Financial Services

BHP boss makes himself tougher act to follow

20 August 2019

The miner reported a record $3.9 bln final dividend alongside its highest earnings in five years. Even as CEO Andrew Mackenzie conserves cash ahead of economic clouds and the end of his tenure, he has fulfilled shareholder return pledges. Any successor will face harder choices.

Dutch insurer revisits ghosts of low yields past

15 August 2019

Despite hiking its dividend, Aegon’s shares dived after a sharp drop in solvency. That revives bad memories of the insurer’s volatile capital a few years back. Incoming CEO Lard Friese’s first job is to show investors he’s better at managing the group as low rates bite once more.

Prudential shrugs off Hong Kong struggles

14 August 2019

Strong Asian growth propelled the London-listed insurer to a 14% year-on-year increase in first half operating profit. Management is focusing on a demerger of the UK business to boost Pru’s lowly valuation, but unrest in its largest Asian market may cast a shadow on sentiment.

New boss must change HSBC ethos without losing it

13 August 2019

Chair Mark Tucker wants a CEO to reverse what he sees as the $149 bln bank’s underperformance. Shifting culture at a lender with 230,000 staff won't be easy. But with Tucker and new Finance Director Ewen Stevenson already outsiders, picking a HSBC alumnus may be the best move.

Hong Kong businesses pick an ill-timed ESG fight

13 August 2019

A stock exchange plan to increase disclosure on green issues and governance has met resistance from local firms, wary of extra costs. The city already lags the likes of Singapore on such reporting; protests are hardly adding to its appeal. A corporate victory would be pyrrhic.

New RBS CEO will have her hands tied

12 August 2019

The UK state-controlled bank has selected 25-year RBS veteran Alison Rose as boss, according to media reports. An insider makes sense for a market leader with limited strategic options. RBS cannot get much larger, and can do little about the economy, UK politics or Brexit.

HSBC can use some lobbying flair in China

12 August 2019

The bank’s Greater China head has left, days after the abrupt exit of group CEO John Flint. Shake-ups happen. This one, though, comes as the lender faces heat in Beijing over its cooperation in U.S. probes into Huawei. New bosses will need diplomatic nous for a tricky task ahead.

Goldman’s top brass become hostages in 1MDB fight

9 August 2019

Malaysia has filed criminal charges against current and former star bankers, including international boss Richard Gnodde. It’s a cunning way to ramp up pressure on the Wall Street firm for a mega settlement. Goldman could end up paying three times to end the sovereign scandal.

J.C. Flowers’ Japan sale marks timely end of era

9 August 2019

The U.S. firm, once called a “vulture” by local press, is selling most of its stake in Shinsei Bank after 19 years. With Japanese lenders staggering, cashing out now of what has overall been a lucrative deal makes sense. Foreign funds owe Flowers for giving them a better name.

Asia sale can give Aviva revamp a timely boost

8 August 2019

The UK insurer is reviewing its future in the east. New boss Maurice Tulloch wants to cut costs and debt. Selling the subscale division, worth as much as $4 bln, is a step in the right direction. Local firms like FWD are keen to consolidate, which should guarantee a good price.

China’s currency slide could be hard to brake

8 August 2019

Tension with Washington has pushed the yuan past 7 per dollar. Beijing needs to keep depreciation modest, but a weakening economy makes that complicated. A sharp fall could weaken already tepid import demand, while cheap exports would sting regional trade partners like Japan.

Muddy Waters’ latest broadside hits AIM as well

7 August 2019

Litigation finance firm Burford was the largest on the London exchange for growing firms in July. An attack on its complex accounting by the short seller has vaporized half its value. Less red tape and disclosure attract listings, but reduce trust – and investor returns.

Hadas: Power shifts from analysts to lobbyists

7 August 2019

Spreadsheet pros understand company and industry trends which used to matter for stock prices. These days investors are more concerned with big-picture changes in geopolitics, economics, regulation and even the climate. Perhaps analysts should reinvent themselves as powerbrokers.

EU banks will struggle to exit value graveyard

7 August 2019

UniCredit, Commerzbank and ABN Amro all reported falls in first half pre-tax profit. Low interest rates threaten to crush revenue faster than CEOs can cut costs. Though euro zone bank shares have underperformed the wider benchmark by 15% this year, lowly valuations are justified.

Masa could do with more Buffett at SoftBank

7 August 2019

Quarterly net profit rose 259% on a big stake sale, but operating income fell. More stable cashflows at Masayoshi Son’s group barely cover loan interest. SoftBank is likened to Berkshire Hathaway, which has steadier income from duller companies. That may be worth emulating.

Hong Kong protests cloud Cathay Pacific’s skies

7 August 2019

The $5 bln airline delivered decent earnings and expects a better performance in the second part of the year. It won’t look so rosy, though, if anti-China clashes continue and prompt flyers to pick other hubs. Worse, Cathay’s ties to Air China are unlikely to provide shelter.

Australia’s largest bank deserves reality discount

7 August 2019

CBA reported a disappointing 5% drop in full-year earnings and dashed hopes for a special dividend. That reflects slower growth and higher costs Down Under. Yet the $95 bln lender still trades at roughly twice its book value. A correction is underway, and overdue.

China’s trade balance previews a life in hock

7 August 2019

Its once-massive current account surplus may soon go into reverse. True, the deficit might be minimal at first, but China could one day need to attract an annual $200 bln of foreign capital. More openness in capital markets and financial services would be a good place to start.

Mastercard charges headlong into e-pay play

6 August 2019

Bulking up its real-time corporate business makes sense for the $263 bln payments processor. But at $3.2 bln it’s paying European rival Nets at least 21 times EBITDA for slow-growth assets. To justify it, Mastercard boss Ajay Banga needs to slash costs or find new business fast.

Blackstone shows BC who’s the junior partner

6 August 2019

The buyout firm run by Stephen Schwarzman is taking a stake in BC Partners. That will fuel the London-based outfit’s expansion into real estate and private credit, and avoid the need for a public listing. Blackstone already has all that. This deal will help keep it a step ahead.