Year: 2009

Bernanke casts blame in wrong direction

24 Aug 2009

The US Fed chairman says a classic panic lay behind last September s meltdown, and central bankers deserve praise for their strong response. But firemen shouldn t take too much credit for bravery when they spread the kerosene that fuelled the blaze.

Does JPMorgan regret ditching private equity?

24 Aug 2009

It left the business after its buyout of Warner Chilcott five years ago annoyed big clients like TPG. Now its former LBO arm is minting it with Warner Chilcott s $3.1bn P&G buyout redux. At least JPMorgan is still raking in big fees from its former sub.

Fox-Pitt sale could reward counter-cyclical spirit

21 Aug 2009

JC Flowers is said to be selling the investment banking boutique to Australia s Macquarie. Opportunistic deals in the downturn haven t been easy to do. Now looks like the right time for the persistent and the brave to find the right financial firms and snap them up.

Porsche probe offers market schadenfreude

21 Aug 2009

The carmaker s binge on options in VW raised eyebrows across trading floors. Now it s fighting allegations of market abuse. Porsche may only have exploited Germany s poor securities laws in its attempt to control its rival. But many investors will feel that an enquiry is overdue.

Off-piste investors could put credit market on the skids

21 Aug 2009

Research from JPMorgan suggests that nontraditional investors in credit dubbed offpisters could destabilise fixedincome markets. Credit newcomers will feel let down. Only a few months ago, many banks were luring them into the market with the promise of juicy returns.

Phoenix could reignite European IPO market

21 Aug 2009

The German drug wholesaler may be floated with a E6bn pricetag as part of the restructuring of the Merckle empire. A trade sale remains likely, and the mooted valuation looks toppy. But if markets hold up, a big European IPO could be the green light for a host of new issues.

UK cartel-busters rightly target directors

21 Aug 2009

The Office of Fair Trading wants to make more use of powers to ban directors involved in pricefixing. That is partly pragmatic: miscreant companies may be unable to afford big fines right now. But it also sends a message to Europe that UK competition watchdogs still have teeth.

Quick UBS exit points to what Swiss got right

20 Aug 2009

The government has managed the crisis delicately. The decision to sell a SFr6bn investment in the country s largest bank is the latest sign. It puts the recovery at UBS ahead of fellow megalosers Citi and RBS. Pity the Swiss didn t handle the assault on secrecy as smoothly.

Gringos flat-footed as BBVA two-steps to Guaranty

20 Aug 2009

Citi and BofA have their hands tied by regulators. Private equity, which once corralled Texas banks, is in limbo while rules of engagement with FDIC are being worked out. So Spain s No. 2 is in prime position to saunter in. Que suerte!

South America may finally gain independence

20 Aug 2009

Most of Latin America is entering economic recovery, as competition for the region s natural resources intensifies. Higher resource prices will benefit those countries open to free foreign investment, and reduce their economic dependence on the Yanquis.

ICBC lends its way to temporary greatness

20 Aug 2009

The world's biggest bank by market capitalisation presented a seemingly strong 21% ROE in the first half. Like rival Bank of Communications, ICBC piled on new loans to keep earnings afloat as lending margins fell. The inevitable costs of this strategy will come through later.

Rio Tinto’s Albanese survives

20 Aug 2009

After a tumultuous six months, the position of the miner s chief executive architect of the illfated deal with the Chinese looks secure. Rio has reined in its debt and is meeting operational targets. But Albanese will have to work to overcome the legacy of past mistakes.

Much at stake for banks in $5bn China property IPO

20 Aug 2009

Chinese realestate developer Evergrande is getting a second go at flotation, having cut the price since pulling an $8bn IPO last year. A cat s cradle of preIPO loans and shareholdings means the float could offer a neat payback for several investment banks if it gets away.

Wipeouts hurt but shouldn’t kill private equity

19 Aug 2009

So long as buyout managers didn t put too many eggs in one basket a lesson KKR taught with RJR Nabisco equity wipeouts like Ripplewood s in Reader s Digest may not be crippling. But concentrated bets on single deals, and of course several faulty investments, could be ruinous.

Xstrata can live without Anglo American

19 Aug 2009

The Swiss miner s push for a merger with its South African rival inevitably raises questions about its standalone prospects. A deal does have merit. But Xstrata is nicely exposed to economic recovery as it is. The question is whether that s enough to keep management interested.

