Time for banks to go cold turkey on sovereign fix 18 Apr 2016 Europe is considering tightening rules that make it easy for lenders to own government debt. Banks addicted to sovereign punts would suffer, and governments lose wiggle room. Yet reform could hasten euro area integration, while ECB bond-buying makes it a less scary prospect.
Mike Corbat now entangled in banking Catch-22 15 Apr 2016 The Citigroup boss aced both the living will and stress tests. He also has fashioned an efficient operation, evidenced by Q1 results. To improve on a 6.4 pct return on equity, though, will require exhausting tax breaks. And to do that depends on finding more elusive profit.
Brexit job risk threatens more than just bankers 15 Apr 2016 The UK might miss out on 100,000 finance roles by 2020 if it quits Europe, a trade group says. The reason those outside the City should be concerned is that the real impact could be wider and more prolonged. The trouble is, immediate job losses elsewhere may seem a bigger risk.
Cox: Who’s the Chinese buyer we’ve never heard of? 14 Apr 2016 That’s the question every investment banker now asks when selling a company or asset anywhere in the world. M&A advisers are even flying China specialists across oceans for pitches. Anbang-like hiccups won’t stop the trend. But extra due diligence and vigilance is required.
Hail equity investors’ rediscovery of risk 14 Apr 2016 The effect of easy money on stocks is ebbing. True, equity prices have rebounded despite economic uncertainty. But money managers are starting to want higher rewards for holding shares versus benchmark bonds, and are betting stock volatility will rise. It’s a welcome shift.
Bank of America can use more self-help 14 Apr 2016 Its main units weathered the first quarter relatively well, partly because some expenses were kept under control. Overall, though, about 70 pct of BofA’s top line is spent on operations. If CEO Brian Moynihan can’t pare back, he’ll struggle to break free of dismal returns.
Wells Fargo at risk of losing its edge 14 Apr 2016 The big U.S. lender posted its lowest returns in years as Q1 loan growth slowed. It also just paid a record mortgage settlement, got low marks on its living will and is more systemically important. Chief John Stumpf has to show he can steer the stagecoach back to a smoother ride.
Italy’s bad bank needs a fireman’s lift from Renzi 13 Apr 2016 The government wants banks and funds to pay 6 billion euros for weak lenders’ non-performing loans. If Prime Minister Matteo Renzi delivers on his boast to reform Italy, they might make a decent return. If not, a Breakingviews calculator shows the bad bank is in for a bad deal.
Probe into UK banking fairness is late and limp 13 Apr 2016 Britain’s financial watchdog took a year to find minor problems with competition in investment banking. Concern over the allocation of shares to favoured investors in IPOs is valid. Other issues - like whether banks manipulate league table data - look a lot like coddling clients.
Schaeuble plays risky political games with ECB 13 Apr 2016 Low European rates fuel support for the far right, Germany’s finance minister says. Such sniping jars with Germany’s usual passion for central bank independence. Wolfgang Schaeuble may be aiming to attract disgruntled voters rather than slam the ECB. His strategy could backfire.
Once-bitten investors may be shy of China brokers 13 Apr 2016 Orient Securities is planning a $1 bln-plus Hong Kong IPO, the industry’s first big overseas equity issue since last year’s crash. Memories of regulators forcing brokers to help prop up the market are fresh, though. Investors nursing losses from past fundraisings will be wary.
Deals can help Japan’s banks offset dollar drought 13 Apr 2016 Mega-banks MUFG, SMFG and Mizuho are making new loans abroad faster than they can amass matching deposits. This headache has boosted the cost of swapping funds from yen to dollars, and made regulators in Tokyo wary. Buying smaller U.S. lenders would help reduce the mismatch.
Italy’s bank rescue is a risky Plan C 12 Apr 2016 Rome has corralled banks into backing a 6 bln euro rescue fund. It’s something, but raises knotty governance issues without decisively plugging bad debt holes. Were they available, market solutions or creditor bail-ins would have been much better than stiffing the bank sector.
Nomura belatedly starts to pick its battles 12 Apr 2016 Japan’s top broker is cutting back in Europe and the U.S. Tough markets have amplified overseas weaknesses and forced it - like European rivals - to choose its specialist subjects more carefully. That does nothing to fix the long-term challenge of being dependent on Japan.
Alibaba’s $1 bln Southeast Asia buy tests limits 12 Apr 2016 The Chinese e-commerce giant is taking control of upstart Lazada in its largest overseas deal to date. Countries like Indonesia and Malaysia offer new growth. But widening losses and fierce competition mean expansion is not cheap. It also dilutes Alibaba’s asset-light model.
Goldman left with long-term greedy as only option 11 Apr 2016 The Wall Street firm’s executives would boast that they’d rather wait for riches than make a quick buck. Lloyd Blankfein’s minions may not have a choice. A dismal start to 2016 for the industry and several years of subpar earnings ahead justify the bank’s discount to book value.
CaixaBank’s BPI saga has potential silver lining 11 Apr 2016 The Spanish bank has reached a deal with Angolan investor Isabel dos Santos that could see BPI cut its exposure to the African state. It’s the key to a Caixa bid for all of BPI. Even better, the Spaniards may be able to take control of their Portuguese rival for a lower price.
Credit Suisse wise to flaunt Brexit neutrality 8 Apr 2016 The Swiss bank has banned staff from events and debates tied to the UK’s EU referendum. Overt partisanship might have unnerved some Credit Suisse clients. As Switzerland renegotiates its own trading terms with Europe, Brexit impartiality also makes sense for its domestic banks.
Spain’s bank branches need more aggressive pruning 8 Apr 2016 Santander is closing 450 outlets and laying off staff. Low interest rates and shrinking loans put strain on an overbanked Spain. Since consolidation is unlikely amid political stasis, other banks will have to follow Santander and wield the shears themselves.
MetLife’s SIFI label doomed by D.C. double-talk 7 Apr 2016 A U.S. judge tossed the insurer’s designation as a systemically important financial institution because a regulator couldn’t keep its story straight. FSOC said it both had and hadn’t changed its rules, prompting a decision that it acted arbitrarily. An appeal will be tough to win.