Bill Miller drifts from investment industry at sea 11 Aug 2016 The renowned money manager once captained both a $21 bln fund with stellar returns and a yacht named for Thomas More's Utopia. He's leaving Legg Mason after 35 years with a humbler record. Low rates, index funds and robo-advisers have made the business far harder to navigate.
M&A activist twist suits almost everyone 11 Aug 2016 Activist hedge fund Elliott won a bump in value on two agreed deals - for brewer SABMiller and UK retailer Poundland. Both results are good for shareholders in the targets, and not too bad for the bidders. It should, though, provoke a subtle shift in how deals get done.
Old Mutual takes the slow road to breakup 11 Aug 2016 The South Africa-focused financials group announced a split earlier this year. Favourable currency moves mean its South African operations are now worth more. But a poor first half for its flagship UK wealth manager suggests a listing could take longer to materialise.
Fintech lenders leave big funding stone unturned 9 Aug 2016 Struggling Prosper and Lending Club, whose CFO just left, are trying to secure long-term financing from investors. Far sturdier SoFi and Earnest have set up successful securitization programs. None is chasing the cheapest option: deposits. That may only be a matter of time.
L&G goes from golden child to whipping boy 9 Aug 2016 The UK insurer’s first-half earnings rose, but shares sank. Its core insurance business was weak, but other areas like “bulk annuities” should ride to the rescue. After the financial crisis, investors fell in love with L&G. Since the Brexit referendum, they are cooling.
Big banks’ stranglehold on UK loosened by a finger 9 Aug 2016 British lenders give customers poor service, but a two-year competition probe has offered few remedies. Caps on overdraft charges could cost the largest banks 1.2 bln pounds a year. But trustbusters have done little to improve all-important small business lending.
Hammond and Carney play discordant UK bond duet 9 Aug 2016 British finance minister Philip Hammond will have to sell more gilts as the economy slows. The Bank of England is buying. But markets are increasingly tuning out rate-setters’ interventions. Extra supply could mean central bank boss Mark Carney has to raise the volume.
U.S. bank deal provides a timely reminder on M&A 8 Aug 2016 Giant pension fund TIAA is snapping up EverBank for $2.5 bln. Even this non-traditional buyer should be able to slash enough costs to justify the price tag. Earnings-strapped lenders may find acquisitions increasingly necessary. Cash is also becoming an integral component.
Bankers’ best business – endlessly patching up MPS 8 Aug 2016 Counting payments for its latest rescue, Monte dei Paschi will have paid $1.4 bln in investment banking fees since 2007 - twice its market value. All four of the Italian lender's rights issues were short-term fixes for dubious political ends. And all have lined banker pockets.
Review: Big Data’s all-too-human failings 5 Aug 2016 An ex-hedge fund quant exposes flaws in how information is used to assess everything from creditworthiness to policing tactics. Programmed biases and a lack of feedback are among the concerns behind the clever and apt title of Cathy O'Neil's book: "Weapons of Math Destruction."
RBS’s grand relaunch in danger of running aground 5 Aug 2016 Since CEO Ross McEwan took over in 2013, the state-owned UK bank has been slowly sorting its issues. But Brexit, low rates and ongoing high conduct charges are big problems. Throw in new losses from the tortuous Williams & Glyn disposal, and RBS looks hobbled for years to come.
Mark Carney’s sledgehammer isn’t up to the job 4 Aug 2016 The Bank of England boss deserves credit for trying. He has halved the policy rate, will resume asset purchases, and done his absolute best to limit the perverse effects of ultra-low rates. But the economic shock of Brexit is probably bigger than anything his toolbox can handle.
RSA and Aviva have hedge against Brexit gloom 4 Aug 2016 Both UK insurers can dodge post-EU referendum blues. Falling rates pose a risk to their half-year positions, but operations are solid and sterling's slide helps groups with big overseas earnings. Losing EU market access is also less of a threat than it might appear.
Renzi’s MPS gamble works win or lose 4 Aug 2016 The Italian premier chose not to haircut the bank's debt for fear of losing a crucial referendum. The alternative - raising over six times MPS' market cap - is hard, but not impossible. If the rights issue fails, Matteo Renzi still wins: it parks the issue until after the vote.
Hong Kong’s special status is in need of renewal 4 Aug 2016 The former colony has mostly thrived in the 19 years since China took charge with a promise to leave it alone until 2047. But society is divided and the rule of law under strain. Without reassurances about its long-term future, Hong Kong faces an exodus of citizens and companies.
Standard Chartered thrives on low expectations 3 Aug 2016 The UK bank will take longer than planned to hit pretty modest return targets. Yet shares surged. Relief that the turnaround is on track and a bombed-out valuation explain why. If it can sell $7 billion of toxic assets for a good price, investors may even be pleasantly surprised.
EU banks give notice that they’re not all hapless 3 Aug 2016 Dutch lender ING and French peers Societe Generale and Credit Agricole all increased second-quarter earnings. Stake sales in Visa Europe helped, and low interest rates hurt in French retail banking. But it’s a reminder that recent EU bank stress tests had a positive message too.
Struggling HSBC has grounds for its payout pledge 3 Aug 2016 The UK bank is holding its dividend and buying back shares, despite scrapping a timetable for hitting an RoE target in a world of lower-for-longer rates. A sky-high dividend yield would usually imply an imminent payout cut. But stronger capital gives HSBC grounds to hold firm.
Intesa has grounds to reject calls for full Monte 2 Aug 2016 The Italian bank's CEO has slammed analysts for questioning if the bank needs higher provisions to match bailed-out Monte dei Paschi. As stress tests just showed, Intesa is swimming in capital and bad debts are down. Markets may set higher benchmarks for its less healthy peers.
Commerz lays bare market over-optimism on EU banks 2 Aug 2016 The German bank says negative rates will further weigh on revenues. Investors are already braced for low returns: Commerzbank trades at 0.3 times book. Still, with analysts' earnings forecasts almost twice those assumed in the EU stress test, even more caution is warranted.