Year: 2009

Calm summer may hint at banks’ true earnings power

7 Oct 2009

Sure, the recession s still biting, and commercial real estate concerns remain. But with improving asset prices, less frothy capital markets and mortgage lending and fewer big writedowns and oneoff funnies, thirdquarter earnings should be cleaner than they ve been for a while.

Exxon’s West African venture is only a start

7 Oct 2009

The oil major is set to pay $4bn for a stake in Ghana s offshore Jubilee field. The deal would bring a big payday for the current private equity owners and raise the stakes for Ghana. But the tiny impact on Exxon highlights the challenge it faces replenishing its reserves.

Sale and leaseback makes timely comeback

6 Oct 2009

Recent weeks have seen a flurry of deals as confidence has started to return to the troubled commercial property sector in Europe. The immediate prospects for property may be mixed. But the real attraction for investors is the promise of longer term inflation protection.

SocGen aims high with E4.8bn rights issue

6 Oct 2009

The French bank wants to repay state support via a big rights issue, no doubt emboldened by the reception to last week s E4.3bn fundraising by larger rival BNP. Supersizing the offer means SocGen can pay E3.6bn back to the government, fatten capital ratios and fund acquisitions.

Banks shareholders suffer as bonuses trump divis

6 Oct 2009

Dividend payout ratios are being cut but not employees share of bank profits. That s wrong but hard to change unless governments, the banks most powerful stakeholders, force the issue. The authorities don t seem bothered with ensuring shareholders get a fair slice of the pie.

Physics Nobel reaches heart of modern economy

6 Oct 2009

Joe Public doesn t always care about scientific innovation. But this year s physics prize for work on optical fibres and sensors used in digital cameras is a reminder that theory leads to lifechanging technology. Such improvements make most financial innovation look puny.

UK banks should be wary of quick liquidity fix

6 Oct 2009

The FSA will allow lenders to keep risky funding structures if they stock up on easytosell government bonds. But that may hinder lending without tackling the sector s structural liquidity problem. Banks should address that directly instead of applying a costly sticking plaster.

Non-dollar oil would psychologically damage the US

6 Oct 2009

Saudi Arabia denied reports it was planning a shift to pricing oil in a basket of currencies instead of the dollar. But such a move has compelling political and economic logic. When it happens, the US will have slightly higher costs, more economic uncertainty and lower prestige.

Is KKR a better buy than Blackstone?

6 Oct 2009

Henry Kravis buyout firm is now publicly traded sort of. It has taken surprisingly modest writedowns and depends heavily on pure private equity. But it looks undervalued relative to Steve Schwarzman s Blackstone. Lauren Silva Laughlin explains why the gap could close.

Australia should be first of many to hike rates

6 Oct 2009

It s different in Oz. Sensible monetary and fiscal policies in the good times make it easier to afford higher policy interest rates now. But with global financial markets bubbling, other G20 countries should follow the Australian lead even before withdrawing liquidity.

Saad’s unfair restructuring may damage Saudi

6 Oct 2009

The troubled conglomerate is prioritising local creditors as it moves to settle a $20bn dispute. For foreign lenders, it's another tough lesson about the riskiness of the region. The Saudi authorities endorsement of the deal will only further weaken confidence.

Nomura’s Wall St adventure an unavoidable risk

6 Oct 2009

The Japanese bank has come unstuck in the US before. But having acquired Lehman in Europe and Asia, it has to have a credible US limb. Doubling its headcount to 1,200 in little over a year carries risks. But at least it isn t trying to compete headon with the bulge bracket.

Gold flies on multiple engines

6 Oct 2009

A new record price above $1,040 an ounce for the yellow metal reflects a multitude of factors: loose money, inflation fears, dollar weakness and conspiracy theories, to name a few. The gold bugs have been right so far, but there is still paranoia built into their case.

UK’s Tories show way on pensions

6 Oct 2009

Pushing up the state retirement age to 66 from 2016 won t deal with the immediate fiscal crisis. But it will start to address the more serious longterm demographic crisis. Other European countries, whose pension systems are in even more of a mess, need to get their skates on.

Tories’ fiscal straitjacket should be tighter

6 Oct 2009

The UK opposition party rightly argues that it s too easy for the government to play politics with public borrowing: hence the soaring deficit. But the Tories solution an independent budget watchdog only does half the job. It needs to be able to bite as well as bark.

