Credit Suisse begins perilous ride to right place 27 Oct 2022 CEO Ulrich Körner will raise $4 bln of capital to finance redundancies and a halving of the investment bank. After several botched strategies, Credit Suisse is now pointing in the correct direction. But ongoing heavy losses, and low 2025 targets, imply a messy few years ahead.
European banks’ perfect moment will prove fleeting 26 Oct 2022 Rates are rising, traders are busy, and customers are paying their debts. That helpful backdrop helped Barclays, Deutsche and Santander average a punchy 11% return on tangible equity so far in 2022. But with recession looming, and bad-debt buffers looking low, it may not last.
HSBC ditches its cost-cut tsar before job is done 25 Oct 2022 Boss Noel Quinn is replacing CFO Ewen Stevenson with investment bank co-head Georges Elhedery. It’s odd timing, since the $100 bln lender has not finished slashing expenses, which is Stevenson’s speciality. Elhedery will have to wield the axe quickly to avoid spooking investors.
If Credit Suisse loves its bankers, set them free 21 Oct 2022 The Swiss bank may bring outside investors into its dealmaking unit, to insulate it from parental turmoil. The business could be worth up to $6 bln, valued in line with boutique advisory shops. Yet the best way to hit such a price tag is for Credit Suisse to cut it loose.
Goldman’s brainwaves are best left for its clients 18 Oct 2022 The Wall Street firm’s consumer bank Marcus – now being dismantled – was a good idea that was executed better by others. With a new revamp, Goldman is sticking to what it does best: marketing to companies instead. Its third-quarter earnings show that’s enough.
Capital Calls: Ye makes a social media frenemy 17 Oct 2022 Concise views on global finance: The singer formerly known as Kanye West has bought social media firm Parler, which is going after the same users as the former U.S. president’s Truth Social. If Elon Musk ends up owning Twitter, both will be losers.
Credit Suisse legal tab is wildcard for investors 17 Oct 2022 The bank settled an old mortgage case without having to set more money aside. But the bill for future litigation, up to $1.6 bln on its own estimates, will erode earnings. The risk for investors in a looming rights issue is that further nasties bog down the bank’s restructuring.
Wall Street has chance to put Hong Kong to work 13 Oct 2022 Leaders from Goldman Sachs, Blackstone and peers will arrive at the city’s upcoming banking summit with a long wish list. Progress in China has been slow. Hong Kong can’t force policies in Beijing, but can lobby on the financiers’ behalf. They’re well placed to press their case.
Credit Suisse’s debt move is largely reassuring 7 Oct 2022 The lender is buying back $3 bln of bonds, a way to remind credit markets of its cash mountain. Having to reassure on liquidity is hardly ideal, but Credit Suisse’s cost of insuring against default fell. For shareholders, it also flags the bank has creative ways to boost capital.
Capital Calls: Peloton races tough economic cycle 6 Oct 2022 Concise views on global finance: The $2.9 bln fitness company is laying off staff for the fourth time this year in a turnaround bid for survival.
Credit Suisse can stop rot with $5 bln cash call 5 Oct 2022 Heavy investment-bank losses and higher funding costs risk damaging the Swiss group’s core wealth unit. Chair Axel Lehmann can draw a line by ditching debt trading and slashing costs. To shrink he needs more capital. Asking investors for equity is cleaner than tricky asset sales.
Credit Suisse selloff throws wrench into revamp 3 Oct 2022 The bank’s shares fell 8% on Monday and the cost of insuring its debt soared. Chair Axel Lehmann may struggle to sell assets amid the turmoil, undermining a strategic overhaul. A sustained rout could even force him to raise capital fast – at a painful valuation for shareholders.
SocGen’s new insider CEO requires outsider mindset 3 Oct 2022 The French lender trades at a third of tangible book value – lower than almost all its rivals. Next boss Slawomir Krupa previously ran investment banking and eastern Europe, both of which arguably drag down its shares. Breaking with the past may require shrinking his old charges.
Goldman’s buyout push casts shade on its home turf 28 Sep 2022 The bank’s $10 bln buyout fund puts it back in the arena with the likes of Blackstone. Being both adviser and investor benefits the firm’s shareholders. But banking clients may not like Goldman cornering the market, and past lessons show crossing the streams can cause tension.
First Boston deserves a selective revival 20 Sep 2022 The defunct brand evokes discord and failure on Wall Street, but also the feats of M&A swashbucklers like Wasserstein and Perella. Reapplying it to Credit Suisse’s investment bank could draw a line to cut along later, a move true to First Boston’s decades-old pioneering spirit.
Petrodollar rush may disappoint Western financiers 20 Sep 2022 In prior energy booms, like in the 1970s, the proceeds wound up in U.S. banks and bonds. OPEC’s $907 bln haul in 2022 is smaller, and winners like Saudi Arabia need cash to pivot away from oil. Bankers may not see a developed world equities and debt bonanza on the same scale.
Bonus cap scrap would be dubious Brexit dividend 15 Sep 2022 UK finance minister Kwasi Kwarteng may dump rules curbing banker payouts to twice their salary. Yet it would only marginally boost the City’s competitiveness and may make more meaningful tax changes less likely. The benefits of tearing up EU regulations look increasingly elusive.
Capital Calls: SPACs’ long shadows 12 Sep 2022 Concise views on global finance: While electric-vehicle startup Nikola is moving beyond its founder, both it and its SPAC-partner peers are mired in supply chain challenges, slipping deadlines and tumbling share price performance.
KKR’s $14 bln Aussie deal is not quite deceased 26 Aug 2022 A consortium led by the U.S. private equity firm has made two offers for Ramsey Health Care. One has been rescinded by the buyers, the other rejected by the target, putting any deal in limbo. Yet both sides can still reach an agreement, provided KKR further opens its wallet.
Banks’ LBO debt hangover may leave lasting scars 16 Aug 2022 Dicey markets forced Goldman Sachs and peers to take a hit on $80 bln of buyout loans that got stuck on their balance sheets. Calmer conditions mean the worst may be over. But the trauma, along with rising rates and competition from private lenders, adds to the case for job cuts.