Year: 2009

Cisco’s restraint on $3bn deal hard to sustain

1 Oct 2009

The US networking giant s acquisition of the Norwegian Tandberg is its largest ever overseas. It s a sensible use of cash given the promise Cisco sees for video conferencing. But the bigger Cisco gets, the more discipline it will need to avoid overreach on future deals.

Arnault and pals have wrong plan for Carrefour

1 Oct 2009

Luxury magnate Bernard Arnault and US fund manager Colony Capital want the French retailer to sell some emergingmarkets assets. It s a bad idea. The units might fetch high prices, but Carrefour would lose vital growth engines that counter its sluggish domestic business.

UK sticks head above parapet on bonuses

1 Oct 2009

Britain is the first G20 nation to corral its banks even the statecapital refuseniks into signing up to global bonus rules. It s a shrewd political move for an embattled government. But the antiexcess resolve could be tested if other countries take a softer approach.

Long bear market for stocks not yet over

1 Oct 2009

The third quarter was strong, but most equity indices are still where they were a decade ago. Stocks were so expensive then that even after a good decade for growth, they still aren t a bargain although they probably were in March. If it s any comfort, bonds look worse.

Financials shouldn’t rush to ape Munich Re buyback

1 Oct 2009

The German reinsurer is resuming purchases of its own shares a rare instance of a financial institution returning capital. But Munich Re is in an unusually strong position. For most financials insurers included capital preservation must still be the order of the day.

Brown’s moral attack on finance too intermittent

30 Sep 2009

The UK premier has again stressed the danger of amoral markets. But he doesn t seem to have pushed world leaders to discuss the goods and evils of finance at last week s G20. That s too bad. The vocabulary of virtue has been sadly absent from the global debate.

Italian banks buy time while shunning Tremonti

30 Sep 2009

UniCredit has got a E4bn rights issue underwritten. That fixes its capital needs, although pricing and timing are hazy. Intesa is to sell E1.5bn of hybrid bonds, buying it time and flexibility. And both banks have avoided the interference that would have gone with state support.

France SA’s flawed governance summed up in Veolia

30 Sep 2009

Directors of the French water company have submissively approved Henri Proglio s wish to retain his chairmanship despite being appointed chief executive of energy group EDF. His dual roles raise serious governance concerns. That board members acquiesced is typical and a shame.

Ken Lewis finally bows to the inevitable

30 Sep 2009

The BofA boss s mishandling of the Merrill merger kicked off an embarrassing and potentially harmful series of distractions. His belated retirement should clear the air somewhat. And it may allow his successor to capitalise on a promising franchise depending who gets the nod.

Bharti-MTN better apart than in half-baked union

30 Sep 2009

South Africa s insistence that MTN must retain its national identity has proved an immoveable obstacle to the telco s proposed $22bn shareswap with Indian rival Bharti. With no guarantee the tieup would ever lead to a fullblown synergistic merger, terminating talks is wise.

CIT will struggle to sell its soul twice

30 Sep 2009

The troubled business lender pledged nearly all its assets to secure lastditch funding in July. Now it faces a deadline to restructure its $30bn debt load. The odds are against it: junior lenders are unlikely to accept anything but bankruptcy or the functional equivalent.

FDIC needs prevention as well as cure

29 Sep 2009

The US agency may tap banks for three years of advance premiums to top up its depleted deposit insurance fund. Yet 90% of banks paid no assessments when their profits were healthy. This procyclicality punished the prudent and rewarded risky lenders.

EBRD cash call is right, but also self-interested

29 Sep 2009

The European Bank for Reconstruction and Development wants to tap its 61country membership for E10bn to drive lending in eastern and central Europe. The plan is both welcome and worrying. And it suggests that the EBRD sees the crisis as a chance to bolster its mandate.

Yen strength doesn’t help deflating Japan

29 Sep 2009

The yen is strong but the Japanese economy is weak. The new government should try to put doubts in traders' minds. But it has more profound economic challenges after years of expensive and ineffective stimulus plans. Japan s quandary is also a warning for the West.

Dimon sacrifices Winters for greater good

29 Sep 2009

The JPMorgan boss is rightly planning his succession. A shakeup leaves Jes Staley a veteran, though lacking retail experience as heir apparent. Bill Winters an architect of the investment bank s success will leave. That s a loss. But Dimon was smart not to dawdle.

