Year: 2009

StanChart wisely skims off some market froth

4 Aug 2009

Months after a rights issue, the emergingmarkets lender is raising £1bn in a placing. At worst, this will absorb rising bad debts. At best, it could provide growth capital for StanChart s embryonic investment banking franchise. Either way, the opportunistic move should pay off.

SEC wrist-slap reinforces need for Ken Lewis to go

3 Aug 2009

The Bank of America boss is clinging on to his job even after the regulator accused the firm of misleading shareholders about Merrill bonuses. True, Lewis seems belatedly to be drawing up a succession plan. But that s slow going. And he should have been gone long before now.

Votes-for-loyalty shouldn’t be rejected outright

3 Aug 2009

Lord Myners, the UK City minister, has provoked outcry by proposing that longterm shareholders should have more votes than shortterm flippers. The plan might deter activists from shaking companies up. But it could also encourage shareholders to act less like absentee landlords.

Co-opetition runs course for Apple and Google

3 Aug 2009

Mutual backscratching among Silicon Valley s leading lights was already in the Obama administration s sights. Another federal government hot button, mobile telephony, is now in the frame, and Google s Schmidt is leaving Apple s board. A less clubby future looks likely.

PE returns aren’t so bad, but need validation

3 Aug 2009

Buyout fund values dropped less than stocks last year. But that's just on paper. Limited partners need more certainty and want some cash back, too. That means buyout firms need to sell assets. A return of investor interest in IPOs might help them start doing just that.

Commodity price surge could endanger world economy

3 Aug 2009

Commodity price spikes generally occur at the peak of economic cycles. This time, a sharp rebound coincides with an economic trough. Whether caused by monetary factors or Asian demand growth, a further commodity price advance could spark inflation and stall global recovery.

BarCap bonus bonanza shows need for tough reform

3 Aug 2009

A stellar first half has led to accruals for some big paydays. The public will rightly recoil. While Barclays didn t take taxpayer capital, it benefited indirectly from cheap state liquidity and loan guarantees. Investment banks need a more constraining regulatory regime.

Barclays begins to prove investors wrong

3 Aug 2009

Despite a Monday spurt, the Lehmanenhanced UK bank is still trading at a discount to forecast 2010 book value. For now, credit losses and an iffy UK macro outlook are offsetting Barclays Capital s spoils. But if revenues keep surging, investors scepticism may look unfounded.

Peace in UBS case could cost Swiss dearly

31 Jul 2009

Details are scarce on the accord reached in the longrunning US prosecution, but the expectation is many more names will be turned over. UBS will be happy to have the case behind it, even if there s an extra hit. For Switzerland, it starts a new era of less profitable banking.

Ferrovial still on better side of improved Cintra deal

31 Jul 2009

The Spanish infrastructure group is absorbing Cintra, its 68%owned motorway subsidiary, on terms that are better for minority investors than had been expected. The merger has some logic. But Cintra needs the deal less than its parent. The minorities will have to lump it.

US economy could languish at bottom of deep hole

31 Jul 2009

The 1% drop in Q2 GDP makes the 3.7% drop in the last six quarters the worst recession since World War II. Government stimulus helped, but personal savings are still depressed and the federal deficit is huge. Correcting those imbalances could make for a very slow recovery.

Anglo American bolsters defences

31 Jul 2009

Facing unwanted merger interest from rival Xstrata, the miner needed a boost. Its interim update was never going to be stellar. But it shows hard progress on cost cuts and growth projects. That gives credence to Anglo s claim to be entering a period of enhanced value creation.

Beer wars open a new front in Africa

31 Jul 2009

A legal skirmish between SABMiller and Diageo could presage allout warfare for Africa s beer drinkers. A forecast 4% economic growth rate and fat margins have executives salivating. The old Africa hands at SAB may not like it, but competition should eventually help everyone.

Cash for clunkers shows how stimulus should work

31 Jul 2009

The US programme to boost car sales may have burned through its $1bn budget after a week. That s a welcome change compared to the slowcooked pork that characterises most government pumppriming plans.

Schaeffler alienates as it takes power at Conti

31 Jul 2009

Usually majority shareholders get their way without too much complaint. But Schaeffler s decision to oust the top man at Continental was delayed by board resistance. The fight between the two overindebted German car part makers is making it harder to find a durable solution.

