Stress-test failures a warning for European banks 29 Jun 2016 Deutsche and Santander again botched the Fed's exams. It's embarrassing, though more surprising for the German lender. The problem for Europe's financial giants is they have to set up U.S. holding companies by July 1 – bringing more of them into a process as alien as baseball.
GE’s 50 billion reasons not to be a SIFI 29 Jun 2016 That's the dollar amount of market cap the U.S. conglomerate has added since it said it would wind down the finance arm that watchdogs said posed a systemic financial risk. Relative to the market and rivals, the gain is bigger still. Complacent mega-bank shareholders, take note.
Hadas: Britain picks the wrong time to play games 29 Jun 2016 After the vote to leave the EU, politicians on both sides have taken pride in abdicating their responsibility. It comes not from respect for democracy, but for another British tradition: treating things as a game. Young people lost this round, but may even the score in future.
Italy first to exploit EU’s new-found weakness 29 Jun 2016 Rome is pushing for a suspension of Brussels' state aid rules to help it bail out its banks, reports say. If Italy doesn't get some slack, its struggles could upend the euro zone. The risk is a weakened EU acquiesces to a host of carve-outs that compromise the single market.
Mark Carney needs wooing, not whipping 29 Jun 2016 The BoE chief's pre-vote warnings of the risks of an EU exit made him a target for leaver ire. But with both main political parties in turmoil, Carney is a rare stabilising force. The priority is pressing him to stay beyond his tentative 2018 departure date, not pushing him out.
Breakdown: Solving Asia’s other bad debt problem 30 Jun 2016 It's not just China: soured loans are clogging up Indian lenders too. Though a cleanup is underway, the worry is that the departure of central bank chief Raghuram Rajan will delay it. But Prime Minister Narendra Modi needs to fix the banks to fulfil a pledge to create jobs.
Credit Suisse beats Deutsche despite rotten year 29 Jun 2016 The banks' stocks are down 50 pct since they switched leaders last July. Deutsche boss John Cryan had the harder task. But while Credit Suisse's Tidjane Thiam botched an investment bank revamp, geographic and business mix suggests he's more likely to restore shareholder value.
Lending Club financial innovations skipped culture 28 Jun 2016 The cratered online loan marketplace says its founder and ex-CEO inflated loan volumes on top of other failings. Only 18 months after its IPO, the supposed disruptor is retrenching. To move fast and break things is risky in finance – especially so when mixed with self-dealing.
Bank stress exams may test investor patience 28 Jun 2016 Results are due this week from the Fed on how 33 financial institutions performed in a simulated bad economic downturn. Countercyclical factors included this year could mean even banks that ace the tests will be required to keep more profit rather than pay out bigger dividends.
Sterling destined for more measured misery 27 Jun 2016 After voting to quit the EU, Britain faces an economic slowdown that will warrant more monetary easing, a pickup in inflation, and huge political uncertainty. It’s a toxic mix for any currency. Spectacular plunges in the pound will give way to steady falls to new lows.
Austerity has no place in post-Brexit Britain 27 Jun 2016 Chancellor George Osborne has since 2010 aimed to cut public debt and deficits in the name of financial stability. He may now need to row back to cope with any post-vote economic slowdown. Investors’ reaction so far suggests his fiscal rigour was over-zealous in the first place.
The City’s future is in lap of EU gods 27 Jun 2016 Britain’s Leave vote could strip so-called passporting rights from domestic banks and asset managers. One solution is to claim the UK merits equivalent status as its rules match Europe’s. But even if euro peers okay that, London will lose control over future policy-making.
Italy best to avoid sneaky bank bailout 27 Jun 2016 The chaos from Britain’s vote to leave the EU could be a prime opportunity for Italy to dodge European rules on recapitalising lenders. Yet such a move might undermine the idea that creditors not taxpayers should stomach losses, and weaken the region’s half-baked banking union.
Bank shares take a bit of a random Brexit walk 24 Jun 2016 Globally, they’re down about 8 pct. Local pain explains Lloyds and Bank of Ireland. Sovereign debt exposure is a problem for Intesa Sanpaolo and others. Santander has a Spanish election to worry about. The likes of BofA and SocGen, though, seem swept up in a sea of confusion.
UK stocks brace for self-inflicted recession 24 Jun 2016 Shares in banks and homebuilders fell sharply as investors reacted to Britain’s referendum vote. As leveraged bets on the domestic economy, the selloff reflects fears of a contraction. But at least lenders are now better equipped to deal with financial turmoil than a decade ago.
Stars may finally align against buyout-baron taxes 23 Jun 2016 A group of self-proclaimed “patriotic millionaires” wants to close a loophole that allows private-equity partners to pay lower taxes on investment profit. Clinton and Trump both back the idea, too. Though efforts in Congress have failed for years, fresh momentum is building.
Swedish solvency scuffle ominous for EU bank peers 23 Jun 2016 Sweden’s regulator has played down a report that Nordea faces a $9.8 bln capital hole. But fears of solvency standardisation still riled investors, who had assumed watchdogs were rolling over. With global standard-setters mulling “capital floors”, expect more discombobulation.
UK banks have range of Brexit shock absorbers 23 Jun 2016 British lenders can weather the storm if Britons vote to leave the EU. Banks will no doubt be hit should the economy slow. But it’s harder for them to go bust than it was in 2008. They have bigger liquidity backstops to cope with any bank run - and so does the Bank of England.
Going Dutch is the future for European brokerage 21 Jun 2016 Rabobank and Kepler Cheuvreux have agreed to let the Netherlands-based bank keep client relationships while using the French equity house’s research and sales. New European rules will make the cost of sellside analysis explicit and thus often uneconomic. Such tie-ups make sense.
AXA outsources upside to Mario Draghi 21 Jun 2016 The French insurer’s new five-year strategy expects annual earnings growth of 8 percent. If rates don’t rise, however, that will be more like 3 percent. Unless the ECB can gee up the euro zone economy, matching assets with liabilities will remain a struggle for all insurers.