EU’s road still bumpy after Irish vote

5 Oct 2009

A no would have been worse, but the Irish approval of the Lisbon treaty isn t a panacea. Obstacles to ratification remain, and the accord only offers marginal gains in EU decisionmaking and diplomatic clout. Those won t help much with Europe s big postrecession challenges.

World needs a higher renminbi – but not today

5 Oct 2009

China s too cheap currency helped cause global imbalances. But a sharp revaluation when trade is weak could have unhappy consequences, especially for Asian countries whose imports China processes. China badly needs a new growth model, but a major currency experiment can wait.

UK right to fudge details on liquidity regulation

5 Oct 2009

The FSA s funding reforms might appear vague detail on banks targets and timescales remains sparse. But it deserves credit for being the first G20 regulator out of the blocks. And with further crackdowns to come, it's wiser not to commit to anything too specific.

Spain starts to wake up to executive pay debate

5 Oct 2009

Politicians are up in arms over the huge payments made to BBVA s outgoing chief executive. But the bank is hardly alone in its generosity. Investors in Spain have generally ignored such abuses in the clubby world of Spanish business. This needs to change.

Euro is Ireland’s life-jacket – and straitjacket

5 Oct 2009

Deep recession has changed Irish minds on the Lisbon treaty. This is no time to spurn the supportive EU. The euro has been a bulwark for the tiny economy, but the safeguard comes with a constraint. Without devaluation, it will take years for Ireland to regain competitiveness.

Greek elections give reason for both hope and fear

5 Oct 2009

The new Pasok government will have an absolute majority. But the socialist landslide may not get Greece on the right track. Planned increases in government spending are concerning and unsustainable in the long term. The new prime minister will have to do more to avoid a crisis.

Kraft should bid below Cadbury’s share price

2 Oct 2009

The US foods group has until November 9 to make a formal bid for its UK rival. Breakingviews imagines a shareholder advising Kraft CEO Irene Rosenfeld to raise her bid from 745p a share but not much.

Femsa turns up late to the beer bash

2 Oct 2009

The Mexican maker of Dos Equis happily sipped alone as rivals swapped brews. Now it wants to join in just as many wouldbe suitors are nursing debt hangovers from other deals. Without the froth, remaining bidders are less likely to pay top dollar for Femsa s bitter aftertaste.

US jobs data shows recession not over yet

2 Oct 2009

The big 263,000 drop in nonfarm payrolls was not the only bad news. Shorter working hours and a big downward statistical revision show the US economy is in a recordbreaking hole. Recent signs of strength look like artificially stimulated blips. True recovery is far off.

UK housing recovery still work in progress

2 Oct 2009

House prices have risen for the fifth month in a row, says one big mortgage lender. But gains continue to be driven by a shortage of supply and ultralow interest rates. As the broader economy picks up, rising rates could upset those dynamics.

Too soon to call the bottom on Spanish property

2 Oct 2009

Some indices suggest house prices in Spain are stabilising at last. Things may be not be deteriorating so rapidly. But a recovery would require a turn in the labour market, which looks some way off. And as things stand, house prices still look too expensive.

Xstrata faces tough choice with Anglo bid deadline

2 Oct 2009

The Swiss miner has until October 20 to make a formal offer for its South African peer. With Anglo having won investor support for rebuffing Xstrata s informal nilpremium approach, its suitor is expected to withdraw. But things aren t that simple. Xstrata has reasons to bid.

Rio’s bid for 2016 Olympics makes good sense

1 Oct 2009

Friday s decision will leave three cities as losers or should that be winners? Olympic investments create distortions and rarely pay off. The price for a few weeks of global glory is high. But the games might just fit with Brazil s developing economy and Rio s dynamism.

Comcast boss has five-year itch for mogul status

1 Oct 2009

Brian Roberts chased Disney opportunistically in 2004. Now he may be eyeing part of GE's NBC to boost his media mogul credentials. Trouble is, he couldn't persuade his shareholders that Comcast should pay up for Disney and there's no reason it should be any different for NBC.

LSE can cut a precious cashless deal for Turquoise

1 Oct 2009

The London Stock Exchange is in pole position to buy its upstart rival. A deal would be small in size and may see no cash change hands. But a tieup would offer the LSE the chance to repair strained relations with Turquoise s founder brokers. That would be pretty valuable.