Portugal can gain if it loses Novo Banco battle 5 Apr 2016 Bondholders are suing Lisbon’s central bank, arguing losses imposed on the stricken lender were arbitrary. Losing the case would complicate Novo Banco’s turnaround. But enforcing the principle that governments should use bail-ins fairly would help all banks, even in Portugal.
ValueAct takes hit to its most valuable asset 4 Apr 2016 Jeff Ubben’s hedge fund has been accused by U.S. prosecutors of being an activist where it said it was a passive investor. ValueAct’s reputation for agitating quietly is already suffering from the Valeant meltdown. A fight against the government invites more unwanted attention.
Panama Papers can only clean up so much 4 Apr 2016 A leak of some 11 mln documents from a law firm in the Central American nation has kicked off a global offshore tax hunt. Iceland’s prime minister is already under fire and other world leaders could be damaged. The impact may be limited, however, in the least democratic regimes.
Alternative lenders brace for regulatory onslaught 1 Apr 2016 Avant is the first major fintech player to put a former watchdog on its board – ex-FDIC Chair Sheila Bair. Rivals have tapped Wall Street to bolster business. But the mix of new lenders’ success, high charges, rising rates and defaults is catching the eye of financial overseers.
New M&A marriage vows raise cost of fooling around 31 Mar 2016 Markit must ensure the CEO of merger partner IHS gets the top job or risk breaking the combined company’s bylaws. AbbVie gave the boss of Pharmacyclics similarly ironclad rights. A rise in stock deals is forging stronger prenuptial agreements for so-called social issues.
Intesa complicates UniCredit’s escape route 30 Mar 2016 Italy’s two biggest banks are underwriting capital raises by weaker peers. Given the market panic, UniCredit is entitled to seek state help to cut its risk on Banca Popolare di Vicenza. But by pressing on with a separate underwriting, Intesa is underlining its relative strength.
Even Wall Street’s M&A pros can get scammed 29 Mar 2016 A partner brought into Paul Taubman’s advisory firm in last year’s Blackstone deal has been accused of a $25 mln fraud. Andrew Caspersen’s privileged background makes the charges all the more jarring. It’s a reminder that determined wrongdoers are hellaciously difficult to stop.
Bank capital rules don’t quite go to the top floor 24 Mar 2016 The Basel Committee is keen to prevent banks understating the riskiness of their assets via their own generous models. Good idea, but new proposals to introduce risk floors could wind up too lenient. If so, investors will continue to take bank capital with a pinch of salt.
Italian bank revolutions set unappetising template 24 Mar 2016 Banco Popolare and BPM have sealed the first merger in Italy’s mutual reform. Yet mooted cost savings don’t look generous enough to offset messy governance and tough capital needs. That’s not great news for others, particularly stragglers like Monte dei Paschi di Siena.
Tidjane Thiam has a PAF back to credibility 23 Mar 2016 Credit Suisse’s boss blamed colleagues for hiding distressed debts that cost the bank $1 bln. Saying he’d take a bonus cut “out of solidarity” only dug the hole deeper. Thiam could partly redeem himself by being paid in toxic assets, as bankers once were in a plan called PAF.
Credit Suisse’s epiphany is late and embarrassing 23 Mar 2016 By adding cost cuts and lowering risk assets, the Swiss bank should make acceptable returns in 2018. Tidjane Thiam could have done more when he outlined his strategy in October. Instead, positions in illiquid assets have helped lose $1 billion – and the bank is on the back foot.
John Thain’s M&A-linked pay cut sets good example 22 Mar 2016 CIT docked its departing CEO’s bonus by 30 pct for poor integration of 2015’s $3.4 bln purchase of OneWest. The lender was less disciplined about Thain’s retirement pot, but others could usefully embrace the idea that failures in deal execution should factor into bosses’ pay.
Bank CEO letters just warm-up acts for Jamie Dimon 21 Mar 2016 The bosses of BofA, Citi and others have included interesting tidbits in their shareholder missives. With the exception of M&T’s chief, however, they haven’t revealed much about the state of the industry. For that, investors will have to wait for word from JPMorgan’s head honcho.
AXA stalwart would be partial fix for HSBC 21 Mar 2016 The UK bank already said it will choose an outsider as its next chair. Board member Henri de Castries, stepping down at French insurer AXA, fits the bill. Ideally though, HSBC would pick someone who hadn’t committed the governance no-no of simultaneously being chairman and CEO.
Bank CoCos deserve all the brickbats 18 Mar 2016 Deutsche Bank’s John Cryan thinks new hybrid bank bonds are flawed. Market turmoil is forcing regulators to clarify when baffled investors get coupons. Yet unless there is also standardisation of when they convert from debt to equity, CoCos will always be prone to death spirals.
Tencent gaming and ad boom adds fuel to deal binge 18 Mar 2016 The Chinese web giant’s revenue topped $5 bln in the fourth quarter, fuelled by mobile games and explosive growth in advertising. To keep up with rivals, the group has been investing heavily in e-commerce and finance. So long as it keeps growing, Tencent can sustain the spree.
U.S. savings could use Aussie and Blackstone flair 17 Mar 2016 Americans don’t sock away nearly enough for retirement, and Social Security is on an unsustainable path. Blackstone President Tony James and an economist colleague are pushing a new mandatory nest-egg program. A similar plan Down Under has made golden years there worth the wait.
Credit Suisse’s Thiam needs a new new strategy 17 Mar 2016 Boss Tidjane Thiam set out to double pre-tax profit in Asia, and the same in wealth management. China’s slowdown and a money-laundering case show events are overtaking him. Time for a face-saving rethink – or in bank-speak, a strategic acceleration.
Bank IPOs expose dark arts of Chinese finance 17 Mar 2016 The country’s mid-sized lenders have become skilled at repackaging loans to look like less risky investments. Two Hong Kong share offerings underscore how such wizardry has fuelled growth. The practice makes China’s financial system even more interconnected – and more vulnerable.
Market only half buys LSE merger thesis 16 Mar 2016 Investors have priced in the 450 mln euros in annual savings Deutsche Boerse and its rival exchange hope to create by merging – but no more. The two aim to create value from revenue synergies too. If they can’t convince the market, the tie-up looks vulnerable to an interloper.