Lehman could be 2013’s Humpty Dumpty 2 Jan 2013 Nomura has struggled with the defunct firm’s European and Asian operations. Barclays may offload the U.S. arm. So why not stitch Lehman back together? Plenty of sidelined Wall Street execs could run it. But funding looks difficult. It’s Wall Street’s problem in a nutshell.
Banks will stop giving stuff away this year 2 Jan 2013 Lenders have underpriced everything from corporate loans to current accounts in an effort to suck in business. But tougher regulators and shrinking revenue streams make such cross-subsidies harder to justify. An overhaul of the industry’s approach to pricing is overdue.
EU drops the ball on Monte dei Paschi bailout 28 Dec 2012 The 3.9 bln euro recapitalisation of Italy’s third largest bank had looked likely to punish Monte’s foolhardy equity investors. Instead, the European Commission has let them off the hook. That hurts Italian taxpayers and dilutes important single market principles.
Gazprom’s travails encapsulate Russia’s problems 28 Dec 2012 For decades, Gazprom’s grip on EU gas supplies made it a key lever of Russian might. But years of mismanagement have taken their toll. What’s more, gas isn’t what it used to be. The new torch-bearing company may be Rosneft. But Russia remains a badly-managed resource economy.
Bank CEO survivors’ club may shrink again in 2013 27 Dec 2012 Of the major bank chiefs who had their jobs before the crisis, three remain: Goldman’s Lloyd Blankfein, JPMorgan’s Jamie Dimon and Brady Dougan at Credit Suisse. Each has had setbacks. But the two U.S. bank heads appear to have shrugged them off. Dougan looks more vulnerable.
Weibo should tap the financial network in 2013 27 Dec 2012 China’s rambunctious social media site is valued by investors at $700 million, based on owner Sina’s share price. Weibo has two hard-to-copy assets - its “social graph” and political usefulness. If it can monetise them, Weibo might be worth many times that.
A merger arb writes to Santa 24 Dec 2012 It’s been another thin and bumpy year for betting on M&A. So, having finished the investor letter, one desperate European merger arbitrageur decided to write to Santa with a 2013 wish list. Breakingviews obtained a copy from a source close to the North Pole.
Latam minority investors strike back against Enel 21 Dec 2012 The Italian utility tried to foist overvalued assets onto shareholders of Enersis, its Chilean unit, as part of an $8 bln capital hike. Minorities rebelled and with regulatory help forced Enel to restructure the deal. It’s a small but significant victory for Latam shareholders.
UK government loses wiggle room on bank reform 21 Dec 2012 An influential parliamentary commission has endorsed UK plans to erect firewalls between retail and investment banking. But it has also called for tough safeguards including the option of forcing bank breakups. That’s a welcome push-back on attempts to water down new legislation.
Diamond Bob will bounce back in 2013 21 Dec 2012 A toxic brew of Libor, bonus spats and regulatory ire led to the ousting of the Barclays CEO in 2012. Yet investors will soon twig that Diamond’s bank wasn’t the only fiddler of interbank rates. He’s unlikely to land another big CEO gig, but he may resurface.
Spain’s exit plan for duff banks better than UK’s 20 Dec 2012 Madrid has just put 1.9 bln euros more into its lenders. The economy is still shaky, and foreign interest in the state’s bad bank isn’t the confidence boost it seems. But setting a fixed deadline to sell its new stakes is preferable to the UK’s flaky policy on RBS and Lloyds.
Dawn of a new era at Breakingviews 20 Dec 2012 As Hugo Dixon prepares to hand the editorship to Rob Cox, he reflects on the bubbles, crashes and crises of the past 13 years.
UBS points to next banking worry: client risk 20 Dec 2012 Investment banks’ new mantra is to put clients at the heart of all they do. After years of risking client cash in prop trading, new rules have rightly forced a change. But the cosying up by interdealer brokers to their client UBS shows that relationship businesses have risks too.
Mini-Berkshire shows it’s hard to beat the master 19 Dec 2012 Markel models itself after Warren Buffett’s company. The $4 bln insurer aims for smart underwriting, picking stocks and adding long-term value. It has even got into reinsurance and owning businesses. But performance isn’t as impressive as Berkshire given its far smaller size.
$2.3 bln Brazilian insurer IPO looks too pricey 19 Dec 2012 That would value the unit state-owned Banco do Brasil wants to hive off at 12.5 times earnings - richer than rivals. BB Seguridade may be a good business. But it will remain majority-owned by a bank that does the bidding of an interventionist government. That warrants a discount.
Growth outlook gives U.S. stocks edge over Europe 19 Dec 2012 On dividend yield and price-to-earnings measures, European shares look attractive - at least compared to the other big, mature market across the Atlantic. But that ignores superior growth potential in the United States. Savvy bargain-hunters will see that better value lies to the west.
German anti-Google bill sets unwelcome precedent 19 Dec 2012 Lawmakers in Germany are examining a bill that would force search engines to pay publishers for the listing of their free content. Media owners who are lobbying for the measure don’t realise it could hurt them most. Other European countries should steer clear of such foolishness.
U.S. government GM sale is more noise than motion 19 Dec 2012 The Detroit automaker’s bosses will be glad to lose the “Government Motors” moniker in a year or so – not to mention restrictions on their pay. But industry-wide worries, not Uncle Sam’s stake, are weighing on the stock. Treasury could have waited rather than take a $5 bln loss.
Jumbo fine isn’t the end of UBS reputation woes 19 Dec 2012 The Swiss bank’s $1.5 billion settlement for rigging interest rates encapsulates all that was wrong with the culture of investment banking. UBS says it changed its spots. But with the prospect of further litigation and client fallout, investors may fear the leopard’s still alive.
UBS shows banks must never think they’re well run 19 Dec 2012 The Libor fines widen the already gigantic gap between pre-crisis self-image and reality at the Swiss bank. Even after a big 2008 mea culpa, rates traders engaged in routine, casual wrongdoing. The bank was so convinced it was fundamentally boring that it couldn’t face reality.