Year: 2009

Banks smart to settle Huntsman LBO lawsuit

23 Jun 2009

Deutsche and Credit Suisse had a strong defence in the US chemical maker s suit over its busted buyout by Apollo. But settling for $1.7bn when a Texas jury could have hit them up for seven times that amount is sensible. Even Huntsman shareholders seem to grudgingly agree.

Sick man of Europe: it’s Berlusconi v Italy

23 Jun 2009

It is not just the Italian prime minister s reputation that is withering in the Roman sun. Italy s economy is too. Reform is needed to break a vicious circle of low growth, falling exports and crippling debt. But with Berlusconi otherwise engaged, big change isn t likely.

Anglo rejection shouldn’t be a final no

23 Jun 2009

Xstrata s idea of a merger of equals was totally unrealistic. But a deal has strategic merit. So while it s totally legitimate for Anglo to fight for better terms, it shouldn t dig in its heels so deeply that it torpedoes the chance of getting together.

Markets turn as commodities mow down green shoots

23 Jun 2009

Tumbling commodity prices provoked a rout in global markets on Monday. Risk appetite fostered by stimulus and perceived green shoots is evaporating in a still recessionary world. With the Fed set to withhold further monetary stimulus, the market retreat may not be the last.

Bharti-MTN advisory mandates come with strings

23 Jun 2009

The possible merger of the emergingmarkets telecoms groups will be a big test of M&A advisers appetite for leaguetable credit. Bharti wants advisers to buy debt for the cash element of the deal. And MTN s business in rogue states makes it a tricky client for Wall Street banks.

Shrinking jet-set doomed service for hurried rich

23 Jun 2009

Clear promised that its advanced biometric screening service would make airport security hassles obsolete. All it really amounted to was a $200 annual fee for the privilege of a special queue. That might have appealed in good times, it didn t in bad.

Xstrata can afford decent premium for Anglo

22 Jun 2009

The UKSwiss mining group has proposed a merger with South African rival Anglo American. But it could structure an allshare deal to pay a chunky premium to Anglo shareholders and still create value for its own investors. Breakingviews.com s calculator shows how.

B&B’s CDS holders edging back from the brink

22 Jun 2009

The deferral of coupons on Bradford & Bingley s subordinated debt briefly saw traders take risky punts on whether its credit default swaps might pay out. But now it looks like the staterun UK bank s CDS will pay after all. If so, the CDS market will breathe a sigh of relief.

California needs its own Felix Rohatyn

22 Jun 2009

The longtime Lazard rainmaker rescued New York City from bankruptcy in 1975. California s political landscape is much rockier than New York s was. But a financial wizard like Farallon s Tom Steyer could still help bridge the gap.

Xstrata/Anglo merger-of-equals is a tough sell

22 Jun 2009

Miner Xstrata has put a friendly face on its proposed $70bn mergerofequals with South African rival Anglo American. But Xstrata is really seeking to capitalise on Anglo s weakness. With Anglo wary of a tieup and a hostile deal tough, Xstrata may have to prepare for a bear hug.

Anglo-Xstrata poses management dilemma

22 Jun 2009

With Anglo s CEO Cynthia Carroll reportedly under fire from her own shareholders, the assumption is that Xstrata s dealhungry boss Mick Davis would run the enlarged miner following any deal. But a quick glance at their performance suggests the case isn t so clear cut.

Green shoots abundant, but drooping

22 Jun 2009

The signs of economic stabilisation are becoming more prevalent. Breakingviews.com s Green Shoots Spotter index is seeing a more even spread of good and bad economic newsflow. But there was still just enough ugly news to see the latest survey dip from its previous week s high.

Chinese IPO shows US investor exuberance

22 Jun 2009

Chinese businesses taste for growth and American investors love of risk have hurt both recently. Chemical company Chemspec received a warm welcome from US investors for its plans to fund a big expansion, despite its shrinking margins. It shows many lessons have gone unlearned.

Nigerian foreign bank talk merits cautious welcome

22 Jun 2009

The central bank says it will now allow takeovers of local banks. Despite its email scamming fame, oilrich Nigeria has economic clout and hustling dealmakers. It could become a growth centre for African finance. The challenge, though, will be getting regulation on track.

Online retailers smell a chance of IPO revival

22 Jun 2009

Yoox and Ocado, two European dotcom survivors, are mulling stock market listings. Their models one in grocery, the other in high fashion aren t much alike. But after 10 years, their backers may be keen to take advantage of returning risk capital.

