Republican donors reach for yield beyond Trump 21 Jul 2016 Wealthy hedge-fund bosses like Paul Singer and other Wall Street financiers wasted millions betting on candidates who lost to the real-estate mogul. Rather than back the GOP nominee, they're giving to congressional races instead. The risk-adjusted return could be higher.
Fat-tail US legal risk keeps Malaysian scandal hot 20 Jul 2016 The Justice Department has alleged over $3.5 bln was siphoned off from 1MDB. The legal details join the dots of the controversy, with plenty of colour. Everyone involved with the sovereign fund, from the Malaysian premier to Goldman Sachs, should feel uncomfortable.
Morgan Stanley gives investors whiff of ROE target 20 Jul 2016 A broad Q2 rebound put the Wall Street bank within spitting distance of rival Goldman's showing. With a lower tax rate, a plan to repay expensive debt and further cost cutting, James Gorman's firm should soon hit its lowly 9 pct return-on-equity goal - if revenue holds up.
Pimco’s new boss adds welcome pep 20 Jul 2016 Emmanuel Roman's contribution as head of Man Group was to make decent acquisitions and be a prominent figurehead. That should suit his new employer. There are deals to be done in asset management, and Pimco never quite filled holes left by Bill Gross and Mohamed El-Erian.
Wall Street whiplashed by Republican hypocrisy 19 Jul 2016 A push to return to the Depression-era law separating commercial banking from trading made the party platform in Cleveland. Meanwhile, an effort to dismantle Dodd-Frank is being led by a disciple of the senator who ended Glass-Steagall. Bankers are left to just shake their heads.
Slovenian twist puts Italy on straight and narrow 19 Jul 2016 Europe’s top court said Ljubljana was right to hit creditors when recapitalising banks. That’s unhelpful for Italian premier Matteo Renzi, who has banks to rescue but doesn’t want to punish their bondholders. He may have to play it straight, which would be no bad thing.
Goldman can take leaf from unlikely book: BofA’s 19 Jul 2016 Better trading and underwriting helped the bank's profit rebound, as did lower legal costs. Boss Lloyd Blankfein also reversed last year's poorly timed hiring spree. Even so, expenses kept its return below the cost of capital. Aping BofA's overhead shredding might suit Goldman.
Bank of America sets stage for a good run 18 Jul 2016 The laggard lender generated an annualized return on equity of just 6.5 pct, trailing rivals from Citi to JPMorgan. Boss Brian Moynihan nevertheless managed to grow book value most while keeping safe on credit. That's good news for shareholders, as long as returns can pick up.
Wells Fargo and U.S. Bancorp raise Citi bar higher 15 Jul 2016 Slowly recovering lenders often target a 10 pct return on equity, hoping to placate long-suffering investors. For Citi and others that only covers the cost of capital. Consistently cranking out more, as Wells Fargo and U.S. Bancorp just did again, is what turbo-charges valuations.
Deutsche Bank a decent flutter for Qatari royals 15 Jul 2016 Funds linked to Sheikh Hamad bin Jassim Al-Thani's family have upped stakes in Germany's largest bank to near 10 pct. The risk for "HBJ" is ongoing drab returns and the risk of further capital requirements. The opportunity is that Deutsche only trades at a third of book.
JPMorgan struggles to earn its keep 14 Jul 2016 The U.S. megabank run by Jamie Dimon cranked out a $6.2 bln second-quarter profit as lending and trading jumped. A utility-like 10 pct return on equity will probably beat most rivals but barely covers the firm's cost of equity. The banking industry needs to show it can do better.
Assault on UK privilege has many possible targets 14 Jul 2016 Theresa May wants to focus on more than the "privileged few". If Britain's new prime minister is serious, the most glaring disparities are in pensions, savings, housing and infrastructure. Action in these areas would go some way to healing north/south and young/old rifts.
Deutsche Boerse has case for go-slow on LSE merger 14 Jul 2016 Almost all the UK exchange group's shareholders voted in favour of merging with its German rival. Index funds are slowing Deutsche Boerse's process. Still, local takeover regulations and post-Brexit difficulties in selling the deal mean it's in DB's interests to take its time.
Boosting bank earnings requires more creativity 13 Jul 2016 Trading, stock deals and mortgage refinancing picked up in the second quarter. That's a relief after a poor start to the year. But bank returns mostly remain too low and new business too scarce. It puts the emphasis on finding new ways to cut costs and harness technology.
Fintech: bigger and dicier for insurers than banks 13 Jul 2016 Financial technology is highly likely to disrupt the insurance industry, executives told PwC. Preventive cover that use sensors to anticipate damage could benefit society. But many shifts may require intrusive Big Brother-like methods - or questionable changes to risk management.
UK watchdog gets first-hand fat-finger experience 13 Jul 2016 The FCA had to tweak a statistic because of a spreadsheet error. The message - that potentially suspicious pre-deal trading rose last year - wasn't affected. It's still an example, close to home, of a curse that has been costly for financial firms including JPMorgan and Goldman.
Deal implosion better for UniCredit than Santander 12 Jul 2016 A planned merger of the Italian bank’s asset manager Pioneer with the Spanish bank’s fund arm may be scrapped. A separate sale would help new UniCredit CEO Jean-Pierre Mustier’s capital build. For Santander, which wanted to list the enlarged entity, it would be more annoying.
New fintech firms hit early by same old problems 11 Jul 2016 Avant's woes put it in league with Prosper and Lending Club. Technology helped such modern-day credit providers find better ways to lend, but like other nonbank finance firms they rely on fickle sources of funding. This time it didn't even take a credit crunch to spark a rout.
Goldman flaunts tin ear with Barroso hire 8 Jul 2016 The U.S. investment bank hired ex-European Commission head Jose Manuel Barroso to chair its London-based international division. Conspiracy theorists will have a field day over the cozy ties between finance and politics. With the UK poised to quit the EU, Goldman won’t care.
UK’s property trauma looks worse from abroad 8 Jul 2016 The slew of gated property funds and 15 pct-plus markdown of values may not hit British banks. They might also not be too bad for sterling-denominated borrowers. Alternative lenders and foreign investors look more likely to be in the firing line.