StanChart belatedly fills most important role 17 Dec 2015 The emerging markets bank has hired HSBC’s Simon Cooper to run its corporate bank. Sorting out StanChart’s mess requires deep knowledge of emerging markets and corporate lending – neither of which new CEO Bill Winters obviously has. Cooper is plugging a vital gap.
Euro banks’ post-Fed good cheer looks short-lived 17 Dec 2015 European bank shares are up after the U.S. rate rise, aided by hints that future increases will be gradual. But EU rates won’t follow anytime soon, and $9.8 trln of non-U.S. dollar credit could get harder to service. Nor is the pace of future Fed hikes set in stone.
Pricey fintech deal may fall shy of industry hype 16 Dec 2015 Global Payments is forking over $4.3 bln for rival Heartland Payment Systems. It looks like a conventional tie-up in a hot market already losing steam. Cost savings probably won’t cover the 20 pct premium, meaning the buyer needs to boost sales to justify the steep price.
Barclays needn’t rush to get out of Africa 16 Dec 2015 As new boss Jes Staley plans the UK bank’s strategy, emerging markets may look an obvious place to cut. Africa sits oddly in a group that wants to be half American, half English. But the continent’s growth potential, and current commodity turmoil, argue against selling at a low.
Banks ponder blockchain’s first-mover disadvantage 16 Dec 2015 Lenders are racing to adopt Bitcoin-style technology to cut their costs. Successfully incorporating so-called distributed ledgers could eventually cut $20 bln from industry costs. But it’s not clear what models will work, and whether free-riding rivals will share the prize.
China’s edgy tycoons will send more capital abroad 16 Dec 2015 Fosun boss Guo Guangchang is among the country’s most respected business leaders. His brief disappearance suggests no-one is safe from Xi Jinping’s graft crackdown. The heightened campaign, plus economic and currency worries, could worsen China’s capital flight problem.
Third Ave teaches finance – and management – 101 14 Dec 2015 The U.S. investment firm’s closure of a high-yield fund, blocking withdrawals, has rattled markets. The episode echoes past failures caused by promising liquidity in illiquid assets. The Third Avenue CEO’s abrupt exit suggests flawed oversight, too. But contagion remains a risk.
Review: A bitter guffaw as Wall Street falls apart 11 Dec 2015 The 2008 financial crisis was too complex for any one medium to tell it all. Journalists and protagonists have penned books. Hollywood has tried terse drama. There have been documentaries and radio shows. The film “The Big Short” goes for dark humor that barely masks disgust.
Goldman and Morgan Stanley cement M&A oligopoly 11 Dec 2015 Both banks landed advisory roles on either side of the $130 bln DowDuPont merger, extending their league-table leads in a record year of dealmaking. They also held the one and two spots during the 2007 and 2000 peaks. Cracking the top tier can be done, but it’s exceedingly rare.
Cash calls leave issuers with unfinished business 11 Dec 2015 Lonmin and Standard Chartered’s shares have both slipped further than theory might suggest since issuing a combined $5.5 billion of new stock. That’s logical at miner Lonmin, which now has a big stock overhang. For lender StanChart, it looks like a vote of diminished confidence.
L&G swells ranks of quarterly report refuseniks 11 Dec 2015 The UK insurer and asset manager has ditched quarterly reporting and will update the market on a semi-annual basis. Reduced transparency is forgivable: Legal & General’s business is long term and lumpy. Rivals could follow, though saying less rather than more isn’t for everyone.
Lloyds strikes blow for edgy CoCo issuers 10 Dec 2015 The UK bank has won its appeal against a ruling blocking it from redeeming redundant contingent capital notes at par. Issuers of CoCos, which turn into bank capital in a crisis, will cheer. CoCos will play a critical role in lenders’ solvency. Greater flexibility helps.
John Thain’s tin ear survives to the bitter end 10 Dec 2015 CIT, the mid-market lender he runs, just changed how it defines retirement. The new rules neatly suit Thain’s age and length of service, allowing him to keep stock he’d otherwise lose. It’s a predictable bow for a man who once spent $1.2 mln gilding his office at Merrill Lynch.
Bank capital zealots hang up their hairshirts 10 Dec 2015 The Basel Committee that sets global bank rules has backed down in its attempt to stop lenders from using rating agencies to measure asset riskiness. A change to measuring real estate loans could yet hurt. But it adds to a sense that tough Basel IV rules could be a paper tiger.
China brokerage scandal less painful than Brazil’s 10 Dec 2015 Two top CITIC Securities executives have disappeared and BTG Pactual’s CEO is in jail. The similarities end there. While the Brazilian investment bank is in crisis, state support and a broader business mix have allowed China’s top broker to cope with a leadership vacuum.
Foreign insurers buy protection for Indian IPOs 10 Dec 2015 New rules have allowed giants like AIA and Sun Life to lift ownership of their Indian ventures to 49 pct. With no clear path to control, that means tying up more capital in minority stakes. At least bigger shareholdings will help them retain influence if the ventures go public.
Alternative lenders facing first major disruption 9 Dec 2015 Lending Club, OnDeck and others in the competitive market will probably experience rising interest rates for the first time next year. That’ll test their performance, funding and credibility. Prosper’s loan to one of the San Bernardino shooters may speed regulatory scrutiny, too.
The Uber or Airbnb of finance will prove elusive 8 Dec 2015 In 2015 more than $15 bln has poured into so-called fintech startups embracing blockchain, peer lending, payments and the like. While each can disrupt an element of the status quo, their scale will be hindered by the deep moat that protects the banking industry: regulation.
Pimco has chosen the wrong celebrity advisers 8 Dec 2015 The $1.5 trln asset manager’s new advisory board includes former UK premier Gordon Brown and ex-Fed Chair Ben Bernanke. Their past errors are worth learning from. But people who spotted trouble coming, such as Raghuram Rajan, India’s central bank chief, would serve Pimco better.
"Zero and 100" model might just work for BlueCrest 7 Dec 2015 The $8 bln hedge fund is closing to outsiders. Michael Platt’s firm will need to do more with far less capital to offset the loss of hefty “2 and 20” external fees. A Breakingviews analysis shows higher leverage is the key. Platt may be OK taking extra risk others wouldn’t.