Year: 2009

Calpers could turn PE fee talk into action

16 Nov 2009

The largest US pension fund is bothered by the fees it has paid Apollo. It has already endorsed calls for lower fees and giving investors in private equity more say. If Calpers does put the screws on Apollo, other big investors and other buyout firms won't be far behind.

Eurozone looks for a tow from stronger world

16 Nov 2009

The eurozone has emerged from recession, but largely thanks to German exports. The region has contracted twice as much as the US and still appears reliant on faraway consumers to fuel its growth. Germany s finance minister is probably right to see tax cuts as a way forward.

Greek banks need exit plan from ECB life support

16 Nov 2009

The country s bonds and bank stocks are under pressure again. The fear is that Greek lenders, loaded with highyielding government debt, have become too reliant on cheap ECB funding. Europe needs to work with Greece to plan an orderly exit from the situation.

Gold price could go much higher

16 Nov 2009

Cheap money strengthens the case for gold, and reduces the cost of holding it. Gold miners won t slow the rally. A jump in hedge fund or central bank interest would swamp annual production, worth $88bn and falling. The 20% increase since August could be only the beginning.

UK’s latest bonus attack looks heavy-handed

16 Nov 2009

The government plans to introduce legislation allowing the regulator to rip up employment contracts if they encourage excessive risk or involve multiyear guarantees. Bankers haven t earned themselves any friends. But meddling with their contracts is a worrying way to go.

Japan’s megabanks threaten capital crunch

16 Nov 2009

Mitsubishi UFJ may raise $11bn ahead of onerous new global rules on bank capital. If its two big rivals follow, some $46bn could be drained from the market, depriving others of capital. Yet it is not clear that Japanese banks really need the cash.

Citi’s EMI burden may not be so painful

16 Nov 2009

The US bank has understandably rebuffed proposals from EMI s privateequity owners to restructure its £2.7bn debt. Backing the music group just as the credit boom was ending was a bad call by Citi. But the loan may prove more harmful to the bank s reputation than its finances.

Bristol-Myers finds clever way to shrink

16 Nov 2009

The US drugs maker is offering its stockholders the chance to swap at a discount into shares of its publicly traded subsidiary Mead Johnson. That would improve Bristol s earnings per share which should come in handy with as much as 30% of its sales at risk as patents expire.

JPMorgan needs creative thinking to fold in Caz

16 Nov 2009

The US bank is to pay £1bn to buy out Cazenove, its UK investment banking partner. Caz s employee shareholders have good reason to sell out after a bumper year. But JPMorgan needs to proceed with care. A mishandled integration could make an expensive deal even more costly.

Lonmin valuation leaves little margin for error

16 Nov 2009

Investors have cheered CEO Ian Farmer, who took charge of the troubled platinum miner over a year ago amidst takeover interest from rival Xstrata. Fullyear results were greeted by a 9% share price rise. But a turnaround is now baked into Lonmin's valuation.

Return of growth doesn’t erase recession’s pain

13 Nov 2009

The eurozone has joined the US and Japan in saying farewell to quarterly GDP declines. That's an improvement on the freefall which looked possible in early 2009. But even if this still tentative recovery proves durable, the economic damage will not be reversed quickly.

Does SAC smoke mean there’s fire?

13 Nov 2009

Exemployees of Steven Cohen s $12bn hedge fund outfit are cropping up in the Galleon insider trading scandal. Cohen s firm isn t implicated. However, his aggressive style helps make him a target.

Liberty’s E4bn cable buy is peep of M&A normality

13 Nov 2009

Apollo and BC Partners ditched plans to float German cable business Unitymedia when trade buyer Liberty Global surfaced with an opportunistic bid. The private equity firms get a clean exit and Liberty buys growth without paying a fat premium. It's classic downturn dealmaking.

BA/Iberia structure is an unappealing fudge

13 Nov 2009

Like Air France/KLM before them, the UK and Spanish flag carriers have devised a convoluted structure to circumvent regulatory hurdles. The snag is that neither party has real control. Extracting the claimed E400m of synergies will be tough. This deal is off to a bad start.

Spain’s bank restructuring makes shaky start

12 Nov 2009

Caja Castilla la Mancha will be taken over in an opaque, politically influenced deal. The country s savings banks have too many connections for anything else. But the new structure may at least open a window for the healthier commercial banks to buy into this weak sector.

