Wells Fargo waves carrot at wavering CEO wannabes 16 Jul 2019 The U.S. lender’s second-quarter earnings could aid its search for a new boss. One-off gains helped, but cost cuts kicked in too. Getting expenses to JPMorgan’s level and mending regulatory relations could boost Wells Fargo’s value by a third. That’s hard to replicate elsewhere.
Goldman enlivened by condition it wants to cure 16 Jul 2019 The $77 bln Wall Street firm’s decent second quarter relied on gains from private-equity investments and equities traders who performed much better than some rivals. Boss David Solomon wants over time to downplay those volatile businesses. For now he’s probably glad he didn’t.
Deutsche Bank accidentally boosts boutique model 10 Jul 2019 The lender’s enforced decision to shut its cash equities business raises the question of whether investment banks need armies of traders and analysts to back up stock offerings. A leaner platform could show they don’t. That would be a shot in the arm for smaller rivals.
Wall Street minnows pitch merger nirvana 9 Jul 2019 Piper Jaffray’s CEO reckons a $485 mln purchase of Sandler O’Neill will double his margins, without cost cuts or new revenue. The target’s capital-lite business is one factor; the buyer’s subpar performance is another. In relative terms the tie-up’s returns will just be middling.
Deutsche tries cherry-picking rivals’ overhauls 8 Jul 2019 Citi set up a far bigger bad bank. UBS and Morgan Stanley set the standard for retooling fixed-income trading. And Barclays once quit the equities business entirely. CEO Christian Sewing’s smorgasbord approach leaves options open – but also room for plenty of headaches.
Deutsche equities exit breathes life into rivals 8 Jul 2019 CEO Christian Sewing is hacking back the 15 bln euro bank’s unit that sells and trades shares in a bid to boost profitability. That makes sense given the sector’s stagnant revenue and low margins. Rivals should follow, but having one less player will reduce the pressure to act.
Deutsche Bank retreat depends on uber optimism 7 Jul 2019 CEO Christian Sewing will exit equities trading, shed assets worth 288 bln euros and slash jobs. The belated rethink of Deutsche’s global investment banking ambitions makes sense. But the plan requires other divisions to pick up the revenue slack, and no more unforeseen losses.
Andrea Orcel could benefit from his own advice 5 Jul 2019 The former UBS investment bank boss is suing Santander for 100 million euros after the Spanish bank yanked an offer to make him CEO. A lengthy battle will further cloud the rainmaker’s future career. Breakingviews imagines what counsel the hard-charging banker might give himself.
Goldman finds value even in ETF scraps 2 Jul 2019 The Wall Street firm’s foray into index-tracking equity funds is worlds away from its once-elite values, and offers little potential for revenue. But it should buttress Goldman’s push into wealth advisory. Going down-market may just be an ineluctable cost of diversification.
Bank payout party is a lavish but sober affair 28 Jun 2019 JPMorgan, Goldman Sachs and large peers plan to hand $150 bln back to shareholders this year. Jumbo payouts were once a sign of excess profit. Now they show a lack of alternatives. Yet an old incentive is unchanged – buybacks’ ability to juice profit per share.
American M&A makes excess great again 28 Jun 2019 U.S. deals jumped 19% in the first half even as activity ebbed in Europe and Asia. Topping the list are pricey purchases by AbbVie, Bristol-Myers and Occidental, plus Raytheon’s questionable merger with United Technologies. Most buyers’ owners will regret their CEOs’ ambitions.
U.S. private prisons set investors easy ESG test 27 Jun 2019 Bank of America is the latest lender to quit the sector amid an outcry over immigrant detentions. Vanguard, BlackRock and State Street own 30% of GEO Group and CoreCivic, which run migrant facilities and jails. If indexers can’t escape, they can at least agitate for change.
Viewsroom: UBS gets lost in translation 20 Jun 2019 A star economist at the Swiss bank sparked outrage on Chinese social media after his remarks about the country’s pigs were misconstrued. UBS’s decision to put him on leave seems overdone. And: Those weighing the benefit of a Facebook cryptocurrency must ask if “In Zuck we trust.”
Debt debacle throws Natixis’ strategy off course 20 Jun 2019 The French lender’s shares fell 12% after Morningstar dropped ratings on one of its funds due to hard-to-trade bonds. That overstates the likely loss of earnings. The risk is that client withdrawals hurt CEO François Riahi’s plan to grow in areas other than traditional banking.
CEO protest vote would create a new Nomura problem 20 Jun 2019 Adviser ISS wants shareholders to punish Koji Nagai at an upcoming annual meeting. He has presided over the bank’s first full-year loss in a decade and an embarrassing leak, and has not fixed bigger strategic issues. The trouble will be finding a replacement better able to do so.
CLSA exodus leaves owner Citic with an empty shell 20 Jun 2019 The brokerage's star analysts are being poached by rivals like Credit Suisse and Jefferies. They take with them much of the brand value China's Citic Securities paid $1.3 bln for in 2013. Such mergers are always tough. But the state-owned group missed opportunities to do better.
Nordic banks’ soft regulators invite U.S. wrath 19 Jun 2019 Shares in Danske and Swedbank have fallen sharply due to concerns about American probes into money laundering. A $900 million fine by Dutch regulators helped ING escape U.S. ire for similar breaches. Laws limiting penalties in Scandinavia mean banks there may not be so lucky.
Now is the time to buy Deutsche Bank 17 Jun 2019 The German lender’s market value has shrunk to 13 bln euros, or about 20% of tangible book value. The retail lending and fund management units alone justify a higher price. If boss Christian Sewing can shrink the investment bank without major stumbles, the shares will rebound.
UBS sets a troubling precedent in China 17 Jun 2019 The Swiss bank put economist Paul Donovan on leave after misconstrued comments triggered outrage in the mainland. Local rivals fed the unwarranted flare-up. The episode hints at new pressures for outsiders in the country; excessive subservience, however, creates bigger headaches.
China audit crackdown is a Wall Street nightmare 13 Jun 2019 U.S. Senator Marco Rubio wants to force mainland companies listed on American exchanges to submit to local oversight - or leave. The problem is real. But torching shares with a market value of roughly $1.8 trln and millions in fees is a heavy price to pay for transparency.