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.
Fund managers join investment banks in hurt locker 15 Mar 2016 Asset gatherers’ costs could rise by 3 pct a year, new research estimates. As at investment banks, misconduct fines and negative rates could be painful. Bank capital rules are also forcing money managers to spend to offset scarcer financing and lower trading volumes.
Jefferies parties like it’s 2008 but gains little 15 Mar 2016 As during the crisis, boss Richard Handler reckons the securities firm can win clients from retreating Wall Street rivals. Trouble is, the eight years he has spent doing that have yielded low returns, culminating in a $167 mln loss last quarter. He’s just in a tough business.
Stock market jitters are here to stay 14 Mar 2016 Europe’s blue-chip index has all but reversed heavy losses from the early weeks of the year. Slower global growth and specific fears over commodities firms and banks sparked the selloff. But with sellside market-making restricted, further bouts of acute volatility look likely.
Nasdaq’s $1.1 bln ISE buy comes with hidden gem 14 Mar 2016 CEO Bob Greifeld struck a fair price for Deutsche Boerse’s options unit. The deal also doubles Nasdaq’s holding in Options Clearing Corp to 40 pct. OCC is a utility that’s deep in a restructuring. Once revitalized, though, Nasdaq’s stake could make the ISE deal look a bargain.
Old Mutual splits for good reason: it can 11 Mar 2016 The Anglo-South African financials group is breaking into four. It has that rare combination of businesses that don’t go together, a boss willing to empire-shrink rather than build, and potential hidden value. Other groups have the same problem, but lack a clear way to fix it.
Fintech’s growing pains are only just beginning 10 Mar 2016 Shares of mobile payments firm Square fell up to 8 pct on so-so earnings. SoFi started a fund to buy its own loans as other sources proved harder to tap. And competition is getting fiercer, including from banks. Lower fees, riskier business mixes and failure are on the horizon.
Draghi pulls a risky rabbit out of his hat 10 Mar 2016 The ECB chief cut rates, said non-bank corporate bonds could qualify for a larger asset buying programme, and flagged new long-term loans. The good news is Mario Draghi is willing to go the extra mile. The bad: he may encourage excessive risk-taking without lifting inflation.
Challenger bank rollup would create real contender 10 Mar 2016 Upstart UK lenders like Aldermore and Virgin Money are growing fast and making reasonable profit. Individually they are tiny next to dominant UK banks. Mashing together nine challengers, however unlikely, would create a 150 bln stg group with decent returns, big enough to matter.
Aviva investors upgrade Friends deal to so-so 10 Mar 2016 The UK insurer has said it will deliver hoped-for synergies from its late-2014 deal to buy Friends Life a year early. Its capital position is greatly improved. But a minus 12 pct total return since the deal broke implies shareholders are still waiting to be convinced.