Dear Draghi: Time to buy bank bonds 12 Feb 2016 Bank shares have slumped and bank bond yields are up. ECB chief Mario Draghi can stop the rout from damaging the economy by buying lenders’ debt. The moral hazard concerns are big, but manageable. Breakingviews imagines a memo from a bank CEO.
Commerzbank picks good time to mend the roof 12 Feb 2016 The German lender has restored its dividend, which was expected, and strongly improved its capital, which was not. Commerz is now better placed to withstand current volatility. The downside: its costs are too high and its returns remain lamentable.
Jamie Dimon aligns money and mouth 12 Feb 2016 JPMorgan’s CEO personally bought some $25 mln of the bank’s shares. This vote of confidence reflects his mantra that lenders do best buying back stock when it’s near book value. It is also an important counterweight to the panic gripping investors in U.S. banks.
Morgan Stanley case refutes skeptics of mea culpas 11 Feb 2016 The bank joins JPMorgan and BofA in bad-mortgage settlements acknowledging dodgy behavior. It’s not an admission of guilt but shows critics were wrong to claim firms would fight, rather than reveal misconduct. Greater transparency is a decent legacy for Wall Street’s watchdogs.
Keep an eye on the banker stage of M&A cycle 11 Feb 2016 France’s Natixis is buying control of Peter J. Solomon, a specialty corporate consigliere. The U.S. boutique wants to roll up fellow advisory shops. Veteran dealmakers can recall the fates of Robertson Stephens and Wasserstein Perella, and wonder if history will repeat itself.
Deutsche has enough capital but not enough clarity 10 Feb 2016 The German lender’s solvency is strong enough to withstand the most likely clouds on the horizon. But Deutsche Bank’s 1.4 trln euro balance sheet is opaque and stuffed with derivatives. Boss John Cryan could deliver relief by opening up on its oil and other exposures.
UniCredit heads into market storm – in leaky canoe 9 Feb 2016 The Italian bank beat 2015 net profit forecasts, and boss Federico Ghizzoni is making progress on a plan to cut costs and boost revenue. Yet UniCredit still looks undercapitalised. It’s a bad time to be a bank, let alone one whose strategy rests on suddenly less-clear growth.
Deutsche hybrids: from poster boy to problem child 9 Feb 2016 The German lender has moved to reassure investors fretting about delayed coupons on its new AT1 securities, after CDS prices collapsed. Unlike hybrid forebears in 2008, AT1s should absorb losses. Yet instead of dampening volatility, the fear of a trigger is exacerbating it.
Bridgewater spat tests odd but successful culture 8 Feb 2016 Founder Ray Dalio and a top lieutenant at the $154 bln hedge fund firm have been at odds. The “radical transparency” behind 25 years of 13 pct returns usually doesn’t include internal clashes spilling into the open. It may heighten “key man” worries at such an idiosyncratic shop.
Bank stock rout’s chief suspect: central banks 8 Feb 2016 The double-digit falls in financials’ share prices since New Year has many potential causes – uncertainty over oil exposure, regulation and bail-ins. But given the sensitivity of lenders to growth, the real driver looks the most obvious one: bad vibes from central bankers.
Credit Suisse chips away at bonus deferral fetish 8 Feb 2016 The Swiss bank is cutting the level of annual bonuses it defers. After the 2008 crisis, regulators delayed variable compensation to improve accountability, leaving lenders with higher fixed costs and grumpy staff. Trouble is, ditching deferrals entirely doesn’t look practical.
BNP Paribas merits shift up EU bank pecking order 5 Feb 2016 France’s largest bank’s 30 pct discount to tangible book value implies investor fears about its so-so capital and exposure to stricken oil groups. BNP Paribas’ top line in its three main arms still grew in the final quarter. It should be trading nearer the likes of ING.
Elliott’s HK bank fight smacks of desperation 5 Feb 2016 The activist fund is pushing for a sale of Bank of East Asia. Other big shareholders are unlikely to join in. It’s also a bad time to seek a buyer for a group with such a large exposure to China. Elliott’s latest salvo suggests it’s getting nervous about its $500 mln bet.
Cox: Bloomberg’s White House hurdle is Wall Street 4 Feb 2016 The media mogul mayor may yet try to be U.S. president. Hands down he’d be the richest contender ever. It would take extreme candidates Bernie Sanders and Ted Cruz as nominees for Michael Bloomberg to run. The bigger issue is that he’d have his deep ties to finance to explain.
Activist Draghi is failing to make his mark 4 Feb 2016 ECB chief Mario Draghi says rate-setters must try to stoke price pressures when inflation is too feeble for too long. Yet for all his bustle, the Italian is less trusted by investors to conjure up inflation than his wait-and-see peer, Bank of England Governor Mark Carney.
Credit Suisse is making a meal of its turnaround 4 Feb 2016 The Swiss bank would have made a fourth-quarter net loss even without 6 bln Swiss francs of one-off and restructuring costs. Its Asian bit alone grew revenue, yet boss Tidjane Thiam is wary over China’s future. Pre-tax profit targets look ambitious: pay cuts can only do so much.
Time for European bank weirdos to simplify 3 Feb 2016 Austria’s Raiffeisen Bank International would give its regional-banking parent a capital bump if the pair merged, its boss reckons. Streamlining the ownership of France’s Credit Agricole also would improve its balance sheet. Neither has made a good case for convoluted structures.
BBVA finds no easy answer to returns riddle 3 Feb 2016 The Spanish bank ended 2015 on a decent note thanks to shrinking provisions, with net profit up in the fourth quarter. Bad loans should continue to fall. The catch: returns are still too low, capital looks light and GDP growth is slowing in Mexico and Spain.
Lazard M&A bankers go big or go home 2 Feb 2016 The advice shop and asset manager run by Ken Jacobs reported a 29 pct fall in quarterly profit. One reason was that despite working on six of last year’s 10 largest deals, only one closed. Increasingly complex merger plans give white knuckles to all involved.
Lesson from UBS: Who’d be an investment bank CEO? 2 Feb 2016 Andrea Orcel has made the Swiss bank’s broker-dealer arm the envy of rivals, but it could only squeeze out a 4.4 pct return in the fourth quarter. With deal volumes at rock bottom, the industry as a whole looks beset. Alternative careers may never have looked so appealing.