Financial Services

Senate could become Wall Street’s house of horrors

30 October 2020

The financial industry has been treated with kid gloves under Republican rule. That will change if Democrats win the upper house. With Sherrod Brown as banking czar, the Senate could take a tough line on trading rules and mergers. Bank breakups may even be back on the agenda.

Bank dividend bans have passed their sell-by date

30 October 2020

European supervisors in March halted payouts so that lenders could keep credit flowing and absorb losses. Yet earnings and capital have held up, while bond markets are booming. Regulators can drop the restrictions, as long as banks keep big shock absorbers and don’t cut lending.

Spain’s cheapest bank is only for the brave

30 October 2020

Sabadell is worth less than a fifth of its 11 bln euro book value. With rivals consolidating, it could become a target for BBVA or Santander. While lowly capital buffers leave little room for a spike in bad debts, cost savings worth 6 bln euros mean a deal could still make sense.

Lufax slips softly priced IPO past Ant hullaballoo

30 October 2020

The Ping An-backed Chinese fintech outfit has garnered less hype than Jack Ma’s record-shattering rival. It isn’t growing as fast, but its online lending unit is profitable and established. A $33 bln valuation, at 13 times forecast 2021 earnings, makes for a compelling option.

UK banks’ mortgage wave may only be knee-high

29 October 2020

Lloyds CEO António Horta-Osório hopes a home-loan boom will offset pain from lower central-bank interest rates. But the spike in credit applications is partly pent-up demand from lockdowns. And stiff competition from HSBC and others may force lending margins downwards again.

Deutsche CEO will dust off Commerz merger in 2021

28 October 2020

Despite a recent trading boom, boss Christian Sewing will soon have to scrap his 2022 profit target. Since further cost cuts are tricky, reviving a 2019 aborted union with Commerzbank is the logical Plan B. It helps that his bank is now healthier, and regulators more forgiving.

Nomura cashes last post-dated efficiency cheque

28 October 2020

Chief Executive Kentaro Okuda pledged to reinvent the bank when he took over in April, and now he’s delivered higher pre-tax profit in its three main units with record input from overseas. Earlier revamps did a lot of lifting. That cues Okuda to start a deeper overhaul.

Big banks are ill-suited to be biodiversity cops

28 October 2020

Under pressure from investors and regulators, lenders have woken up to the financial risks of climate change. Activists are pushing for similar urgency in protecting the world’s variety of plants, animals and insects. But any big shift requires governments to lay down the law.

Cuccia’s heir deserves longer reign at Mediobanca

27 October 2020

The Milan bank that called the shots in Italian industry has successfully transitioned from power-brokering to profitability under CEO Alberto Nagel. A new pushy shareholder, Leonardo Del Vecchio, and more competition from Intesa will keep him on his toes, where he should be.

Noel Quinn deftly sails HSBC into stiff winds

27 October 2020

A 36% fall in quarterly profit was better than feared thanks in part to choppy markets. The CEO’s plan to wring more fees out of customers is also welcome. Low interest rates are only one problem, though. UK, U.S. and Chinese authorities loom too large over the bank’s prospects.

Santander’s global blessing may be a virus curse

27 October 2020

Quarterly earnings at the $34 bln Spanish bank rallied, helped by booming loans in Brazil. That justifies boss Ana Botin’s Latin America growth focus. But with over half of profit from states with high Covid-19 infection rates, her global reach may not remain an advantage.

Jes Staley’s Barclays strategy will go stale

23 October 2020

The CEO’s decision to keep a big trading unit has helped the $25 bln group in 2020. That’s a minor win given a fading market boom and the lender’s low valuation. As the board plans for Staley’s eventual exit, a candidate willing to cut investment banking would be the best choice.

Four-year deal delay dims the romance of M&A

23 October 2020

China Oceanwide’s $2.7 bln takeover of Genworth has been postponed for the 16th time since it was unveiled in October 2016. Blame politics and the pandemic for the wait. Mergers that take this long to consummate make it hard to recall the benefits they were meant to provide.

Goldman’s clawback is small but pointy

22 October 2020

CEO David Solomon and others will forfeit $174 mln of bonus payments to resolve the 1MDB bribery scandal. But there’s a question mark over former COO Gary Cohn, who cashed in when he went into politics in 2017. That career change shouldn't shield anyone from past sins.

Goldman fines are literally cost of doing business

22 October 2020

The Wall Street firm is drawing a line under the 1MDB scandal. A U.S. settlement worth under $3 bln looks trifling, but years of bad behavior cost it far more. The bank spent more on legal woes since 2012 than on rent or technology. Like those expenses, penalties are inevitable.

Could Bill Ackman’s SPAC buy Bloomberg or Airbnb?

21 October 2020

The media firm and the home-sharing app have both been reported as possible targets for the activist hedge fund manager’s blank-check company. His $5 billion hook could land a big fish by taking a small stake. But large, well-known private firms don't need a SPAC to go public.

Corona Capital: U.S. tests, UK loans, Man U groans

21 October 2020

Concise views on the pandemic’s corporate and financial fallout: Abbott Laboratories has a bumper third quarter; UK banks look at a workaround for their Covid-19 loan problem; and Manchester United reveals a predictably ropey set of annual results.

New UBS CEO faces a cost-cutting odyssey

20 October 2020

Ralph Hamers takes over a $44 billion bank with slim growth prospects and high expenses. With the easy savings already found, he’ll have to get creative. That means shedding subscale units, further shrinking investment banking, replacing bankers with robots, and potentially M&A.

Corona Capital: Vaccine yields, Halliburton, Glovo

19 October 2020

Concise views on the pandemic’s corporate and financial fallout: Corporate bond investors are nearly as worried about a vaccine crimping the market as they are about inflation; oil services firms get three times unlucky; Delivery Hero acts like one despite investor skepticism.

Lufax may find three’s a China fintech IPO crowd

19 October 2020

It’s like the proverbial bus: long waits before multiple new share sales arrive at once. The Ping An-backed outfit, last valued at $39 bln, is touting small-business bona fides to stand apart from Ant and JD Digits. New York could be a tougher venue to make the case, however.