Year: 2009

Bonuses should be shareholders’ problem

17 Aug 2009

It s not the government s business to limit bankers pay. But the authorities should ensure bank capital matches the risks and that clients get a truly competitive market. Shareholders also deserve an adequate return. If there s then still money for fat bonuses, so be it.

All win in UBS tax-case denouement – even cheats

17 Aug 2009

Compromises will allow everyone to claim victory. The Swiss apparently won t need to change the law to hand over names. UBS can finally embrace a new future. US doggedness will yield billions and act as a deterrent. But some tax dodgers will also find comfort in the cracks.

British Land shares price in too much hope

17 Aug 2009

The UK commercial property group is flying high on speculation of a bid or a partial sale of its prized London office complex to US buyout firm Blackstone. Its Q1 results may mark the trough. But corporate activity is no certainty and the shares look overpriced.

China’s Fortescue deal not an iron ore victory

17 Aug 2009

The People s Republic publicly insists the 35% price cut agreed with the Australian miner should be a reference for settling China s remaining benchmark contracts. But this deal came with a $6bn financing for the mining upstart. Larger rivals BHP, Rio and Vale won t be impressed.

WPP should be prepared to defend its credit rating

14 Aug 2009

The UK ad group is at risk of a rating downgrade. Investors fear it may follow indebted publisher Reed and raise equity. Nonfinancial firms shouldn t be ruled by ratings. But WPP may be an exception. At least CEO Martin Sorrell can pull other levers apart from a share issue.

Deutsche’s Sal. Oppenheim heroics could backfire

14 Aug 2009

Germany s largest bank may curry political favour by riding to the rescue of the storied but stricken wealth manager. Cosy deals are local custom, and this one could prove an opportunity for Deutsche. But such arrangements can go badly wrong, as Sal itself discovered.

UK dividends are down but not out

14 Aug 2009

Think the easy money has been made in the stock market? Juicy yields could be the next investment frontier. With the FTSE yielding about 4.4%, more than twice the S&P 500 s 2.1%, there are rich pickings. But investors should be wary of the recession or an oil price decline.

VW-Porsche finish line is far from sight

14 Aug 2009

The carmakers have a roadmap to a merger. Step one sees VW pay generously for 42% of Porsche s auto unit and 100% of the Porsche family s dealership business. Step two sees VW and Porsche sell shares to cut leverage. But there is still a chance a full merger won't happen.

Letter to the Editor: Another voting reform proposal from Myners

13 Aug 2009

The UK City minister responds to Breakingviews.com s concerns about making shareholder votes tradable. Lord Myners has a new proposal for improving shareholder stewardship letting investors divide themselves into voters and nonvoters though a 1for1 issue of nonvoting stock.

Pru takes capital out, Aegon puts it in

13 Aug 2009

The UK s largest insurer has raised the dividend while peers are cutting payouts to conserve capital. Holland s Aegon is raising E1bn in a share issue. Prudential is an outlier in taking capital out of the sector, but that may be the best way to serve its shareholders.

Eurozone enters fragile stabilisation

13 Aug 2009

Recession in Germany and France is over, after their GDP rose slightly in the last quarter. Past recoveries have been vshaped. But that is not likely this time the pain is too global and the financial dislocations are too severe. A recessionary relapse is a greater risk.

Glitzy image weighs on Las Vegas economy

13 Aug 2009

The US gaming capital s What happens here, stays here motto helped cement its naughty reputation during the boom. But that marketing message is now a burden. Budgetminded tourists and conventioneers are eschewing Sin City s selfconscious extravagance, battering its economy.

Woodstock 40th a grim anniversary for music business

13 Aug 2009

The industry s fiscal circumstances look nothing like they did during the celebrated 1969 festival. The threeday concert was a financial disaster, but a subsequent live album and documentary made it profitable. Rob Cox looks at the economic reversal in today's rock and roll.

Schwarzman finesses debt market – again

13 Aug 2009

The Blackstone boss took advantage of the leveraged loan market s boom to fund his LBOs at minuscule cost. Now his buyout shop has sold $600m of bonds to tap the investmentgrade market rally. But his new investors should do better than their unfortunate loan market counterparts.

