500-euro note passes into illogical limbo 5 May 2016 If the ECB really feared its highest-value bill were a tool for criminals, it would scrap the note altogether. If it saw a strong case for keeping it, it would print more. Instead, the central bank is merely suspending production from 2018. It’s a classic euro-compromise.
LSE investors look even more bearish on merger 4 May 2016 The UK exchange’s shares dived after U.S. rival ICE said it wouldn’t submit a bid. Investors weren’t giving an LSE-Deutsche merger much credit for potential revenue synergies as it was. Now, fear a deal could get blocked may be prevailing over value creation from cost savings.
Credit Suisse sheds problem assets but not stigma 4 May 2016 The Swiss bank has sold $1.2 billion of distressed credit to buyout group TPG, locking in an extra $100 mln of writedowns. High-yield prices are similar to what they were in October. Hence Credit Suisse hasn’t gained much financially for the dent in its credibility.
SocGen gets nose in front of BNP and EU peers 4 May 2016 France’s third bank by assets added more capital than BNP Paribas, with better returns. It also trounced fixed income trading rivals with a 17 pct revenue increase. SocGen’s decision to cut 220 mln euros more costs could provide cover against future rises in bad debts.
Steve Cohen returns as beau of Wall Street ball 3 May 2016 The billionaire investor starred at Michael Milken’s annual bash, warning global grandees that overcrowding in the hedge-fund world is lowering returns. Now managing $11 bln of mostly family money, his joviality seemed justified: U.S. watchdogs left him bruised but unbowed.
Australian central bank comes to miners’ aid 3 May 2016 Cutting interest rates to an all-time low of 1.75 percent will weaken the currency and help stave off deflation. Reversing the Aussie dollar’s recent rise will help make miners Down Under more competitive. That offsets the risk of further heating up the country’s housing market.
UBS’s golden ratio shows cuts are vital 3 May 2016 The Swiss bank is rejigging its wealth unit after trading income as a percentage of invested funds dipped to historic lows. Group return on equity was just 5.1 pct in the first quarter. UBS depends on rich folks being active. When they aren’t, the only option is to trim expenses.
BNP keeps capital catch-up plan on track – just 3 May 2016 The French bank’s revenue shrank less than costs, reversing the dynamic from the previous quarter and helping returns to improve. BNP needs profits to bring solvency in line with peers. But it would help if earnings were driven by a higher top line, not just lower bad debts.
Aberdeen’s big problem is emerging "meh" 3 May 2016 The UK asset manager’s stock has slumped, despite a recovery in its core emerging market investment business. The good news is that outflows have slowed, and Aberdeen is hacking costs and diversifying. The bad news is that the recovery is tepid, and clients come back only slowly.
Who cares who invented bitcoin? 2 May 2016 The whole point of the cryptocurrency and related technology is that they now live a life of their own. That makes Australian Craig Wright’s claim to be bitcoin creator Satoshi Nakamoto a curiosity at best. There is, however, a caveat related to the originator’s personal stash.
Washington starts hitting fintech where it hurts 2 May 2016 The FTC is probing PayPal’s fast-growing payment app Venmo. Customers and big bank bosses including Jamie Dimon and Brian Moynihan have complained about lax data protection at financial upstarts. The watchdog’s move serves as a warning not to favor speed over security.
RBS sale delays hit credibility more than finances 29 Apr 2016 The part-state owned UK bank says it may miss an EU-mandated timeframe to dispose of 300 branches. Even if it takes another 12 months, RBS’s capital position should be OK. But for investors to believe the path to dividend reinstatement, it needs to avoid any missteps.
Deutsche Bank’s zeal to reform takes odd detour 29 Apr 2016 The German bank has parted company with the head of its integrity committee, following criticism of his “overzealous” approach. Deutsche has new executives and says it is committed to addressing past scandals. If so, there should be a place at the table for such ardour.
Euro zone needs better glue than Canadian kindness 29 Apr 2016 Portugal’s eligibility for ECB bond-buying hangs on the rating of Toronto-based agency DBRS. Effectively, the ECB has outsourced the decision of whether to cut off a country. It works to a point: it’s hard to imagine the ECB abandoning Italy or France whatever their ratings.
Private equity gets loco with pricy Spanish IPOs 29 Apr 2016 Telepizza’s dismal IPO debut joins a list of recent duds sold on the market by buyout barons. Investors in other IPOs like Parques Reunidos are getting more cautious. By pushing for high prices, buyout barons may be shooting themselves in the foot.
Deutsche Bank upgrades from dire to depressing 28 Apr 2016 The German lender made first-quarter earnings of 236 mln euros, confounding forecasts for a loss about that size. But Deutsche’s capital position fell, return on equity was just 1.4 pct and the only bit that really beat revenue expectations was Postbank, which is on the block.
Lloyds’ dividend promise has Brexit caveat 28 Apr 2016 The UK bank’s payout growth hinges on keeping its capital ratio at 13 percent - which it barely managed in the first quarter. Lloyds’ potential to generate lots of capital is undimmed. But if Britons vote to quit the EU, those earnings may have to be diverted to running repairs.
BBVA finds pain in Spain and USA 28 Apr 2016 Shares in the Spanish lender dropped after it disclosed weak first-quarter profit. Currencies and lower trading income have hurt, but business in Spain is sagging and provisions grew in the U.S. It’s an inauspicious start to what was supposed to be a strong year.
Goldman may find some dark alleys down Main Street 27 Apr 2016 The Wall Street titan is going mass market with GSBank.com to fund itself with more deposits and fewer short-term loans. It also invites scrutiny from more regulators, including the CFPB, DFS and other state enforcers. It’s not yet obvious the tradeoff is worthwhile for Goldman.
Euro zone cracks show in QE plaster 27 Apr 2016 The ECB’s money printing has squashed interest rates for countries and companies, even in the south. Yet the difference in borrowing costs between riskier sovereigns and Germany is rising. Bond-buying has not made investors insensitive to risk. It may not prevent default either.