Chinese rivalry for oil assets has silver lining

29 Sep 2009

Iraq, Argentina, and now possibly Nigeria. Chinese energy groups are seeking mega oil assets in risky places. They may look like an increasing competitive threat to Western oil groups. But their interest is not all bad news for the majors. The Chinese could also be good partners.

Tui Travel pays up to win convertible contest

29 Sep 2009

A busy day for new issuance in convertible bonds saw tour operator Tui Travel up against steel maker Salzgitter. Despite Tui Travel s weaker balance sheet, keen pricing made its issue more successful. Higherrisk credits are once again welcome in convertibles land at a price.

Banks should face liquidity stress-tests

29 Sep 2009

The UK may ask its banks to detail contingency plans for coping with another liquidity crisis. As wholesale markets thaw, and global regulators struggle to update liquidity rules, such a move would be a welcome antidote to complacency. Other countries should follow suit.

Steady BBVA suffers shaky reshuffle

29 Sep 2009

The Spanish bank has had a decent crisis, but its wellregarded chief Goirigolzarri is departing unexpectedly. The head of risk is leaving too. Chairman González seems to be consolidating power with an unproven crony as the new daytoday boss. Investors could be right to worry.

BNP’s liberation is not the start of a revolution

29 Sep 2009

The French lender is freeing itself from state shackles with a painless rights issue. Domestic peers could follow suit. But German, Irish, Swiss and UK recipients of state assistance are some way from similar moves. Government involvement in European banks is nowhere near over.

BNP Paribas jumps queue with E4.3bn capital hike

29 Sep 2009

France's largest bank is raising equity to buy out state preference shares before they become even more expensive. Domestic rival SocGen, another recipient of government cash, must be kicking itself. With markets in generous mood, BNP has wisely seized a firstmover advantage.

Xerox has tough sell with $6.4bn ACS deal

28 Sep 2009

The US office equipment company is the latest to try and snap up a business services firm. It will have to convince its shareholders that this isn t a case of metoo corporate strategy. That may be difficult. The purchase price is high and the synergies are unconvincing.

Sterling may go to euro parity – for good or ill

28 Sep 2009

The euroapound line is in sight for the second time in a year. There are so many reasons for sterling to fall, from money printing to a willing central bank. A weaker pound will eventually help exports. But with the UK's finances as they are, the drop could go too far.

Merkel gets clear mandate for muddled platform

28 Sep 2009

The incumbent chancellor will lead the government she wanted: a coalition of her Christian Democrats with the economically liberal FDP. In theory, the end of the grand coalition with the Socialists opens the path to reforms. But it's far from certain Merkel wants to follow it.

Dividend might keep Ryanair out of trouble

28 Sep 2009

The European budget carrier has the sort of problem other airlines dream of too much cash. But its E2.8bn provides firepower that can easily be misdirected, as in Ryanair s stake in Aer Lingus. Shareholders should clamour for the cash and discipline that come with a dividend.

Abbott’s E4.5bn Solvay deal a good use of offshore cash

28 Sep 2009

Against some ambitious recent deals, the US healthcare company's purchase of the Belgian chemical group s drug arm looks boringly sensible. At two times sales, the price is right. It s better than leaving the cash sitting in overseas banks, too.

G20 shows signs of flagging

28 Sep 2009

If only half the vague commitments made in the Pittsburgh global summit are kept, the world would be much better off. But don t be too hopeful. As the crisis fades, rhetoric is replacing substance. It looks like a new crisis could be required to force some necessary changes.

Retirement is latest pooper at US fiscal party

28 Sep 2009

Social security may run a cash deficit in 2010 and 2011. That wasn't supposed to happen until seven years later. Early retirement by babyboomers would reduce the longterm burden on the social security trust fund. But the short term cash outflows would worsen budget shortfalls.

Bankers can sleep easy with G20 bonus fudge

28 Sep 2009

The world leaders offered an endorsement of their guidelines on bonuses, and promised to monitor the situation. But the banks are ready to justify big payouts with arguments the politicians are willing to believe. It looks like an opportunity for reform is being squandered.

Smartphone makers not all better than average

25 Sep 2009

Basic mobile phone handset sales have matured. So manufacturers tout the prospects of their advanced models. Investors seem to think every firm can sew up the market. The lukewarm quarterly report from BlackBerry maker RIM signals more disappointments ahead for the credulous.