Financial Services

Huawei settles into eye of geopolitical storm

6 December 2018

Meng Wanzhou, the Chinese telecom equipment maker’s CFO, was arrested in Canada for allegedly violating U.S. sanctions. The case arises just as more countries put the squeeze on Huawei. Suppliers will be rattled, too. It may be a microcosm of a broader containment effort.

EU gives Mediobanca Christmas gift on Generali

5 December 2018

Finance ministers extended until 2024 a generous capital treatment for banks’ stakes in insurers. It allows Mediobanca, which has 13 pct of Generali, to add 100 bps to its capital ratio and delay a sale. CEO Alberto Nagel has a larger buffer to resist market jitters, or do deals.

China’s Charles Schwab pitch hooks investors

4 December 2018

Fresh funding values fintech giant Lufax at $38 bln, double its last valuation. A crackdown on peer-to-peer lenders has hammered rivals, but Lufax appears to have convinced new backers it’s insulated by its shift toward wealth management. It’s not out of the regulatory woods yet.

UBS takes just one small step for banks in China

1 December 2018

The Swiss group was given the green light to raise its mainland joint-venture stake to 51 pct. Approval comes years after local rivals learned the ropes and as the economy cools. It’s mostly a symbolic gesture amid trade tension. Plenty of challenges remain for Western banks.

Smarting Aussie lenders brace for Banking 2.0

30 November 2018

Commonwealth Bank of Australia and other top institutions have been battered by an inquiry that has wiped some $39 bln off their market value in 2018. As nine months of theatrics wind down, investors can expect five major changes, including tighter credit and tougher punishments.

Deutsche Bank’s new dark clouds have silver lining

29 November 2018

The lender has been hit by police raids linked to clients’ alleged tax evasion and speculation its investment bank head could leave. Yet Panama Papers issues have thus far not meaningfully hit European banks. And Deutsche’s traders should have a decent 2019 – whoever’s in charge.

Pimco makes Christmas turkey out of UniCredit

28 November 2018

The Italian lender is raising $3 billion from the bond giant at nearly 8 pct, miles more than it would have cost earlier this year. UniCredit’s plight is analogous to a last-gasp Christmas turkey shopper. Having delayed until the last moment, it now has to pay through the nose.

Bank of England hurls a lifebelt to UK Brexit plan

28 November 2018

The UK central bank has warned domestic GDP could fall 8 pct in a disorderly Brexit scenario. A deal more akin to the state’s exit plan could lead to a 0.75 pct dip. That helps Prime Minister Theresa May’s deal, but maybe not enough to get it through parliament.

Greece tries “hair of the dog” bank recap plan

28 November 2018

Athens-based Eurobank, saddled with bad real estate debt, is buying property company Grivalia for 760 million euros. It can then use the latter’s equity to spin off 7 billion euros in dud loans. It’s a novel way to recapitalise a bank, but probably hard to copy.

Goldman Sachs could wind up paying twice for 1MDB

28 November 2018

Abu Dhabi’s sovereign fund is now suing the investment bank for its role in the Malaysian scandal. Damages being sought could exceed Goldman's average net profit of $5.4 bln. U.S. authorities may want a piece, too. The longer this drags out, the worse the financial fallout looks.

Caixabank’s new plan sets its sights suitably low

27 November 2018

The Spanish lender aims for a 12 pct return by 2021 if interest rates rise and a 10 pct return if they don’t. The latter is what it makes now. Having had to cut previous growth targets, boss Gonzalo Gortazar seems more worried about looking silly than boring.

Greek bad-loan rescue relies on government padding

21 November 2018

Greece’s central bank is working on a deal to securitise up to 42 billion euros of lenders’ bad debts. The plan uses tax credits from the over-indebted sovereign to help banks shift loans without too much pain. That will require a loose interpretation of EU state-aid rules.

Analyst tie-up merely defers research bloodbath

20 November 2018

AllianceBernstein is set to buy Autonomous Research. The deal, for an undisclosed sum, endorses the value of independent insight in the wake of new European rules. But it also acknowledges that asset managers will continue to cut budgets, hitting less-celebrated rivals.

Julius Baer slip heralds broader pain for peers

20 November 2018

Choppy markets and nervous clients hit the Swiss private bank’s margin in October, putting a key target at risk. The group’s push into the more volatile Asian market didn’t help. The weak update flashes a red light to rival wealth managers, like Credit Suisse.

SocGen U.S. settlement has sting in the tail

20 November 2018

The French lender will pay $1.4 billion to U.S. authorities for sanctions violations. The hit is in line with its expectations, but a deferred-prosecution pact will push up compliance costs. That puts more pressure on boss Frederic Oudea to cut the bank’s bloated cost base.

Rates pain compounds UK banks’ Brexit misery

16 November 2018

Shares in British lenders fell after government resignations increased the chances of Britain failing to agree a deal with the EU. Investors are pushing back hopes for higher interest rates. That leaves banks stuck with low margins on top of political and economic uncertainty.

Payment stars are victims of their own growth hype

14 November 2018

Amsterdam’s Adyen and Munich-based Wirecard lost 3 bln euros of market value despite the German group upping its targets. A trigger may have been Adyen’s non-inclusion in a big index. Still, companies priced for years of rapid growth are most vulnerable late in an economic cycle.

Wall Street can be effective forest-fire fighter

13 November 2018

The Camp Fire is California’s most deadly and destructive ever. Such conflagrations, worsened by climate change, cost the Golden State some 6.5 pct of GDP last year. A new financing tool can make forests more resilient – and protect everything from water to air to livelihoods.

Italian group bank rescue is self-preservation act

12 November 2018

A vehicle funded by the country’s lenders is spearheading a 400 mln euro rescue plan for ailing Carige. A private sector bailout avoids using taxpayers’ money and should not clash with EU state aid rules. It’s a sensible way to minimise the risk of banking contagion.

Review: Why too much banking can hurt

9 November 2018

In African nations and elsewhere, excessive mineral wealth has imposed costs on ordinary people. Nicholas Shaxson argues that banking and financial markets can also be too much of a good thing. Read past the occasional harangue, and “The Finance Curse” makes an intriguing case.