Banks’ private-credit fightback may underwhelm 4 Aug 2022 JPMorgan and Deutsche are trying new ways to fend off lenders like Ares, who are displacing them in funding buyouts. Holding onto loans for longer or launching funds mean lower returns and tough competition. Their best hope is that the booming $1.2 trln sector deflates by itself.
Cheery bank CEOs have the edge on gloomy investors 29 Jul 2022 Santander, BNP, ING, Lloyds and SocGen have lost 27% of their value since mid-February, on fears higher rates will cause defaults to rise. Chief executives, meanwhile, expect returns to stay high. Share prices implying steeper losses than 2020 suggest the selloff is overdone.
Ukraine needs grants more than long-term loans 22 Jun 2022 EU leaders are debating ways to help Kyiv finance its $5 bln monthly budget deficit from the Russian invasion. So far, it has met all its financial obligations. But Ukraine’s allies shouldn’t add to its debt burden. Better that they borrow in order to help Kyiv out with grants.
Italian banks face return of sovereign embrace 14 Jun 2022 A decade ago, soaring government bond yields threatened to drag down domestic lenders. Today, banks have shrunk state debt to less than 7% of total assets, while cutting dud loans and building capital buffers. As the ECB retreats, the pressure to load up again will increase.
Apple pay-later foray blurs tech-finance boundary 9 Jun 2022 The $2.4 trln iPhone maker will use its balance sheet and data on user spending to offer short-term instalment loans. Fear of regulation and humdrum returns have largely kept big U.S. tech firms out of the lending business. Banks will be watching with interest – and trepidation.
Debt-market chaos makes bank deposits great again 24 May 2022 Rising rates and volatility are a problem for fintech upstarts, like Affirm, which rely on wholesale markets to fund loans. Old-school lenders, flush with cheaper deposits, don’t face the same funding pressure. It gives banks a window to strike back.
Polish mortgage holiday is bad idea with allure 17 May 2022 Warsaw wants to protect citizens from surging inflation and interest rates by offering breaks on home loan repayments. That would cost the country’s banks up to $3.6 bln. Forcing lenders to bear the effects of Russia’s war is crude and distortive, but may also win votes.
Goldman’s financial alchemy extends to crypto too 4 May 2022 The U.S. bank made a bitcoin-backed loan to $27 bln Coinbase. Regulatory suspicion of cryptocurrency means a third party will hold Goldman’s collateral, which the latter won’t touch. If it avoids censure, the loan’s lucrative nature means the rest of Wall Street could pile in.
What is Morgan Stanley smoking in Twitter LBO? 25 Apr 2022 The bank is leading a $13 bln debt package for Elon Musk’s buyout and lending $12.5 bln against his Tesla stock. Interest will eat up the social network’s cash flow and Musk may undermine its revenue. A good relationship with the world’s richest man may justify the risk, though.
Banks enter AGM season wearing green bullseyes 25 Apr 2022 Top U.S. lenders and some European rivals face votes on their climate policies at looming annual general meetings. Banks may resist greening their loan books if that hits earnings. But even if they clear the immediate hurdle, the heat will be on to clarify their net-zero plans.
Buy gas now, pay later is a hard tiger to ride 1 Apr 2022 Fintech firms Klarna and Zip are offering U.S. punters interest-free instalments as a way to manage higher fuel bills. The fact that consumers use loans to afford mere essentials raises the risk of defaulted payments. And unlike discretionary sales, Klarna isn’t getting a fee.
Capital Calls: Blowout banker pay helps New York 23 Mar 2022 Concise views on global finance: A 20% surge to record bonus levels across the city’s securities industry reflects a post-Covid rebound and will also boost its coffers.
LBO shops offering credit get best of both worlds 22 Mar 2022 Buyout firms have $3.4 trln of dry powder. With markets upended and regulatory uncertainty, there’s no better time to spend it. But lenders have suddenly shut their purses. Private equity shops with those resources, like Blackstone and Apollo, can play two sides of every deal.
Russians lose private banks’ golden goose status 21 Mar 2022 Spooked by sanctions, wealth managers are treating all Russian clients as suspicious. That limits the scope to offer lucrative loans or new products to customers who have $213 bln stashed in Swiss banks. Higher compliance costs will turn them from cash cows to financial baggage.
EU energy crisis is a 130 bln euro joint problem 17 Mar 2022 That's how much it could cost to wean the bloc off Russian gas, at a time when energy bills are already soaring. States could tax energy companies or draw unused pandemic loans to offer subsidies. Common grants look like a better option.
Aussie lenders offer risky bet on rising rates 9 Feb 2022 The big four, including Commonwealth and ANZ, rely more on interest income than U.S. peers, so should benefit when central banks tighten. But a rate hike Down Under might be slower than expected, while fixed-rate loans and rivalry for deposits and borrowers will eat into gains.
Breakdown: Buy Now, Pay Later’s bill is coming due 14 Oct 2021 The instalment-lending tool is reshaping how consumers buy online and could reach $300 bln by 2024. Banks are scrambling to catch up with upstarts like Klarna and Affirm, while regulators worry about unsustainable debts. Breakingviews explains why a reckoning is on its way.
Capital Calls: Cellebrite good times 8 Apr 2021 Concise views on global finance in the Covid-19 era: The Israeli cracker of mobile-phone encryption is going public via a SPAC at a $2.4 billion valuation.
Buy-now-pay-later exposes regulation blind spot 8 Dec 2020 Sweden’s Klarna and Australia’s Afterpay both allow punters to buy goods and defer payment. Opinion is divided over how regulators should treat any loss on the enabling financing. Balancing innovation and stability is hard, but the rules right now aren’t clear enough.
India’s banks peddle bad-loan black holes 14 Jul 2020 ICICI wants to raise some $2 bln, joining peers seeking capital as customers take advantage of interest holidays on a huge one-third of borrowings. Defaults system-wide could double to a whopping 20%, or worse. Amid so much disarray, the strong will inevitably get stronger.