BofA top brass face stark Merrill bonus choice

31 Jul 2009

New York s attorney general put numbers on a known divide: Merrill had four times as many milliondollar earners last year as its new parent. The two pay cultures won t be easy to combine. BofA could impose its thrift on investment banking or make some older staff very happy.

US needs to choose a privatisation model

30 Jul 2009

Lawmakers defeated a bill to distribute GM and Chrysler shares to taxpayers. But the US still needs a strategy for unloading its stakes. Russia and East Europe s experiences suggest two ways: give shares to the public or employees. Or better, sell them cheap to big investors.

GE Capital may need bigger loan-loss buffer

30 Jul 2009

The conglomerate says its $650bn finance arm has adequate provisions against defaults. But a look into one slice of its portfolio, leveraged loans, raises questions about whether it will need to squirrel away more cash.

League-table obsession scales new heights in Asia

30 Jul 2009

Bankers pretend to be blasé about rankings but secretly watch them with zeal. The fixation is most intense in Asia, where the advisory business is less mature. But so long as league tables are the only tangible measure of success, profits in the region will probably suffer.

Darling’s bank-bashing is muddled but necessary

30 Jul 2009

The UK finance minister wants banks to do the impossible to lend more and shrink at the same time. Banks have many reasons, not all of them good, to cut back on lending. Darling's position may sound contradictory. But a bit of sabrerattling should help keep banks honest.

China’s lending spree could create zombie banks

30 Jul 2009

Beijing wants $1.3 trillion of bank loans channelled into public works rather than stocks and property. But for lenders, such worthy projects can be a recipe for bad debts. China s big banks are unlikely to blow up but deadend loans could weigh on earnings for years to come.

Exxon Q2 stumble highlights long-term challenges

30 Jul 2009

The West s top company missed expectations. The halving of oil doesn t fully account for a 66% decline in profit. Decreasing production and sustained capital spending do. They also point to Exxon s conundrum: oil is getting harder to find and costlier to extract.

Derivatives rules should target low-hanging fruit

30 Jul 2009

Key US lawmakers want standardised derivatives to be centrally cleared and traded on exchanges. But there s little consensus over what standardised means. If the rules try to cast the net too wide, it could bog legislation down or backfire by increasing risk.

Shell keeps dividend, cuts investment

30 Jul 2009

The energy major s new boss faces an old problem the sums don t work for many key projects with oil around $60, and falling natural gas prices make it harder. Voser s response is to axe jobs, cut capex and increase debt, but maintain the dividend. That may not be sustainable.

Andrew Cuomo provides roadmap to Wall Street riches

30 Jul 2009

The NY attorney general s Heads I win, Tails You Lose report adds little to the debate over bonuses with one exception. His aggregation of individual compensation provides a tip sheet on which bank is most likely to make you a millionaire.

Reed Elsevier finds capital raising costly

30 Jul 2009

The publishing group is adding 10% to its share count through a cash box placing avoiding preemption rights. The new cash should preserve its credit rating. But this first big move from a new boss irritated already disgruntled shareholders. The shares plunged 15%.

Rail woes give UK chance to rethink privatisation

29 Jul 2009

The crisis hasn t done any favours to the old private good, government bad thinking. The return of one big privatised rail franchise to the UK government provides a good opportunity for a privatestate comparison. Who knows, the Tories might end up the party of nationalisation.

Wall Street-Washington divide is grey and messy

29 Jul 2009

BlackRock and Goldman courted a US government pension official, perhaps too eagerly. He sought their help, perhaps too freely. But the former PBGC boss s contacts presumably helped qualify him for the job. Rules can t outlaw human nature or substitute for judgment.

Bear case for BBVA and Santander harder to justify

29 Jul 2009

Spain s biggest lenders are the latest banks to beat expectations with their results. Cost control and wider margins are offsetting rising loanloss provisions. While conditions in Spain will only worsen, the prospects for other markets especially Latin America are improving.

Yahoo’s retreat in search makes it look like AOL

29 Jul 2009

The internet company has agreed to let Microsoft handle its users web search queries in exchange for a big cut of revenue. Handing over the keys to its rival will boost margins. But Yahoo s new business strategy is unsettlingly like that of internet alsoran AOL.