Hadas: Share buybacks aren’t worth defending 13 Mar 2019 Goldman does just that in a new report. They are almost like dividends, but they are sneakier in several ways. Their recent significance shows executives gaining power while small shareholders and taxing governments lose. If tighter rules kill them off, they would not be missed.
Lyft IPO has fewer Wall Street seats than it seems 6 Mar 2019 The ride-hailing firm has booked a staggering 29 banks for its trip to the public market. But only three, led by JPMorgan, will earn a decent fare. That’s an unusually small group. If Uber sticks with recent practice, there will be more wannabe drivers clamoring for their share.
ECB stimulus flows show why Draghi works so hard 6 Mar 2019 President Mario Draghi bought 2 trln euros of government bonds to boost the economy. But some proceeds were used to buy debt issued by non-euro zone companies, or left in bank deposits, the BIS says, diluting the impact. Though mainstream, money-printing remains an imprecise tool.
BofA culls the herd on the street 25 Feb 2019 The $284 bln lender is eliminating the Merrill Lynch name from its investment bank and shortening it at its brokerage. Ditching an acquired firm’s brand can be a tough call. But after a decade, CEO Brian Moynihan can easily judge where it has value – and where it doesn’t.
Investment banks have a problem with volatility 25 Feb 2019 For years bankers complained markets were too calm. But when stocks and bonds tumbled in the fourth quarter, most trading units suffered. Nervous investors and companies are partly to blame, as are models that push up capital demands. It doesn’t bode well if markets stay choppy.
Goldman credit card blends logic and hubris 21 Feb 2019 Teaming up with Apple to put plastic in wallets gets the Wall Street firm into a business with attractive returns. The mix of elite brands and technology should help the experiment along. But the bank has limited experience, and rivals won’t give up millennials without a fight.
EU banks keep stepping on old landmines 20 Feb 2019 A French court fined UBS a record $5.1 bln for helping clients evade taxes in the past, while Swedbank faces allegations about old dodgy transactions linked to Danske Bank’s money-laundering scandal. European lenders seem unable to avoid the damage from past compliance bungles.
Brexit and costs cloud Lloyds’ sunlit uplands 20 Feb 2019 CEO Antonio Horta-Osorio announced a 1.8 bln pound buyback and pledged a 15 pct return on equity. That needs a big fall in one-off charges, and sustained low bad debts. The risks of a chaotic exit from the EU, and the bank’s hairier lending mean investors are rightly nervous.
Tidjane Thiam put on the spot by hapless traders 14 Feb 2019 Credit Suisse’s markets arm made a second consecutive quarterly loss at the end of 2018. Bumper profits from wealth management and Swiss retail banking spared the CEO some blushes. But it makes a pledge to avoid further investment bank shrinkage harder to justify with investors.
Commerzbank comeback only increases M&A allure 14 Feb 2019 Germany’s second largest bank by assets saw pre-tax profit jump in 2018 after a 5 percent increase in underlying revenue. Improving returns make the lender a more attractive partner from Deutsche Bank’s view. Its own shareholders may conclude the company will be better off alone.
Aussie inquiry gives NAB a chance to start afresh 7 Feb 2019 The smallest of Australia's Big Four banks will part company with its CEO and chairman, after a landmark report singled out both. It's a dramatic finale and a long-overdue change for a $49 bln lender which has acted tone-deaf. Finally, NAB can close the governance gap.
Beatup BNP Paribas puts euro zone banks on notice 6 Feb 2019 The French bank led by Jean-Laurent Bonnafé cut a 2020 profit target after a one-tenth drop in annual pre-tax income. Volatile 4Q trading resulted in a 225 mln euro pre-tax loss at the investment bank. But a declining top line points to a bleaker revenue outlook for the industry.
Lazard takes valuation hit early in the game 5 Feb 2019 It’s the worst stock-market performer among independent Wall Street firms. Slower top-line growth justifies that, as does a tougher money-management environment. But with M&A revenue set to stall this year, rivals’ shares now look more vulnerable than those of Ken Jacobs’ firm.
Barclays’ activist investor faces moment of truth 5 Feb 2019 Edward Bramson has nominated himself to join the UK bank’s board. Barclays shares are down by a quarter since he disclosed a 5.5 pct stake; his listed vehicle has lost more. But shifting the lender’s strategy requires winning over regulators and directors as well as shareholders.
Intesa gets as much market credit as deserved 5 Feb 2019 Italy’s top retail lender kept a dividend promise despite a weak fourth quarter and pruned 16 billion euros of dud loans from its balance sheet. That justifies its valuation premium over many rivals. But with the economy weakening at home, a richer one seems a big ask.
Goldman adds extra kevlar to 1MDB rear-padding 4 Feb 2019 The Wall Street firm says it might hold back some of CEO David Solomon’s $23 mln pay if the Malaysian scandal leaves a smear. It had the ability to do that already. The new policy makes clear that clawbacks can be used to avoid added embarrassment as well as inflict punishment.
Germany chooses familiar sin in $4 bln bank rescue 4 Feb 2019 Regional governments and other lenders are bailing out NordLB. The salvage keeps the sickly bank in public hands, but is costlier for taxpayers than other options, like hitting bondholders. The old-school bailout reinforces the case for consolidation in Germany’s banking system.
Australian bank review has a soft bite 4 Feb 2019 After almost a year of painful testimonies which helped wipe some $40 bln off the value of the big four banks, a landmark report into financial services recommends oversight of regulators, an overhaul of mortgage broking and of fees paid for advice. It could have been worse.
Spanish banks’ capital journey is only beginning 1 Feb 2019 BBVA and Santander trade at relatively low valuations relative to their above-average returns. That’s partly justified by thin capital positions. The pair are boosting this margin of safety, but only slowly. Domestic economic and political risks mean they may have to do more.
Deutsche Bank reprieve is only temporary 1 Feb 2019 The German lender’s first net annual profit in four years and plans for bigger cost cuts are welcome. But revenue fell, partly because its trading business did worse than U.S. peers in the final quarter. CEO Christian Sewing needs top-line growth to deliver even mediocre returns.