FDIC finally learns from its own history

19 Aug 2009

The US bank regulator is starting to insert profitshare clauses in its failed bank asset sales much as it and the RTC did during the S&L crisis. It s a fair trade for shouldering the bulk of any losses and shouldn t impede deals. But FDIC could have insisted on them sooner.

Plummeting natural gas trips producers, investors

19 Aug 2009

A price spike in one product should increase demand for alternatives. But despite oil s rise, natural gas is at a sevenyear low. They may come from the same fields, but they re not interchangeable. And a growing supply glut is causing the gas market a lot of indigestion.

US shows its might in UBS settlement

19 Aug 2009

The Swiss will hand US tax officials details of 4,450 UBS accounts, twisting national law in the process. Switzerland is also stretching its resources to produce information quickly to avoid further US action. As for the bank, it avoids a fine and looks almost ready to move on.

Bankers and hedgies could profit from Myners plan

19 Aug 2009

The UK City minister wants to stimulate shareholder engagement by segregating registers into voting and nonvoting share classes. But the proposal is a recipe for conflict and arbitrage. Investment banking advisers and traders might be the real winners.

Turquoise sale would be blue day for equities

18 Aug 2009

Investment banks set up their own share trading platform as a lowcost rival to expensive stock exchanges. Turquoise may now be sold to one of the incumbents it was meant to challenge. If tough markets make a sale necessary, it would be better to maintain the founding ethos.

Buyout firms race to start over in the east

18 Aug 2009

Foreign private equity firms have finally been allowed to set up Chinese funds for local investors. Perks for early arrivals like Blackstone include a share in government projects, access to prodigious domestic savings and new investors still willing to pay 2and20 fees.

Will MySpace try to steal Facebook’s groove?

18 Aug 2009

Rupert Murdoch s website is reportedly poised to buy iLike, the most popular music application on Facebook. It s a small deal financially but could give a glimpse into whether the two dominant social networks will cooperate or go for the jugular.

What do Paulson and Krawcheck see in BofA?

18 Aug 2009

The hedge fund supremo went bullish on the bank, becoming its fourthlargest shareholder. The former Citi CFO has staked a career revival on running BofA's Merrill brokerage and bought shares too. BofA s hardly out of the woods. But they may be on to something.

New music industry emerges from digital fire

18 Aug 2009

Digital downloads nearly killed record companies. Now, online music accounts for 35% of the US music market. In about two years, they should surpass traditional sales and keep growing. Good news, but record companies will have to share the spoils more widely.

Wall Street may do better than clients in re-equitisations

18 Aug 2009

Bankers hope this year s rally in equity markets will tempt buyout shops to float their companies. But while banks may feast on fees, IPOs may not work out as LBO firms expect. Investors have the whip hand in pricing highly leveraged firms with few refinancing options.

Markets confused by recovery puzzle

18 Aug 2009

Shares are having a choppy week. That s hardly surprising after such a long rally, and when the signs of global growth remain tentative. Above all, in the midst of revolutionary policy experiments neither theory nor history provides much guidance about what happens next.

A first step for Fannie and Freddie

17 Aug 2009

As the anniversary of their conservatorship approaches, the $5.4 trillion mortgage giants remain the biggest black holes in the financial firmament. Robert Cyran says there s an easy and fairly painless first step the US could take to begin their reform.

Prawns and risky bonds make for an ugly cocktail

17 Aug 2009

Some bigname hedge funds and an investment bank are bogged down in a dispute after an unusual bet on Indonesian prawn farming went sour. Their pursuit of unconventional returns is laudable. But many of the risks of this peculiar opportunity were visible from the outset.

Dole re-equitisation good early test for LBOs

17 Aug 2009

The US food company filed for a $500m IPO to refinance debt that s the legacy of a 2003 MBO. Many leveraged companies will be forced to follow in its wake. But Dole has the earlymover advantage and its performance is good big legs up.

Reader’s Digest saga chronicles Debtville, USA

17 Aug 2009

When it went private in 2006, the publisher seemed to share the characteristics of its smalltown America readership: pleasantly hokey, stable, even boring. Like its readers, though, the company gullibly believed in the story of easy credit.