Cheap oil has become expensive

13 Aug 2009

Brent benchmark crude should be cheaper than its West Texas Intermediate rival, because WTI is easier to refine. But Brent is now selling for around $3 per barrel more, almost the widest gap this year. The explanation: US regulatory scrutiny and changing consumption patterns.

Crisis may kick a limping financial model

13 Aug 2009

A panoply of restructuring efforts has failed to stabilise ING, whose results again confounded investors. The Dutch group cryptically suggested additional strategic options . The drastic step of splitting banking and insurance may be the only and best one left.

China steps back in Rio Tinto spy case

12 Aug 2009

After various Chinese channels alleged espionage against four of the miner s employees, formal arrest on suspicion of commercial bribery is a climbdown. China could be trying to depoliticise the case. But months of uncertainty still lie ahead.

When is it time to give up the hedge fund rat race?

12 Aug 2009

For Tim Barakett at Atticus it s at 44 with $1bn in the bank but near the bottom of his game. That s not ideal, but at least it s honest to hand back money when your heart s not in the job. Others make the mistake of hanging on too long and being forced to give up.

L&G would be tough target for Resolution

12 Aug 2009

The relaunched financialservices dealmachine might have the UK insurer in its sights. The new Resolution allows targetcompany shareholders to stay invested. But like its predecessor, it is relying more on buying cheap than reaping synergies. An L&G deal looks tricky.

Crisis has changed remarkably few minds

12 Aug 2009

When the world financial system was close to the edge, many bankers, economists and politicians called for new thinking. But prejudices are proving strong. It s almost back to the precrisis mindset as far as worries, strategies, policies and even bonuses are concerned.

New mythical paradigm: trading without risk

12 Aug 2009

Investment banks are peddling the idea that client trading can do what prop trading used to. The recent profit rebound from flow has come from favourable volume, spreads and marketshare shifts. But the trends don t look like they ll last long enough to sustain the new model.

Twitter goes down, world goes on

12 Aug 2009

The popular microblogging service s network failed again, yet the sun still rose. Now Google and Facebook are introducing rival services. Humanity can live without vapid hourly updates from Blist stars, but continued outages may yet kill Twitter.

Fed taps brakes – but must be wary of the traffic

12 Aug 2009

The central bank said it will slow its purchase programmes of Treasuries and agency securities and it expects inflation to remain subdued. But it must be uncharacteristically vigilant on developing stock market and commodity bubbles to avoid repeating the errors of 200206.

Securitisation’s recovery is no sure thing

12 Aug 2009

The Fed is considering extending the Talf programme that has helped resuscitate the market for new assetbacked deals. But US plans to force issuers to keep skin in the game and banks to keep many assets on their balance sheets could restrict securitisation s usefulness.

Rio case tests Chinese legal system

11 Aug 2009

Under Chinese law, the July 5 detention of four Rio executives has to be officially approved, and explained, by this week. It s a chance for China to show it s willing to follow its own rulebook and for the miner to get some idea of how serious the charges against it are.

Financial crisis makes US Ex-Im more like a real bank

11 Aug 2009

The export finance agency once mainly provided loan guarantees to help foreigners purchase US goods. But with banks on the sidelines, ExIm has boosted its direct lending sharply. That increases its risk and, as with privatesector banks, the taxpayer is lender of last resort.

BoE coshes pound as UK risk revives

11 Aug 2009

The central bank s Thursday decision to print a further £50bn has clobbered the pound. The BoE won t regret sterling s fall, which will help exports. But the drop could become dangerously steep, if markets start to panic about the sustainability of UK government finances.

Cracks could emerge in SEC crackdown

11 Aug 2009

Boss Mary Schapiro wants the US securities watchdog to chase higherprofile cases like those it recently agreed with BofA, Hank Greenberg and GE. But the fines it extracted are peanuts and could undermine its new campaign against rule violations.

Is Myners being paid to upset investors?

11 Aug 2009

It certainly feels like it. The UK City minister has stirred a storm by proposing radical changes to help shareholders be better owners. His latest notion is to let apathetic investors sell their votes. But that effectively means paying holders not to vote a backwards step.

China’s unemployment fears inflate oil prices

10 Aug 2009

That sounds a stretch. But the Middle Kingdom is buying more crude and producing more petrol than it needs. Part of the motivation is to minimise refinery unemployment. To avoid the social and political problems that come with lost jobs, China is stoking commodity markets.