Portugal’s ropey bank rescue comes home to roost 16 Nov 2015 The “good bank” part of bust lender BES needs another 1.4 bln euros, EU regulators say. If it ends up being sold cheaply, fellow banks that part-financed its rescue could suffer. Had Lisbon taken a tougher line with senior creditors last year, it would be in less of a mess.
Megabanks set example to Japan Inc. on share sales 16 Nov 2015 Japan’s three top lenders plan to slash their huge holdings in client companies. That’s good: the shift should boost the banks’ returns, shield them from market swings, and give more power to regular investors. Even better if smaller banks and non-financial outfits follow suit.
Cerberus finds workaround for Northern Rock mess 13 Nov 2015 The private equity firm is paying a premium for 13 bln stg of assets from the collapsed UK lender. It helps the state’s finances, but leaves Cerberus to fund a big portfolio itself. Selling a 3 bln stg chunk to TSB, and better securitisation markets, suggest a way to do so.
Amundi’s so-so listing sums up Europe’s IPO market 12 Nov 2015 Shares in the Credit Agricole-owned asset manager opened just above the issue price, at the lower end of its original range. Anything less would have been a failure for the 15 banks on the deal. The valuation reflects concerns about the business – and new stocks in general.
ECB hits European banks where it doesn’t hurt 11 Nov 2015 Europe’s banking supervisor wants to fast-track the phasing out of bogus capital like deferred tax assets. Greater harmonisation is exactly what Frankfurt should be pushing. But the ECB’s inability to tell national governments what to do will limit the fallout for most lenders.
UniCredit opts for fingers-crossed capital plan 11 Nov 2015 The Italian bank’s strategy to boost returns and capital involves a credible dose of cost-cutting. But to boost its core Tier 1 ratio to a still-unexceptional 11.5 pct, it will need topline growth that may not materialise. It may not be enough to close UniCredit’s discount.
Regional banks grab hold of repo grenade 10 Nov 2015 Wells Fargo, Nordea and Sumitomo Mitsui are bulking up in a form of short-term collateralised lending, as big investment banks pull back. Yet buoyant “repo” financing may carry hidden risks. The market played a central role in the financial crisis - and much of it remains opaque.
Hefty ECB rate cut might do more harm than good 10 Nov 2015 Some European Central Bank policymakers want to push the floor for policy rates deeper into negative territory. This may depress the euro and bond yields for a while. But Nordic evidence of the price banks pay when rates are so low suggests an outsized cut may be self-defeating.
ABN Amro IPO merits discount for ugly structure 10 Nov 2015 The Dutch state is hawking up to 23 pct of its erstwhile problem child, valuing the bank at up to 18.8 bln euros. The price range seems attractive relative to listed peers. But a markdown is warranted given an anti-takeover provision that could rescind investors’ voting rights.
Too-big-to-fail rules make banking less global 9 Nov 2015 New guidelines will force lenders to hold big buffers of capital in their overseas arms. American and European banks can phase in their bail-in needs, and big Chinese groups no longer get off scot-free. Even so, the regulatory regime looks set to be another balkanising force.
Allianz’s Pimco recovery looks largely priced in 6 Nov 2015 The German insurer’s bond fund Pimco saw inflows in October for the first time in 30 months. That takes the edge off a slightly disappointing set of third-quarter numbers and legal challenges from founder Bill Gross. The catch is Allianz shares already trade at a premium.
Barclays, not HSBC, should mull quitting the UK 5 Nov 2015 HSBC caused a scene by suggesting it might move its HQ to Hong Kong. But it makes more sense for UK-based peer Barclays to move to New York. Its new CEO is American, the U.S. is better able to house a systemically important bank, and Barclays might dodge UK bank and bonus rules.
BTG Pactual earnings flatter its performance 5 Nov 2015 The Brazilian investment bank’s lower costs and 28 pct ROE put its U.S. rivals to shame. The country’s interest-rate hikes and the firm’s increasing diversity help. But Pactual often pays little or no tax – or gets a benefit. Strip that out and its returns are more pedestrian.
SocGen and Credit Agricole are deceptively similar 5 Nov 2015 The two French lenders’ share prices headed in different directions after third-quarter results. Societe Generale did well in French retail banking, while Credit Agricole suffered in asset management. But with both light on capital, the divergent reaction looks overdone.
Boardroom gender targets only do half the job 4 Nov 2015 Bonuses paid to City executives should be linked to how many senior women they employ, according to a review commissioned by the UK government. The idea probably has more merits than drawbacks. But promoting women to the highest echelons may be easier than retaining them.
G-SIFI envy turns into G-SIFI ennui 3 Nov 2015 Not long ago, being on the list of 30 “global systemically important financial institutions” was a big deal. The lack of market reaction to the newly updated version shows times have changed. Gung-ho local regulators now make banks pile on capital, systemically important or not.
Mixed economic messages complicate Carney’s job 3 Nov 2015 Timing the UK’s first rate rise in eight years is especially tough for Bank of England Governor Mark Carney. Recent economic signals are muddy. Old certainties, such as links between unemployment and inflation, are in doubt. Hesitant central bankers make for choppy markets.
Dismal AIG earnings add fuel to Carl Icahn’s ire 3 Nov 2015 The activist wants the insurer to break up and cut costs. AIG boss Peter Hancock is pledging to do the latter. But a $231 mln Q3 loss emphasizes just how much work the company still has to do to get shareholders on board. A carve-up may be painful, but it’s not off the table yet.
StanChart faces years of pain for humdrum gain 3 Nov 2015 New CEO Bill Winters is dumping risky loans, cutting costs, and raising $5.1 bln in capital. He thinks the loss-making lender can rebound by serving affluent consumers in emerging markets. But even if all goes to plan, a modest 10 pct return on equity is still five years away.
UBS seals new banking era of utility-like returns 3 Nov 2015 Since its 2012 revamp the Swiss bank has led the EU investment bank pack. But despite a jump in Q3 net profit to $2.1 bln, it’s scaling back return objectives for the third time in two years. Macroeconomic softness and rising capital demands are skewering targets - for all banks.