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.
Abu Dhabi bank M&A could ease state’s fiscal fix 20 Jun 2016 A union of state-held National Bank of Abu Dhabi and the smaller First Gulf Bank makes sense in an era of low oil prices. But with public spending cut 20 pct last year, Abu Dhabi could also use the cash. A value-creative merger could in due course herald a Saudi Aramco-style IPO.
Brexit is trigger for market liquidity migraine 20 Jun 2016 If asset managers are anxious before Britain’s EU vote, traders who handle their orders are just as troubled. Sterling’s 1992 ERM exit made them huge profits. In 2016, too-high volatility and growing illiquidity mean market-makers could struggle even to ensure normal service.
Pro-Brexit bankers risk repeating past errors 17 Jun 2016 The City may well suffer if Britain quits the EU, yet some financiers plan to vote Leave. Hopes the economy will flourish, as after sterling’s 1992 ERM exit, look optimistic. Betting that London can gain from a euro implosion, meanwhile, may just repeat wrong calls made pre-1999.
New U.S. exchange won’t fix unfairness in markets 16 Jun 2016 IEX is pitching a “speed bump” to level the playing field for regular players and high-frequency traders. SEC staffers want their bosses to approve the plan. But the upstart’s approach might just fuel the race for a trading edge. Retail investors could still be left behind.
Review: Blockchain hopes go well beyond finance 10 Jun 2016 The distributed-ledger concept is linked to the bitcoin cryptocurrency, and more recently potential financial uses have taken wing. A new book, “Blockchain Revolution,” explores democratic and humanitarian applications. It’s both eye-opening and, at times, a bit wide-eyed.
Bankers can learn from miners about culture change 15 Jun 2016 Rio Tinto, BHP and their peers have spent years improving their safety records. The finance industry can learn a thing or two from the way that miners have tried to clean up their act. Not least is the ambition to attain higher standards than absolutely required by the law.
Giving watchdog algorithm keys is slippery slope 14 Jun 2016 The CFTC wants to inspect source codes of trading firms without a subpoena. The U.S. agency says it’s needed for records retention. Unclear is whether the regulator can safeguard such intellectual property, and it opens the door for other officials to request similar access.
Italian banks can make a virtue out of privacy 10 Jun 2016 Bailout fund Atlante has slashed board members from rescued Banca Popolare di Vicenza. The lack of a public market listing, far from depriving the bank of necessary discipline, seems to be helping get things done. Listed peer UniCredit, by contrast, looks rudderless.
UBS laudably admits U.S. wealth unit has a problem 8 Jun 2016 The Swiss bank is upending how it pays its American brokers and cutting a layer of management. With some of the worst results among local rivals, something had to give. Along with an alliance with a fintech provider, the moves may give UBS a shot at some qualified U.S. success.
Lending Club sale makes sense – to someone else 8 Jun 2016 Renaud Laplanche is considering a bid for the $1.5 bln marketplace lender he founded. Going private or being absorbed into a bigger company may be the best way forward at this point for embattled Lending Club. The man who caused the crisis, however, probably isn’t the one to fix it.
Wall Street will keep feeling the Bern 8 Jun 2016 Hillary Clinton declared victory as the Democratic presidential nominee over Bernie Sanders. The Vermont senator is fighting on to influence the party’s agenda and perhaps the vice presidential choice. His populist platform’s lingering power could be bad news for big banks.
France finds wrong way to send banks right message 8 Jun 2016 A court has ordered SocGen to pay compensation to rogue trader Jerome Kerviel for wrongful dismissal. It sounds absurd. After all, he cost the French bank 4.9 bln euros. But it serves as a useful reminder that the failings of the pre-crisis financial system were a team effort.
Commerz plays Jedi to ECB’s negative-rate Empire 8 Jun 2016 The German bank may stash billions of euros in vaults to offset the pain of the ECB’s negative rate policy. The financial gains are modest, yet the move is a warning against future rate cuts. If the ECB slashes further, other rebellions may start to undermine monetary policy.
Sterling not done as pre-Brexit whipping boy 7 Jun 2016 An EU exit would be less disastrous for Britain’s stocks and bonds than its currency. Some firms will gain from weaker sterling, and rate cut speculation may support gilts. But foreigners holding these assets are going to hedge FX exposure, piling yet more pressure on the pound.