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.
M&A conflict case is advert for independent advice 31 Jan 2019 United Natural Foods is suing Goldman Sachs, saying the firm put its own interests first when it advised on and financed an acquisition. Goldman disagrees. Whatever the reality, having one adviser in multiple roles may be efficient, but it carries some risk of bad blood later.
Nomura’s messy quarter begs for faster tidy-up 31 Jan 2019 An estimated $120 mln fee from SoftBank bolstered the broker’s earnings but failed to offset abysmal performance across wholesale, retail and asset management divisions. Job cuts and improved incentives are steps in the right direction, but thin padding against tough markets.
Hedge funds’ outperformance is small consolation 28 Jan 2019 The industry lost less money for investors last year than a bet on the S&P 500. But more than half the top players’ gains came from just two firms, Bridgewater and Renaissance. With fees already under pressure it’s no wonder the number of funds is shrinking after years of growth.
Deutsche-Commerz even more defensive than it looks 25 Jan 2019 The German government is still exploring a merger between the ropey domestic lenders. As a way to create economic returns for investors, it’s underwhelming. As a means to limit capital injections if Deutsche Bank’s various U.S. woes become massive fines, it has some logic.
Hadas: Larry Fink can’t reshape capitalism 24 Jan 2019 The BlackRock boss wants big firms to think long term and balance the interests of all stakeholders. That’s noble, but passive investors are poor strategic guides, while active fund managers have other priorities. Also, BlackRock's profit margins and Fink’s pay are bad examples.
WeWork offers glimpse of conflicts to come 23 Jan 2019 The shared-office upstart and potential IPO candidate rents buildings part-owned by its co-founder and CEO. Private-company trends arguably encourage such blurred lines, but public investors tend to distrust them. It’s another reason to doubt WeWork’s high-rise valuation.
EU “golden visa” alarm is too little too late 23 Jan 2019 Brussels is right to worry that dodgy tycoons can buy their way into Europe. But national governments are the only ones with the power to close these back doors. Given the benefits that countries such as Cyprus and Malta reap from such schemes, the gates will swing shut slowly.
Cost cuts can help UBS ride market ructions 22 Jan 2019 The Swiss bank reported a 2 percent increase in pre-tax profit despite a torrid end of 2018. The investment bank crashed to a quarterly pre-tax loss, while wealth management assets fell. The tougher environment puts more pressure on CEO Sergio Ermotti to hit his expense targets.
Market turmoil is last straw for asset managers 18 Jan 2019 State Street will slash its payroll by 6 percent. Both the selloff in stocks and outflows hit the company’s AUM in the fourth quarter. The investment industry is already reeling from fee pressure and turning to technology as the solution. That will mean plenty more pink slips.
Jamie Dimon puts America and himself first 17 Jan 2019 JPMorgan’s CEO said last year he wanted the U.S. tax cuts “shared broadly.” And he followed through, boosting low-paid workers’ wages and opening branches in poorer areas while also growing the bank’s earnings. But taking a $1.5 mln pay hike himself is unnecessary and tin-eared.
Jack Bogle defined value in more ways than one 17 Jan 2019 The Vanguard founder turned the once-heretical idea of indexing the broad stock market into the dominant form of investing. Instead of pursuing riches, he spread the low-cost ethos, saving investors untold billions and building a $5 trln juggernaut. Talk about wealth creation.
Banks tell a U.S. tax tale with three endings 15 Jan 2019 Wells Fargo, JPMorgan and Citi all started 2018 with the gift of lower taxes. Fourth-quarter earnings show the similarities end there. Treasury largesse propped up Citi and Wells, accounting for most of their underlying growth. JPMorgan gave back most, and needed the help least.
Markets dump coal in U.S. banks’ stockings 15 Jan 2019 JPMorgan missed the mark with quarterly earnings as it, like Citi, posted a steep drop in fixed-income revenue. Trading is always volatile, and JPMorgan’s valuation was already higher than its peers’. But peep behind the reported numbers and the drop looks particularly brutal.
EU investment banks face the regulatory microscope 28 Dec 2018 With the region’s bad-debt crisis on the wane, supervisors will shift their focus to probing lenders’ risk models and 132 billion euros of hard-to-value assets. For banks which had previously relied on their own guesstimates, that could mean higher capital charges.
Cevian, Nordea dangle truce in bank activism feud 21 Dec 2018 Lenders and shareholder activists rarely gel. But the Nordic bank welcomed the Swedish fund’s 2.3 pct stake. Cevian’s proposals for cost cuts are less radical than, say, a breakup, but could push Nordea’s return on equity to 14 pct. Its surplus capital could be a sweetener.
EU Brexit safety net still means trauma for London 20 Dec 2018 The bloc will allow banks to use UK clearing houses for a year, the minimum to spare $60 trln of swaps being cancelled if Britain can’t agree an exit deal. The temporary waiver also gives Europe a negotiating tool, and forces banks to shift business and staff across the Channel.
City is even less diverse than RBS makes it look 19 Dec 2018 The UK bank’s hire of a female CFO and potentially a female CEO too is unusual. But 50 FTSE-350 companies have no women on their executive boards at all. With firms often restricting them to non-P&L roles like HR, female CEOs will remain depressingly scarce.