 Dec 2012 The revered tech group represents the essence of Silicon Valley. But its era as an everything-to-everyone tech conglomerate is over. CEO Meg Whitman and the board won’t stick around for a five-year turnaround. Breaking up HP would be quicker, and could almost double its value.
Deutsche spat reopens mark-to-model/myth debate 6 Dec 2012 Former employees of the German bank allege it hid $12 bln of losses during the crisis. Banks valued the structured credit assets in question with their own models. This raises the question of whose interests would have been served by a more robust approach.
EADS’ governance rejig falls short of true reform 6 Dec 2012 Paris and Berlin will reduce their influence over the aerospace group. Private shareholders Lagardere and Daimler will be free to divest their stakes. But EADS is still a long way from the kind of reform that would prevent unwarranted government meddling in its operations.
The 1 pct find a way to stimulate themselves 5 Dec 2012 Special dividends are coming thick and fast in the U.S. to avoid higher tax rates in 2013. Oracle’s Larry Ellison and the Waltons of Wal-Mart are among the beneficiaries. Payouts may have saved recipients $5 bln so far. Uncle Sam might have put that to work fixing infrastructure.
Citi’s new boss wields his predecessor’s machete 5 Dec 2012 Mike Corbat is picking up where Vikram Pandit left off. The bank will cut 11,000 jobs, reaping savings of $1.1 billion a year. It won’t endear the new boss to his staff. But it’s not a radical move, hitting back-offices hardest. Corbat’s merely tweaking Pandit’s strategy.
HSBC proves canny trader with $9.4bln Ping An sale 5 Dec 2012 The emerging market lender flogged 16 pct of the Chinese insurer at a premium to the market price. That’s impressive compared with Bank of America and Goldman Sachs, who accepted discounts for their bank stakes. It should also buy HSBC time to explain its broader China strategy.
Tesco will expose itself by removing U.S. fall guy 5 Dec 2012 The UK-based supermarket group has finally admitted that its American dream has gone sour. But the likely exit from the U.S. will focus investor concern on a much bigger issue: the health of its core grocery business in Britain and its hotchpotch of other international markets.