Don’t give up on global accounting standard

12 Nov 2009

Attempts to streamline the rules for bank accounting are running into problems with both the EU and the US. But this holy grail is well worth pursuing. The current hairballs helped confuse almost everybody and exacerbated the crisis.

China’s new imbalance: real estate addiction

12 Nov 2009

The Middle Kingdom s powerful recovery is too reliant on property investment. House prices are soaring. Local governments and developers are rushing to cash in. A USstyle meltdown is unlikely, but the bursting of this bubble could undo some of China s economic achievements.

Freedom thumbs its nose at capitalism

12 Nov 2009

Freedom Communications, that is. The bankrupt publisher of the Orange County Register is hoisting the interests of its equity holders including the heirs of founder and Ayn Rand follower RC Hoiles over those of creditors. The old man would roll over in his grave.

Intel pays small price to maintain chip dominance

12 Nov 2009

It's paying rival AMD $1.25bn and agreeing to soften some of its aggressive marketing ways. Abusive practices or not, the winnertakeall nature of tech generates monopolies that regulators and smaller rivals find difficult to tame.

EU should stay out of hedgies’ pockets

12 Nov 2009

The bloc s politicians are thinking about regulating the terms of hedge funds managers pay. That would be regulatory overkill. Hedge funds didn t create the crisis, managers compensation is already linked to performance and hedge funds aren't insured by taxpayers.

Hu not yet ready to tell Obama who’s boss

12 Nov 2009

The Chinese and US leaders will have a friendly meeting mutual dependence guarantees as much. But the rising and the mature economic powers have different agendas. China could be the stronger partner in a few years. For now, though, it can t really tell the US what to do.

First CoCo test goes down swimmingly

12 Nov 2009

Lloyds investors have been so keen to swap oldstyle hybrid bonds into newfangled contingent capital that the UK lender has been able to increase the issue size to £7bn. It s now possible to estimate the premium that bondholders will get for the risk of being stuck with equity.

Tarp should be wound down – just not quite yet

12 Nov 2009

Obama may take unused or repaid funds to cut US debt. That's the right thing to do eventually, not least because it stops Tarp becoming a slushfund. But the US economy is still fragile and more banking trouble is possible. Phasing Tarp out by concrete steps makes better sense.

BA and Iberia a marriage of necessity

12 Nov 2009

The lossmaking UK and Spanish airlines are close to a deal after 16 months of onoff talks. The intervening fall in BA s shares means Iberia shareholders will now enjoy more of the value created. But both groups have their work cut out to demonstrate the scale of the synergies.

Money printing can’t produce inflation-free UK growth

11 Nov 2009

Mervyn King may think otherwise. The UK central bank s governor implied that lots of newly created money will make the long, hard road of recovery much softer. That s wrong. Money printing may have averted deflation, but it can t make growth soar without bringing inflation.

Carbon tax could kill two birds with one stone

11 Nov 2009

The IEA has set out targets to reduce emissions and the carbon price hikes needed to get there. The focus on price is helpful, and underlines the virtues of a carbon tax. As well as being a marketfriendly way to tackle climate change, taxes would also boost government revenues.

AIG pay standoff entirely predictable

11 Nov 2009

It s what happens if a government props up a private company, makes a show of keeping it running like one, and then interferes. CEO Benmosche s threat to quit may be a bluff. But the lesson is that if there s no clear turnaround plan firms should be wound down, not bailed out.

ING should be worth more as a pure bank

11 Nov 2009

Investors panicked when the Dutch bancassurer agreed to sell its insurance arm. But it has four years to get a good price. Add in the repayment of state aid, and ING s current conglomerate discount could be erased. Brussels intervention may turn out to be a boon.

Reed moves to address bad succession planning

11 Nov 2009

The troubled UK publisher is replacing CEO Ian Smith nine months after he started. Reed s new chairman deserves credit for moving fast to ensure the group has the right leadership to drag it out of recession. But the episode reflects poorly on the wider board s decision making.

Rusal’s $7bn debt restructuring goes to the wire

11 Nov 2009

The world's largest aluminium producer must clinch a deal with western creditors before it can pursue a crucial listing in Hong Kong and Paris by the year end. Failure could leave owner Oleg Deripaska having to buy out minority investors which the tycoon cannot afford to do.