Financial Services

Breakdown: Libor habit is hard and costly to kick

23 October 2018

Over $300 trillion of financial contracts are linked to discredited benchmark interest rates. Switching to new ones could disrupt economies as well as markets. It will take a lot of money, time, and willingness to reconcile conflicting interests to avoid bad withdrawal symptoms.

GAM takeover is only for the foolhardy

23 October 2018

Funds are flowing out of the Swiss group that suspended a money manager over compliance issues. Its stock has nearly halved in value since the scandal broke but the case for a takeover is far from compelling. The risk of haemorrhaging more assets will deter potential acquirers.

One alternative to tainted Saudi cash: Qatar

23 October 2018

As Riyadh’s investment shindig opens, the Khashoggi affair has cast a pall on the kingdom as a source of funds for Western startups, infrastructure and the like. Qatar is smaller and blockaded, but rich. If the world needs a vision fund, it could just as easily come from Doha.

Lloyds offers shareholders a binary Brexit dare

22 October 2018

The UK bank may buy back 2 billion pounds-worth of stock next year, according to the Financial Times. That could boost annual returns to nearly 15 percent and justify as much as a 40 pct boost to Lloyds' share price – as long as the UK can avoid a messy split from Europe.

India Insight: Shadow banks look ugly in the light

22 October 2018

A golden run for the country’s non-bank lenders is over. Rising interest rates, shallow markets and the herd mentality of investors raise the possibility liquidity problems could unmask dodgy assets. If the last pillar of Indian credit growth crumbles, the economy could be next.

The Exchange: Stephen Harper

19 October 2018

Canada’s former prime minister, in office through the financial meltdown a decade ago, is an advocate for conservative politics with a small “c.” He talked to Breakingviews about the revamped NAFTA, Donald Trump’s standoff with China and the pros and cons of the loonie.

Spanish bank tax hit not as scary as it looks

19 October 2018

Shares in Spanish lenders dropped sharply after a court ruled banks may have to refund mortgage taxes. That could mean a collective hit to earnings of up to 1.5 bln euros, based on the last four years of new loans. With lending rates set to rise, that’s painful but manageable.

Guest view: Governments need more accountants

18 October 2018

Many states waste their resources and hide their obligations, write Ian Ball and Dag Detter. Poor accounting is partly to blame. Measuring public assets and liabilities is a first step to better financial management. That requires more accountants - and fewer economists.

Wall Street offers no relief to European rivals

18 October 2018

On average, U.S. investment banks reported a 7 percent jump in equities revenue in the third quarter, while fixed income trading declined. If results from European peers follow the same trend, top-line growth will be minimal. That leaves more cost cutting to boost dreary returns.

Japanese banks sit quietly pretty in Saudi saga

17 October 2018

Top U.S. and European bank bosses have pulled out of Riyadh’s investment conference. Japanese rivals MUFG and Mizuho are relatively insulated from the same culture of protest. If anything, it’s a chance to court favour in the kingdom and increase their share of Saudi’s fee wallet.

BlackRock’s immunity to market cycles runs out

16 October 2018

Revenue growth slowed to a crawl as clients of the world’s largest money manager pulled large sums out of equities in favor of low-cost exchange-traded funds in the latest quarter. Tax cuts masked a 20 pct drop in performance fees. Choppy markets can rock even the biggest boats.

Saudi fail is fresh win for U.S. banks over Europe

16 October 2018

The bosses of HSBC, Credit Suisse and StanChart are quitting Riyadh’s investment conference next week. Belatedly following JPMorgan CEO Jamie Dimon’s lead cements their pre-existing status as also-rans. French banks may yet go – but any pickup in business will be tainted.

Monzo traces faint path to digital-banking profit

16 October 2018

The UK startup won a million customers with next-to-no marketing, but keeps most funds at the central bank. CEO Tom Blomfield hopes to make money by selling other companies’ products, like insurance or mortgages, in return for a small fee. The numbers at least work on paper.

China’s share-backed debt problem is a lasting one

16 October 2018

Some $220 bln of loans backed by stock collateral threaten to worsen a nearly $2 trillion selloff this year in the People's Republic. Beijing is likely to step in to contain the immediate risk, but higher lending costs and moral hazard will hurt for longer.

The Exchange: Anshu Jain

15 October 2018

Deutsche Bank was credited with coming through the 2008 crisis in better shape than many of its rivals. Jain, who rose from running the German lender’s global markets business to eventually become CEO, stopped by Times Square to speak with Rob Cox about the state of finance.

BofA punches above Wells Fargo’s weight

15 October 2018

The Charlotte-based bank’s earnings typically lag those of its West Coast rival. Yet the two trade at the same multiple of tangible book value. CEO Brian Moynihan's implicit valuation premium has taken years to achieve. Wells' Tim Sloan may soon reach his turning point.

Cox: Global finance has a Saudi Arabia problem

14 October 2018

Wall Street bosses and their European and Japanese peers are reconsidering next week’s “Davos in the Desert.” Like China, there’s money at stake. Unlike Russia there’s no guidance from above. A coordinated pullout following Jamie Dimon’s withdrawal is their least-bad option.

Indebted consumers save Wall Street’s bacon

12 October 2018

JPMorgan and Citi beat earnings estimates, partly helped by consumers showing no strain from their record levels of personal debt. Tax cuts and rising wages mean this can continue for a while. Lumpy investment-banking revenue gives banks a reason to hope it does.

India’s bailout agency is fuelling moral hazard

12 October 2018

Life Insurance Corporation has a reputation for buying New Delhi’s cast-offs, most recently a failing bank. The nation’s largest investor, with around $400 bln of assets, can absorb short-term losses. But its largesse encourages shoddy governance at the heart of India Inc.

The Exchange: Howard Marks

11 October 2018

The founder of Oaktree Capital, with $120 bln of assets, doesn’t see signs of an imminent correction or crisis. But investors, particularly in the credit markets, are acting bullish in ways they’ll inevitably regret when the cycle turns, Marks told Rob Cox earlier in October.