The billion-dollar IPO makes a comeback – in Brazil

22 Jun 2009

VisaNet s selling $3bn of stock. The credit card processor is profitable and growing fast, which should give investors reason to be optimistic. It s also a play on a country whose leftist government's surprisingly prudent policies have put the economy on relatively solid footing.

Fed needs end game for emergency loans

22 Jun 2009

It s still too early to pull the plug on all of its myriad financial rescue programmes. And some are winding down of their own accord. But the financial sector won t reach a healthy equilibrium until the US government withdraws its massive subsidies, Dwight Cass argues.

UBS, Credit Suisse size limit is good last resort

19 Jun 2009

Switzerland is mulling a cap on how big its banking giants can be. The idea goes beyond other toobigtofail proposals. Less radical remedies should come first. But Swiss bank assets are eight times GDP. The Iceland and Ireland disasters make an extreme fallback plan sensible.

Blackberry envy fades with financial crisis

19 Jun 2009

During the boom it was cool to be an investment banker or just look like one. A shiny new gadget from Research in Motion was the accoutrement of choice for wannabe financial engineers. RIM s latest numbers suggest that may be changing.

Crisis brings debt opportunity for Europe

19 Jun 2009

Corporate borrowers have tapped bond markets with record issuance following the collapse in bank loans. They can partly thank lessdiscerning investors swimming in liquidity for the volume. But the general shift in funding is one of the good developments from the crisis.

Glencore takes key role in Xstrata-Anglo merger

19 Jun 2009

As Xstrata s biggest shareholder, the Swiss metals trader could emerge from a $68bn mining merger with juicedup trading revenues, and a more valuable stake to borrow against. The cost? Heavy dilution unless Glencore offers itself up later, in a reverse takeover.

China’s threat to BHP-Rio venture limited

19 Jun 2009

The iron ore deal which scuppered a tieup between Rio Tinto and China s stateowned Chinalco will almost certainly face regulatory scrutiny. But the joint venture looks unlikely to be blocked. Any sanctions China could impose on BHP and Rio could be selfharming.

EU opts for lenient banking regulation

19 Jun 2009

Europe s leaders have reached a tentative compromise on plans for panEuropean regulation of the banking system. UK concerns on fiscal sovereignty have been addressed. Still, new transnational regulatory bodies will be created albeit lacking some teeth.

CIC’s Blackstone interest confirms sea change

19 Jun 2009

China s sovereign fund snubbed Western financials last year. Yet Morgan Stanley, BlackRock and maybe even Blackstone are all beneficiaries of an apparent uturn. CIC might be calling the bottom or just beginning to act like a less politicised investor.

New plan to boost clearing could cut trading costs

19 Jun 2009

EuroCCP is calling on its European clearing and settlement competitors to agree a common operating convention. The idea isn t selfless the USowned mutual wants more business. But it could reduce risk and increase competition. That should mean cheaper securities dealing.

Ex-Sovereign chief Sidhu attempts do-over

19 Jun 2009

Almost three years after being ousted for sparking one of the few bank shareholder revolts before the crisis, Jay Sidhu has landed another job. But investors can rest easy: his fivebranch gig won t allow him to bash investors through empirebuilding again just yet.

Spain needs further dose of realism

19 Jun 2009

The government is now more realistic in its economic forecasts a welcome sign. It has also paid lip service to budget austerity. But Madrid continues to spend with abandon. It must come up with a more concrete strategy to bring the budget back in line.

Remorse, punishment still missing from crisis

19 Jun 2009

Financial scandals should end with drama: heartfelt remorse, highprofile trials exposing extravagant lifestyles and painfully long prison sentences. Despite Stanford s indictment and Madoff s jailtime, there s been almost none of that. Perhaps greed doesn t shock any more.

US plan hastens loss of central bank independence

18 Jun 2009

If Congress approves Obama's reforms, the Fed will get macroprudential powers. That makes its agenda more complicated and political. But the scheme only ratifies reality. The crisis had already killed off the notion that monetary authorities could work in ivory towers.

UK public-sector jobs bloodbath may soak retailers

18 Jun 2009

Tesco and Sainsbury s have been in a more upbeat mood about the UK economy after posting decent quarterly sales. But shopowners aren t in the clear. The recession hasn t hit the public sector yet. When it does, the pain could be severe.