LSE merger must please three tough crowds 9 Mar 2016 A tie-up with rival exchange Deutsche Boerse should please customers by cutting their collateral needs. But it could unsettle regulators if it sees too many derivatives being booked in one place. Squaring that circle might leave less for a third key constituency: shareholders.
American oversight of financial tech looks so 2007 9 Mar 2016 U.S. regulators are falling short of policing this emerging industry, partly because of the outdated patchwork of state rules. The UK and others are further ahead in addressing the sector in fresh ways. Creating a modern, federal regime to oversee these firms is a priority.
Credit Agricole glosses over the point of fintech 9 Mar 2016 The French lender will invest 4.9 bln euros into digital banking. Yet cost savings won’t bring job cuts. That contradiction works given CredAg’s quirky rural model. But it neglects an inconvenient truth: for investors, fintech’s appeal is to help make staff and branches obsolete.
Austria may have to accept painful hit on Heta 9 Mar 2016 Bondholders of bust bank Heta rejected a payback offer from Austria. Heta’s guarantor, a province, faces ruin. In an ideal world, bank creditors are held to account and governments ensure insolvency is predictable and fair. But this is Austria, where two wrongs can make a right.
Amex boss needs better credit with shareholders 8 Mar 2016 Ken Chenault this week faces investors tired of missed targets, slow growth and an underperforming stock. A mega-merger fix isn’t possible, and some issues are industry-wide. But he has to sell owners on his plan for boosting results – or risk having them find him in default.
Wall Street pay and profit hint at bloat 7 Mar 2016 Bonuses in the Big Apple’s securities business tumbled 9 pct to $146,000 on average, New York’s comptroller found. Earnings fell, too. The two are more closely aligned than they’ve been in years. Such drops often precede either a recession or a culling of bank staffs. Or both.
Silicon Valley unicorns to starve without tourists 7 Mar 2016 Funds of the mutual, hedge and sovereign wealth variety have been feeding tech startups and the $1 bln mythology. As valuation clouds darken the rainbows, these outside investors will retreat and the herd will thin. That should help venture capitalists get back to reality.
Old Mutual carve-up a question of when, not if 7 Mar 2016 The UK group has always looked a weird mix of British wealth manager, U.S. asset manager and African financials arm. Old Mutual is now considering a breakup. The big question is whether South Africa’s troubles are reason to push ahead or wait.
Being a UK bank boss is now just scary enough 7 Mar 2016 Senior bankers now face censure for their own or subordinates’ misdeeds. Even where job titles don’t imply responsibility, regulators may be able to argue that institutional culture does. This fuzziness aside, the new regime should rein in brash boards, bosses and risk-takers.
China’s growth fixation will scupper other goals 7 Mar 2016 The country’s leaders have reiterated their pledge to lift GDP by 6.5 percent a year until 2020. That’s slower than before, but still too high. Unrealistic targets distort the economy by delaying rebalancing and boosting debt. They also ignore the risk of external shocks.
BlackRock picks its battles with Hong Kong protest 7 Mar 2016 The fund giant is staging an unusual public campaign against a midcap that wants to ditch mining for finance. The latest outbreak of investor assertiveness in the city is welcome. It’s a shame that many other firms remain shielded by powerful insiders and docile retail owners.
Barclays shouldn’t double dip with Diamond 4 Mar 2016 The UK bank is selling its listed ownership of several lenders in Africa. Ex-Barclays boss Bob Diamond, who has operations there, would need $4 bln to buy a majority stake. That’s quite a tall order. And Barclays would face huge pressure not to give Diamond too good a deal.
LSE merger of equal-ness is a red herring 4 Mar 2016 Is it a merger? Are they really equals? It matters not. Deutsche Boerse’s approach for its UK rival could leave London Stock Exchange shareholders 16 pct better off. If a spoiler comes from U.S. peer ICE, value not format is what should guide LSE’s board and boss Xavier Rolet.
StanChart reinforces case for simpler pay 4 Mar 2016 The bank gave new boss Bill Winters 6 mln pounds to buy him out of hedge fund Renshaw Bay. Yet that’s hard to square with the now-known price at which the fund’s main business was later sold. Standard Chartered’s numbers may still add up, but investors can only guess.
Investment banks fiddle while economic value burns 3 Mar 2016 Even by 2020 they won’t earn returns above their cost of capital, a poll of 147 analysts has predicted. Deutsche Bank and Standard Chartered have almost said as much. Rather than accept that as a fact, the industry could do more to exit weak businesses and cut costs.
Ambac getting right pressure from wrong place 3 Mar 2016 The bond insurer may soon face a proxy fight from Canyon Capital. The hedge fund wants it to speed up settling $4 bln of financial crisis-era claims. That makes sense. Trouble is, Canyon has a position in both sides of the trade. It’s a worrying conflict of interest.
Russia gets even less enticing for foreign banks 3 Mar 2016 Goldman Sachs may not help underwrite a Russian state bond issue after Washington criticised U.S. involvement, reports say. Foreign investment banks that remain in Moscow need business. But the difficulty in negotiating the conflicts shows why some are quitting.
Schroders picks bad time for not-great governance 3 Mar 2016 Michael Dobson will stand down as chief executive of the UK asset manager and become non-executive chairman. That’s not good practice. Schroders has reasons for the move, but given the tough environment for fund managers, there are good grounds for fresh blood.
Spotify’s cash hoard signals it’s ready to dance 1 Mar 2016 The digital music service may be about to raise $1 bln of convertible debt, much of it from TPG. That’d hand the private-equity firm an IPO discount without affecting the $8.5 bln valuation from last year’s funding round. It’d also give Spotify firepower to hunt for partners.
Barclays’ new strategy is uneasy mix of past two 1 Mar 2016 The UK bank will exit Africa but keep the group’s investment bank intact. CEO Jes Staley’s predecessors Antony Jenkins and Bob Diamond respectively aimed to slash trading and advisory, and invest in it. In assuming the unit is the right size, the risk is weak returns persist.