Dimon diaspora extends to Barclays 13 Oct 2015 Jes Staley, JPMorgan’s onetime investment banking chief, is poised to be the UK lender’s next boss. He would join a coterie of Jamie Dimon’s former lieutenants now in CEO roles including at First Data, Visa and StanChart. Staley will put the mega-bank skills to the biggest test.
EU needs better capitalised banks, not bigger ones 12 Oct 2015 SocGen and Barclays warn big European broker-dealers are being outmuscled by U.S. rivals. That’s true, but American superiority is partly due to better capital positions. Sorting this out, even at the expense of short-term competitiveness, makes more sense than easing regulation.
Credit Suisse wins first-to-the-trough equity edge 12 Oct 2015 The Swiss lender is readying a share sale as part of a strategic review. Adding 5 bln Swiss francs would suffice, but raising more means firepower for acquisitions and regulatory caprice. Boss Tidjane Thiam stands to gain from beating Deutsche Bank and StanChart to the punch.
The Devil’s Dictionary of Post-Crisis Finance 9 Oct 2015 Ambrose Bierce wrote “The Devil’s Dictionary” a century ago, ranging acerbically across government, commerce and life. Breakingviews’ original re-use of the form for finance – in 2007, when the crisis was barely beginning – is no longer adequate. Herewith part one of the sequel.
Deutsche writedown shows evil of ancient goodwill 8 Oct 2015 The German bank has belatedly recognised that it paid 5.8 bln euros too much for acquisitions dating back to 1999. It’s a little nutty, but to be expected. The real problem is the economically bizarre technique of accounting for premiums paid in acquisitions.
Regulators give Deutsche rebirth a helpful shove 8 Oct 2015 The German lender’s 6.4 bln euros of writedowns were prompted partly by supervisors demanding more capital. Co-chief John Cryan wants to slice or scrap the dividend to keep the balance sheet perky. With rule changes coming, it’s the only way Deutsche Bank can avoid a cash call.
Deutsche kid gloves give bondholders false hope 8 Oct 2015 Restructuring costs are forcing the bank to cut its dividend, but it looks set to pay coupons on hybrid bonds. It’s a twist on the 2008 controversy, when Deutsche didn’t repay Tier 2 bonds. Bondholders shouldn’t conclude that banks will always treat them better than equity.
Deutsche Bank’s kitchen sink augurs new plumbing 7 Oct 2015 Germany’s biggest lender has shocked with a pre-announced 6.2 bln euro Q3 loss on writedowns of past M&A. Even the symbolic dividend looks endangered. In particular, a revaluation of the 1999 Bankers Trust deal implies new boss John Cryan may have a thorough renovation in mind.
BoE’s Carney sails between honesty and expediency 6 Oct 2015 Full disclosure from the UK central bank governor could shake investors’ view that rates won’t rise for at least another year. But this might be inconvenient for Mark Carney since it would result in an economy-harming stronger pound. Carney may try for a calibrated compromise.
How capital union can ease EU banks’ great divide 6 Oct 2015 Europe’s proposals for a capital markets union are a boon for Spanish and Italian lenders. Banks investing in asset-backed debt needn’t use penal rating agency grades to measure capital. That should mean more equal funding for banks across Europe.
Insurer TBTF capital rules take baby step forward 5 Oct 2015 Regulators want to stop global insurance groups being too big to fail. New solvency add-ons make sense, and for now insurers don’t need extra capital. But the models are sensitive to volatile markets, and politics may impede a further leveling of the international playing field.
UK takes needless risk with Lloyds retail sale 5 Oct 2015 Britain is to hawk 2 bln stg of its remaining 12 pct bank stake to retail investors at a discount. Shareholder democracy is all very well. But further institutional sales would have meant more value for all taxpayers. And if shares tank, an avoidable political storm will erupt.
Online lending unicorns like SoFi need stamina 1 Oct 2015 The student loan refinancing startup raised $1 bln this week, and online loan shop Avant pulled in $325 mln. The involvement of smart investors suggests these multibillion-dollar upstarts have room to run. More important, though, is whether they can endure the credit cycle.
Abu Dhabi pullback shows shifting sovereign sands 1 Oct 2015 Emirati fund Mubadala has sold a $3.6 bln loan portfolio jointly held with GE. It may be driven by the U.S. conglomerate’s turn away from finance. But the decision by its Gulf partner to follow is a sign of how sovereign investors have lost their risk appetite.
Commerzbank ought to consider merging with HVB 1 Oct 2015 The German lender makes poor returns, while its domestic rival’s Italian parent UniCredit could do with more capital. Putting Commerz and HVB together, ideally in an all-share merger, could help. It could also help Germany achieve a speedy exit for its Commerz stake.
Emerging market debtor crisis likely and needless 1 Oct 2015 An IMF study shows that emerging market borrowers have taken full advantage of stimulative post-crisis monetary policy. Higher rates are set to bring more defaults and a liquidity squeeze. Such woes could be avoided easily, if companies and investors turned away from debt to equity.
New ANZ boss stuck in strategic mid-ocean 1 Oct 2015 Mike Smith is leaving as CEO of the $55 bln Australian lender after eight years. Beefing up in Asia has proved less lucrative than he hoped. Yet a slowing home economy and tightening regulation mean successor Shayne Elliott may have to stay centered somewhere in between.
EU establishes bridgehead in capital markets push 30 Sep 2015 Brussels is to unpick self-defeatingly high capital charges against infrastructure and asset-backed bonds. It is capital markets union’s first tangible win. Yet other barriers like diverging insolvency regimes have been shelved, and tighter regulation is making trading harder.
Draghi lacks arrows to hit ECB’s inflation target 30 Sep 2015 Euro zone consumer prices are falling again, putting near-2 percent inflation further out of central bank President Mario Draghi’s reach. He could ramp up asset buying, but inflation seems ever less responsive to monetary policy globally. Higher prices might be beyond his gift.
Alibaba Indian e-commerce scramble risks conflict 30 Sep 2015 The Chinese giant is investing at least $500 mln in Paytm, India’s top mobile wallet and wannabe marketplace. Alibaba already owns a stake in archrival Snapdeal. It’s odd for competing firms to share strategic investors. Consolidation may be the best way to manage the tension.