Chancellor: Carillion’s flaws are common to many 22 Jan 2018 The collapsed UK construction firm’s problems may look idiosyncratic. But its problems with “onerous contracts” were exacerbated by a balance sheet stuffed with intangible assets and ultimately shaky assumptions. These issues are not peculiar to Carillion.
Carillion collapse exposes new bank folly 22 Jan 2018 The failed UK contractor used lenders to finance 412 mln pounds of payments to suppliers when cash was running low. The process, known as “reverse factoring”, seems a lucrative way for banks to provide short-term credit. But insolvency exposes the true extent of the risks.
Italy’s pension U-turn would try markets’ patience 10 Jan 2018 Centre-right parties, frontrunners in March elections, have vowed to scrap a key pension reform passed during the 2011 crisis. The law is rigid, but axing it would hurt young Italians and widen Rome’s fiscal deficit. Investors would have a reason to avoid Italian debt.
Tech backlash catches up to Apple 8 Jan 2018 Jana Partners and pension giant CalSTRS want the company to give parents better controls over their kids’ iPhones. It’s an unusual issue for an activist, and apps from Facebook and Snap would make better targets. But focusing on Apple shows how much technology has lost its halo.
Canada will export its pension model to U.S. 4 Jan 2018 Canada’s retirement funds are well funded and governed, run most of their money in-house, shun rosy assumptions and post good returns. As the need to lift returns increases, expect struggling U.S. public pensions to adopt at least some of their northern neighbors’ approach.
Short-selling fee bastion will be hard to topple 18 Aug 2017 Wall Street makes $9 bln helping pension funds lend stocks to fuel hedge-fund bets. Now three public retirement plans are accusing Goldman, JPMorgan and others of collusion. It’s a business ripe for disintermediation. But it’s too lucrative for banks to concede without a fight.
Lloyds has a good get-rich plan 15 Aug 2017 The lender is considering a push into wealth and savings products. A capital idea. Lloyds’ 2,000-strong branch network gives it a head start over rivals. And while CEO Antonio Horta Osorio has done a good job at cutting costs, it’s high time he did more to grow revenues.
U.S. tax-cut hopes may give pensions a rare boost 2 Aug 2017 International Paper is borrowing to stoke its retirement fund. Rising plan costs and a desire to lock in tax benefits before any reduction in rates prompted the move. With other firms likely to follow, this is one way Trump’s fiscal policies can trickle down to the little guy.
Match.com owner leaves investors looking for love 26 Jun 2017 A CalPERS lawsuit has forced IAC to scrap plans to use non-voting stock to give Chairman Barry Diller eternal control of the company. Legal threats may thwart similar egregious ideas. But to remove existing supervoting powers at Facebook, Snap and the like is a far harder task.
Chicago emigration is warning of Detroit endgame 1 Jun 2017 More people quit the Windy City in 2016 than left any other U.S. metropolis. Chicago's pension funds and schools are already strapped for cash. A sustained exodus can only worsen the financial squeeze. If it's not reversed, the long-term risk is Motown's bankruptcy and blight.
Theresa May has a way out of UK pension pickle 28 Apr 2017 The prime minister is dithering over whether to keep guaranteeing above-inflation hikes to pensioners. The triple-lock is nonsensical, inequitable and unfit for an era of Brexit and stagnant wages. May has the political capital to adopt a fairer single-lock, tied to earnings.
Brazil’s Temer steers white-knuckle reform route 17 Apr 2017 The "Car Wash" corruption probe is increasingly denting the president's government as he tries to drive crucial changes to an unsustainable pension system through Congress. The nation's economic recovery may hinge on his ability to ease off the gas just enough to ensure passage.
Philip Green pays 363 mln pounds for a quiet life 28 Feb 2017 That’s what the British apparel billionaire has put into the pension pot of defunct retailer BHS. It ought to calm politicians who painted Green an enemy of the state. And, anyway, the return from reinvesting his jumbo dividends should cover it nearly twice over.
Panasonic joins ranks of Japan’s buyout bullies 24 Jan 2017 The electronics group has offered to buy out the remaining 45.5 pct of subsidiary PanaHome for about $515 mln. The stingy deal ignores the target's big cash pile. For all that corporate Japan has reformed, minority investors remain vulnerable to bullying like this.
CalPERS return cut would be small but notable step 16 Dec 2016 The $300 bln U.S. public-pension manager is weighing a reduction in the 7.5 pct annual gain it assumes it will make on investments. The move would squeeze public budgets and employees but help secure funding for retirees. If CalPERS can get a bit more real, others will follow.
Sky shareholders are close to maximum altitude 15 Dec 2016 Some of the pay-TV operator’s investors grumble that independent directors were too eager to accept an 11 bln pound bid from Rupert Murdoch’s Fox. But Sky’s share price wasn’t obviously beaten up, and the premium is generous. A small bump is the best they can hope for.
China’s pension move into stocks is overdue 1 Dec 2016 China is moving to invest $290 billion worth of public pension funds in financial markets including stocks. That won't spark a rally, but will increase healthy institutional ownership. Given shortfalls, long-term returns from volatile Chinese stocks are preferable to deposits.
Dallas pension fiasco lights up broader problems 28 Nov 2016 Investment losses and a bank-like run prompted the police and fire workers fund to ask the city for a $1.1 bln bailout. Some of its woes are unique, but it was chasing unrealistic returns in a low-rate world. That's a problem for the entire $4 trln U.S. public pension system.
U.S. pension funding boost is temporary reprieve 24 Aug 2016 New figures show a $1.1 trln funding gap for 50 states narrowed in 2014 as high returns boosted assets. Investments have struggled since, though, and assumptions about long-term returns are still too rosy. Even the better-funded pension pots may fall short as bills come due.
Goldman’s BHS faux pas is cost of doing business 30 Jun 2016 The investment bank admitted its reputation was not enhanced advising retail magnate Philip Green on the sale of the now-bust UK retailer. Indeed it wasn’t. But courting the rich and colourful is just another kind of trade. Sometimes it brings revenue, sometimes it brings costs.