DoJ stabbing of UBS would send wrong message 13 May 2015 U.S. enforcers may use the Swiss lender’s forex sins to undo an agreement not to prosecute it for rate-rigging, reports say. That may be technically possible. But UBS won leniency for fessing up. A DoJ about-turn risks making banks feel they’ll be better off refusing to help.
DuPont shows three ways to neuter activists 13 May 2015 The chemical conglomerate has defeated Nelson Peltz’s push for four board seats. Decent company performance was DuPont’s sharpest knife. Unveiling a credible financial plan, including the cost of the breakup Peltz once wanted, and appointing respected directors finished the job.
Italy poses conundrum for bank investors 13 May 2015 While a weak state and economy have hurt Italian banks in recent years, first-quarter earnings are encouraging. Relative stability and a reforming government could allow lenders to earn their cost of capital. The snag is that betting on Italy means paying up, or taking a punt.
Resisting Exor’s $6.8 bln is futile for PartnerRe 12 May 2015 The Agnelli family vehicle sweetened its bid – and rattled a hostile sabre. The offer clearly outguns PartnerRe’s planned merger with Axis, and there are no interlopers so far. A parallel rise in Axis stock suggests that if Exor succeeds, bankers may get a bonus deal to work on.
UK vote hands banks golden lobbying opportunity 11 May 2015 The election of the business-friendly Conservatives should reduce state-endorsed bank-bashing. Better still for UK banks, there are good reasons as well as self-serving ones to rethink two key bugbears: ring-fencing and the bank levy. Industry advocates will be gunning for both.
Thruppence: Can Snapchat unmask dodgy borrowers? 8 May 2015 Alternative lender Affirm has raised $275 mln for a model that rates creditworthiness using social media data alongside other old-school indicators. Breakingviews columnists debate whether info gleaned from Facebook and its ilk could supplant traditional credit-scoring methods.
ECB’s bank board-crashing makes sense – to a point 7 May 2015 The euro zone’s financial stability gnomes will observe board meetings. Handled right, the ECB should glean extra insight – after all, corporate culture starts at the top. But regular sessions with board committees may reveal more about how Frankfurt’s 123 charges really operate.
Memo to European banks: more work to do on capital 6 May 2015 Investors largely rewarded lenders whose Q1 results showed stronger balance sheets. They were tougher on those who backtracked, like Societe Generale, BNP Paribas and Deutsche. That disdain looks wise: in time banks will probably need to hold yet more equity against assets.
HSBC revival overshadowed by existential questions 5 May 2015 Better investment banking revenue and fewer bad loans boosted the $194 bln bank’s quarterly results. That’s a welcome respite from the Swiss tax furore. Still, long-term fortunes rest on decisions about its shape, head office location and UK business. None will be resolved soon.
Hedge fund pay hauls a political-financial shame 5 May 2015 The top 25 managers took in $11.6 bln last year, Alpha magazine calculates. If these rewards were for building a stronger economy, the 0.001 percent’s political clout might still be troubling. But such gains for largely mediocre performance in secondary markets are shocking.
PartnerRe manages to cede high ground to Agnellis 5 May 2015 The Italian dynasty’s vehicle, Exor, has offered $6.4 bln for the Bermudan reinsurer. PartnerRe’s rigid board is sticking with a sweetened but lower-value merger with Axis. Exor’s hostile stance may put PartnerRe in play – as it probably should have been from the start.
UBS pulls ahead of both activist and rivals 5 May 2015 The Swiss lender’s Q1 profit leapt 88 pct to 2 bln francs. A strong return at the leaner investment banking unit further discredits Knight Vinke’s case for an exit. And with better capital ratios on both main metrics, UBS is piling pressure on less decisive competitors.
BBVA unnerves with another sudden C-suite shuffle 5 May 2015 Francisco Gonzalez, the Spanish bank’s dominant executive chairman, has replaced the second COO in six years. Picking the head of digital banking as his replacement fits Gonzalez’s tech fascination. But investors are right to focus more on profitability, growth - and succession.
Wall Street’s P2P folly reverts to reckless form 1 May 2015 Traders want to link derivatives to the fledgling peer-to-peer loan market. Such lenders don’t need to reduce balance sheet constraints like banks do, however. A hedging tool may have marginal utility, but the securities will mainly create unnecessary and dangerous speculation.
Lloyds revival makes retail offer unnecessary 1 May 2015 The state-owned UK lender avoided new legal charges as underlying pre-tax profit rose 21 pct. Improved capital implies decent dividends. The government may think retail investors should share the upside. But banks are leveraged, cyclical investments better sold to institutions.
Rob Cox: Bitcoin enters age of Goldman and lawyers 30 Apr 2015 For libertarian early adopters, the discovery of the cryptocurrency by Wall Street’s top firm and a bevy of legal eagles is a pivotal moment. Diehards will mourn the lost privacy and edginess of bitcoin. The flipside is the prospect of mainstream financial industry acceptance.
Market could push BNP to lift capital ratios 30 Apr 2015 France’s biggest bank outdid forecasts with a 17.5 pct rise in first-quarter net profit to 1.6 bln euros. Yet BNP Paribas failed to grow its capital ratios. French banks aren’t yet under regulatory pressure. But with peers stronger, investors may require higher levels.
Spanish bank recovery has sting in the tail 29 Apr 2015 Better GDP prospects, cheaper funding and lower provisions for bad loans are helping Spain’s lenders. Banks have reported sharp increases in profits in the first quarter of 2015. But pressure on net interest margins will create headwinds later this year.
M&A predators stalk Michael Milken’s ball 29 Apr 2015 The financial elite prowling Beverly Hills at the behest of the former Drexel Burnham boss worried about everything from China to cybersecurity to stock valuations. Three former Treasury chiefs lamented a lame Washington. When it came to deals, however, animal spirits ran wild.
Barclays cost restraint adds to heat on Deutsche 29 Apr 2015 The UK bank’s hefty first-quarter provision implies it may be hit with an FX fine of as much as $3 bln. And ring-fencing costs remain an unknown quantity. But Barclays is making progress on expenses, and its targeted returns look higher than those of main rival Deutsche Bank.