Banks may need bruises for living wills to impress 24 Mar 2015 HSBC, RBS and BNP failed to provide credible resolution plans again, regulators say. They join 11 big banks watchdogs demanded new failure schemes from last August. Stress test results improved when dividend cuts caused pain. Whacks may be needed here too for better results.
Profumo leaves Monte Paschi with mixed record 24 Mar 2015 The veteran Italian banker will leave as chair of the Sienese lender after its next rights issue. Alessandro Profumo revamped MPS governance but the bank’s future remains up in the air. As with his previous role as UniCredit CEO, there have been hits and misses.
QE froth leaves banks stuck with stocks and bonds 24 Mar 2015 Botched trades have left Credit Suisse, Deutsche Bank and others holding blocks of securities or forced to sell at deep discounts. With quantitative easing lifting prices to uncomfortable highs and sparking a glut of transactions, the risk of dealing for third parties has risen.
What Deutsche Bank’s strategy revamp should say 20 Mar 2015 The German lender’s co-CEOs Anshu Jain and Juergen Fitschen have cut investment bank assets by a fifth. They should chop at least that much again, faster, while exiting Postbank and marginal countries. Without radical action, Deutsche will struggle to make decent returns.
Wall Street owners finally get breakup bona fides 19 Mar 2015 The SEC is allowing BofA shareholders to vote on whether to spin off Merrill Lynch. The watchdog previously muzzled similar requests at JPMorgan and elsewhere. Banks won’t like the scrutiny, but it’s a worthwhile debate to air publicly, as they’re running the numbers internally.
Goldman’s shadow bank debuts somewhat deceptively 18 Mar 2015 In what could be seen as a bad ad for its own bankers and lead underwriter BofA, shares of the middle-market lender fell as much as 2.5 pct. Deal fees typically drag on business development company IPOs, however. And unlike some rivals, Goldman’s trades above its net asset value.
Central bankers struggle to follow good advice 18 Mar 2015 Their global club, the BIS, is good at spotting trouble. Current worries include risk-taking enabled by easy money and illusory market liquidity. But rate-setters have to think domestic, not global. Their parochialism makes preventing crises much harder than predicting them.
London doesn’t need to stress-test foreign banks 18 Mar 2015 UK regulators deny they are planning U.S.-style formal exams for overseas banks. They will be reluctant to do anything to compromise the City’s attractiveness. But global resolution requirements for lenders to place bail-in capital in London mean they may not have to.
Jefferies rubs salt into own wounds 17 Mar 2015 The Wall Street firm avoided a second straight quarterly loss, but just barely. It reported only $12.5 mln in profit after missing the rebound in most fixed-income trading and relying too much on slowing LBOs. Boss Richard Handler can’t afford another dismal quarter like this.
Vienna gives bank bail-ins a political twist 17 Mar 2015 Austria’s resolution of its Heta bad bank means German and domestic lenders face losses. Investors should have seen the use of new EU bail-in rules coming. They may not have twigged that Vienna could cannily use the same laws to stop the Carinthia region getting its just deserts.
GE’s crumbs make for Australian buyout feast 16 Mar 2015 The U.S. conglomerate is offloading its consumer lending arm down under in one of the country’s biggest private equity transactions. Yet the $6.3 billion deal shrinks GE Capital’s balance sheet by just over 1 percent. The group has far to go to reduce its dependence on finance.
Commerz’s $1.5 bln fine brings state sale closer 13 Mar 2015 The German bank had largely provisioned the $1.45 bln in fines paid to U.S. authorities for sanctions and other breaches. Yet closure should help Berlin sell its 17 pct stake. The return of bank M&A is another plus, though Commerz’s huge balance sheet means it is a distinct case.
Euro zone recovery may dampen reform drive 13 Mar 2015 Governments are slowing reform across the euro zone. Brighter economic prospects and loose monetary policy seem to lessen the urgency for tough political choices. Yet the opposite is true: better times should make reform easier and less costly.
Feuding clearers and dealers need a capital umpire 12 Mar 2015 The hot debate at a derivatives jamboree is whether shops that net out swap and futures risk should put up more cash to cover losses. With neither side budging, regulators may have to step in to soothe banks and investors. Forcing clearing firms to be less opaque also would help.
Spain may give UK banking the challenger it needs 12 Mar 2015 Sabadell has offered to buy old-new UK bank TSB for 1.7 bln stg. Half-owner Lloyds has to sell anyhow. The Spanish lender would add foreign reach, while a fully owned TSB could focus on growth, not dividends. That could help it compete against a rash of newly listed peers.
Bank earnings need more stress than dividends 11 Mar 2015 The Fed has approved plans by the 31 biggest lenders to return capital, if not all they’d wanted, to shareholders. As important as the news is to investors and to CEO egos, ensuring bottom lines are robust is more crucial. That’s still an abiding hurdle for the industry.
Deutsche Bank’s main stress test still to come 11 Mar 2015 The German lender flunked Fed stress tests for risk management, along with Santander. It’s bad but not disastrous news – first timers often fail. However it may hand ammo to those at its forthcoming strategy day who’d prefer Deutsche hacked back its outsized investment bank.
Santander’s U.S. woes a cautionary M&A tale 11 Mar 2015 The Spanish bank’s stateside lender is struggling to pass the Fed’s stress test for the second year in a row. A flawed bank takes time to fix. But Santander let it drag on too long. New bosses should help. The tardy response, though, keeps Santander on the takeover sidelines.
Politicians can learn from Wall St’s email snafus 11 Mar 2015 Banker scandals are routinely unearthed because correspondence must be logged on sanctioned platforms. However the brouhaha over Hillary Clinton’s emails plays out, it should be a nonpartisan, teachable moment for the political establishment on the risks of hacks and opacity.
Mark Carney’s triple-bind is recipe for BoE stasis 11 Mar 2015 The UK economy is doing pretty well, which argues for a rate hike. But sterling’s export-denting rise against the euro is a reason to consider extra stimulus. And risks to the housing market abound either way. The Bank of England chief may just leave policy on hold for a while.