Credit

ECB has big enough stick to repel bad-loan revolt

24 April 2018

A political backlash may force the European Central Bank to ditch plans for stricter provisioning of 760 bln euros of dud loans. The saga has weakened chief supervisor Daniele Nouy, and may delay reform of Europe’s banking union. But the ECB has other tools to cut the loan pile.

Capita swerve averts Carillion-style crash

23 April 2018

The outsourcer is raising 700 mln pounds from shareholders. Halving its debt-to-EBITDA ratio helps new CEO Jonathan Lewis avoid the downward spiral that felled the UK contractor. The bigger task is showing that a stronger balance sheet can reverse sliding revenue and cash flow.

China’s surprise reserve cut exposes growth angst

17 April 2018

The central bank cut reserve requirements for banks, freeing $200 bln for lending. That backs up other moves to help over-stretched banks amidst a purge on loose credit. The timing, however, suggests Beijing is looking for a cushion if the economy slows, or a trade war escalates.

Intesa offers partial hope for Italy’s dud loans

17 April 2018

The Italian lender is nearing a deal with Swedish group Intrum to shed 10.8 bln euros of dodgy loans from its balance sheet. Domestic peers will be cheered by the price, which is higher than rivals have attained in similar transactions. Then again, Intesa is a better bank.

Texas downgrade worry is a good problem to have

12 April 2018

The Lone Star State’s comptroller reckons its increasingly underfunded pension obligations risk a credit markdown. Texas’ rainy-day fund helps give it more leeway than many states. Others face bigger problems because, as the U.S. economy has improved, their budgets haven’t.

Bolloré’s best bet is to play along with Singer

10 April 2018

Vivendi chair Vincent Bolloré may lose a fight for control of Telecom Italia with activist investor Elliott. Selling his 24 pct stake would mean a loss, assuming he can find a buyer. Staying put while Paul Singer’s group tries to revive the Italian telco is a better option.

Equifax CEO pick has lesson for Facebook

28 March 2018

The hacked $14 bln credit-scorer’s new boss is more technocrat than tech nerd. Then again, Facebook’s poor handling of its data woes suggests having a coding genius in charge is no certain solution. Hiring an outside manager willing to ask tough questions is a step forward.

Cox: A beneficent billionaire should buy Remington

27 March 2018

The AR-15 maker filed bankruptcy papers a day after millions of Americans marched in favor of banning its products. Owners and creditors just want out in a hurry. But Bloomberg, Gates or Bezos could turn Remington into a force for sensible gun policies with mere pocket change.

Chancellor: Index investment riskier than it looks

22 March 2018

That investors are abrogating their responsibilities to allocate capital intelligently is a danger from the rapid growth of passive fund management. Less widely aired, but of greater concern, is the threat posed to financial stability by the dominance of benchmark-tracking funds.

Asia may reward private equity’s patient capital

15 March 2018

After years of wrestling with the region's founding families and companies, the buyout model is paying off, new research from Bain suggests. Deals are pricey, but getting bigger. If more like Toshiba and GLP come along, Asia itself could turn into a solid long-term investment.

Broadcom’s next sweetener: a bigger breakup fee

14 February 2018

The chipmaker's increased $120 bln-plus offer for Qualcomm has finally persuaded its quarry to talk. But the $8 bln of insurance Broadcom is offering in case antitrust regulators in Beijing or Washington block the deal probably isn't enough. History may justify twice as much.

CFPB scores too low on Equifax transparency

5 February 2018

The consumer-finance watchdog is dialing back its probe of the $15 bln U.S. credit-scoring firm’s massive data breach last year. Trump’s CFPB head says the regulator has gone too far in the past. Perhaps – but if protecting vital data isn’t its remit, he needs to explain what is.

Banks’ crypto caution reveals double standards

5 February 2018

Lloyds Banking Group’s ban on credit card customers buying bitcoin is part of a broader backlash against crypto-currencies. Lenders are protecting customers from losses, while trying to avoid future fines. It makes the futures markets’ embrace of bitcoin all the more jarring.

Steinhoff reminds creditors they are not all equal

1 February 2018

The scandal-hit retailer is planning early repayment of a $1.3 bln South African bond in return for releasing funds to cash-strapped European brands. Other mainly international creditors will be asked for waivers. It’s an early indicator of the unofficial pecking order.

Intesa can afford to speed bad debt cleanup

11 January 2018

Italy’s biggest retail bank may sell up to 15 bln euros of sour loans. It looks like a reversal of boss Carlo Messina’s plan to keep bad debts rather than sell them cheaply. But Intesa can take the hit and, with regulators bearing down on dud assets, a quick exit makes sense.

British shoppers are a shaky economic backstop

8 January 2018

Consumer spending on Visa cards in 2017 was the weakest in five years. Profit warnings from retailers Mothercare and Debenhams add to the glum outlook. Despite easing cost inflation and a tight job market, customers who have kept the UK economy moving are becoming less reliable.

Credit markets will enjoy one last hurrah

26 December 2017

Healthy global growth will make chief executives and buyout firms more willing to take risks and keep a lid on defaults. There’s also a case for locking in cheap borrowing costs before central banks become less generous. But the next wave of blowups is building.

Portugal beats Italy in bond market pecking order

15 December 2017

The country that needed a bailout in 2011 can borrow for less than its larger peer. Investors’ preference for Portuguese debt reflects its more vibrant economy, and messy Italian politics. Lisbon can keep outshining Rome, so long as lax bond markets don’t encourage bad habits.

Hadas: Greed is best indicator of financial crisis

26 October 2017

New research casts small-time property investors as the secret villains in the 2007 U.S. house price collapse. As usual, the love of leverage was the root of financial distress. Balance sheets are stronger today, but investors still haven’t learned the virtue of moderation.

UK banks are trapped in a pincer movement

25 September 2017

The Bank of England says lenders will face higher capital requirements – and all the more so if they are vulnerable to consumer loans souring. Meanwhile the opposition Labour party wants to cap credit card interest. Investors may have to give up hopes of ever-larger dividends.