Capital Calls: NatWest nerves 28 Oct 2022 Concise views on global finance: Shares in the government-backed UK lender fell 8% after it revealed an impairment charge 43% above what analysts had expected.
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.
Bank mortgage tweaks presage bigger political hit 14 Oct 2022 Spain’s CaixaBank proposed a rate freeze, while UK lenders favour ad hoc relief for struggling borrowers. As interest costs soar, these won’t be enough to avoid a mess. Since cash-strapped governments can’t help, they may hammer banks with Polish-style blanket payment holidays.
Capital Calls: Buffett’s Berkshire successor 4 Oct 2022 Concise views on global finance: The Omaha oracle owns $100 bln of stock in his conglomerate. His potential successor Greg Abel’s purchase of $68 mln of stock last week – after selling shares in a subsidiary for $870 mln in June – is too small a move toward Buffett’s standard.
“Help to Refi” could be UK’s next financial wheeze 30 Sep 2022 Prime Minister Liz Truss’s rash tax cuts have rattled the government bond market. She needs to attract investors and bring yields back down. The “Help to Buy” scheme to subsidise mortgages offers a template. Breakingviews imagines a fictional adviser taking up the challenge.
UK swaps one cost-of-living crisis for another 27 Sep 2022 The Bank of England may raise rates past 5% to stem the inflationary effect of Chancellor Kwasi Kwarteng’s tax cuts. Homeowners, saved by the government’s energy price cap, now face a surge in mortgage costs. That will sap growth and add to pressure for banks to help customers.
China’s multi-layered property crisis explained 21 Jul 2022 Homeowners in the world’s second-largest economy are refusing to pay mortgages on unbuilt homes. In this Viewsroom podcast, Breakingviews columnists describe how government deleveraging policy destabilised the sector – and President Xi Jinping’s unpalatable options for fixing it.
China property crisis enters dangerous next phase 14 Jul 2022 Homebuyers in 22 cities are refusing to make mortgage payments on unfinished homes. It extends the risk of defaults from offshore developer bonds to banks with $6 trln of mortgages. The fat tail risk of deleveraging the sector is emerging, and puts Beijing in a very tight spot.
This time, U.S. housing bubble burst is tolerable 6 Jul 2022 Mortgage rates averaged about 6% before over-leveraged homeowners helped spur the 2008 financial crisis. Now as borrowing costs approach that level, a frothy market is set to decline. But Americans’ budgets are healthier, and a housing correction could actually be good for some.
Barclays adds risky spice to insipid valuation 24 Jun 2022 The UK bank is scooping up specialist lender Kensington for nearly $3 bln. It’s small, and CEO C. S. Venkatakrishnan is right to try to gee up his low-valued shares with retail assets. Still, he’s also bulking up in the riskier end of the market amid a potential house price dip.
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.
ICE’s Black Knight deal has antitrust snare 13 May 2022 The NYSE owner is paying a big premium to round out its mortgage tech dominance with the servicing-focused Black Knight. But the combination looks to pose antitrust problems, and a loose merger agreement gives ICE room to blow up the deal if it runs into resistance.
India’s $168 bln bank merger bets the house 4 Apr 2022 HDFC Bank’s plan to buy its mortgage-lender parent at a tiny discount sparked a 10% rally in shares of both. New capital rules enable the long-speculated union. Benefits range from lower funding costs to resolving CEO succession. Preparing for a home-loan boom is the main goal.
Irish housing bind opens door to radical options 31 Jan 2022 The cost of renting in Ireland has soared, but so has the cost of buying a home. Regulatory reluctance to relax bank lending standards means demand won’t rise to help stimulate new supply. The impasse makes it more likely that leftist Sinn Féin may win the next election.
Capital Calls: Stadium naming, Diageo, Evolution 17 Nov 2021 Concise views on global finance: Crypto.com is paying heavily to rename Staples Center; The drinks maker plans to grow its market share by 50% in the next decade; the $36 bln Swedish gambling firm lost $2 billion of its market capitalisation after accusations of illegal gambling.
Chancellor: U.S. credit cycle close to overheating 30 Jul 2021 Home prices and private-sector borrowing have taken off and credit standards continue to deteriorate. The end may not be nigh, but overvalued stocks and a massive lending boom, especially to corporations, make U.S. financial markets a particularly dangerous place for investors.
Fate of U.S. mortgage giants only half clear 23 Jun 2021 The Supreme Court’s blow to Fannie Mae and Freddie Mac investors leaves a fuzzy future. Bill Ackman’s fund and others had insisted the government illegally confiscated earnings. What Joe Biden wants to do with the firms backing half America’s homes may have bigger consequences.
Capital Calls: Platinum Equity, FTC chair, Tui 16 Jun 2021 Concise views on global finance: The buyout firm acquires textbook company McGraw Hill and the maker of Singer sewing machines; Joe Biden’s pick for the Federal Trade Commission brings swagger; and another capital hike will still leave the German holiday group heavily indebted.
Barclays’ Goldilocks moment faces lurking bears 30 Apr 2021 For the first time under CEO Jes Staley, the UK bank’s three main units all earned a quarterly return on tangible equity over 10%. A looming slowdown in capital markets and UK mortgages, combined with rising costs, means it may not last. That will keep Barclays shares in check.
New Zealand’s diluted punch bowl may tempt others 26 Mar 2021 Prime Minister Jacinda Ardern is combatting a hot housing market by stopping property investors from deducting mortgage interest. This mitigates side effects of low rates and allows the central bank to defer policy tightening. The approach might appeal to governments elsewhere.