Year: 2009

Oil surge is mixed blessing for Russian economy

18 Jun 2009

At $70 a barrel, oil prices are back where Russia says it can balance its accounts. But the Russian economy is still in a severe slump, worsened by longstanding flaws including corruption. The danger is that with oil on the rise, reforms might look less urgent.

RBS lets Goodwin off hook but history won’t

18 Jun 2009

The bank s disgraced former boss is returning some of his controversial retirement pot. It looks to be a decision of tact, partly prompted by the threat of legal action. Goodwin can now retreat into exile. But the move comes too late to do much for his tattered reputation.

Heidelberg strikes once-unthinkable E9bn debt deal

18 Jun 2009

The German cement maker s refinancing with 50 lenders shows how far the global banking system has come in six months. The deal isn t cheap, but the alternative would have hurt lenders more. At least now, HeidelbergCement can focus on the equally daunting task of cutting its debt.

BA boss picks tough but necessary fight

18 Jun 2009

Willie Walsh has secured important concessions from the UK airline's pilots, who are recommending that union members accept being paid partly in BA shares. But he hasn t won over all BA s employees. So long as the threat of a strike looms, the airline and its CEO are in trouble.

Mervyn King rightly pulls punches on regulation

18 Jun 2009

The Bank of England boss says banks shouldn t be allowed to be too big to fail and that the BoE needs more powers. But he isn t openly calling for radical remedies such as separating retail and investment banking or combining watchdogs. Fortunately, there are alternatives.

Latest US bankruptcy trend could be slippery slope

18 Jun 2009

Chrysler s restructuring included a swift asset sale under section 363 of the bankruptcy code. Now others, like Eddie Bauer, are trying the same shortcut process. But wider use of section 363 would sidestep creditors rights. Lauren Silva Laughlin explains the dangers.

Magna’s Opel deal looks like all-or-nothing bet

18 Jun 2009

Becoming a competing carmaker could drive off many of the Canadian car parts supplier s clients like Daimler and Ford. That may be worth it if Magna can turn around GM s European arm. If not, the firm risks losing a good chunk of its revenue base for nothing.

US sprinkles new acronyms on regulatory landscape

17 Jun 2009

President Obama wants to make financial products easier for most people to understand. Too bad he isn t doing the same for financial oversight. His reform plan expands the already mindnumbingly complex crazy quilt of US regulatory agencies.

Sainsbury’s fundraising shows canny opportunism

17 Jun 2009

The UK retailer is placing shares and convertible bonds to raise £450m. The move capitalises on the market recovery and warm sentiment towards boss Justin King. But Sainsbury s predatory expansion plans also indicate that its risk profile may have turned up a notch.

Nuclear power solves problems – if money’s cheap

17 Jun 2009

Atomic energy is the best US hope for reducing carbon emissions by 2030. But new plants call for heavy capital investment. To encourage that, the Energy Department s $18.5bn in funding guarantees make sense. Global warming worriers should also hope real interest rates stay low.

Even Lehman stigma can’t stop banker’s rebirth

17 Jun 2009

Mark Walsh, the architect of a real estate deal that helped sink Lehman, has a new gig: sorting out Lehman's property portfolio. It's a striking example of Wall Street's short memory. But former poachers can make good gamekeepers, and the logic holds for Walsh as well.

Gold vending machines are sign of the times

17 Jun 2009

The idea of buying gold from machines at airports seems odd. After all, if the worst happened, why would anyone want to take it with them? But the buzz around the yellow metal makes sense. With both deflation and inflation causing concern, its perceived attributes seem alluring.

Obama plan sensible but patchy

17 Jun 2009

Details of his overhaul of US financial regulation suggest a genuine effort to plug the worst holes. But much of it is a patchwork of tape, filler and dabs of paint. It will look better and could work better. But the best chance in decades of a full rebuild has gone begging.

Twitter’s Iran boost is no guarantee of success

17 Jun 2009

Media around the world are using tweets from Tehran to supplement their coverage of the postelection upheaval. This has given the revenuefree website a credibility boost. But Twitter still hasn t proven it can leverage its popularity to make money.

Research victory points the way for UBS

17 Jun 2009

Investment clients still like the Swiss bank despite its troubles. It has won top prize in Extel s analysts awards for the ninth year in a row. With fund managers griping about the poor quality of research elsewhere, this is an area UBS should be careful about cutting too much.

Buy China policy is worrying

17 Jun 2009

Plans to favour homegrown goods in China s $586bn stimulus won t do much to return Chinese industrial firms to rude health. Such rhetoric is more likely to merely fan protectionist flames elsewhere. Countries with bloated export sectors shouldn t throw stones.

Iberdrola takes cover with E1.3bn cash call

17 Jun 2009

The Spanish utility is raising equity it doesn t really seem to need. After all, it already has a disposal programme in place to cut debt. The cash call looks like an opportunistic insurance policy against any slippage in the planned asset sales.

Tax-deductibility of debt rightly in cross-hairs

17 Jun 2009

Giving companies and households an incentive to leverage themselves to the gills, as many tax systems do, helped exaggerate the bubble and bust. The IMF is now taking a pot shot at the practice. Unwinding these subsidies could be a convenient way for governments to raise cash.

Spanish banks need more than a E99bn bailout

16 Jun 2009

The support package for Spain's troubled savings banks has been a long time coming. But the country's banking sector needs restructuring as much as recapitalising. Luckily, Madrid's bailout proposal seems to recognise this.

BIC nations could have a future

16 Jun 2009

Russia is hosting a Bric conference. The guests Brazil, India and China have much to learn from each other. A combination of Chinese manufacturing, Indian democracy and Brazilian resources and monetary policy would be a worldbeater. Tough to see where Russia fits in, though.

Bond spat is chance for Dubai to prove maturity

16 Jun 2009

The row between investment bank Shuaa Capital and statebacked Dubai Banking Group over whether the former's $400m fundraising was a mandatory convertible seems farcical. A fair and speedy resolution to the spat could give Dubai s standing as a financial centre a needed boost.

Pain still coming for eurozone banks

16 Jun 2009

The ECB says the crisis will cost eurozone banks $649bn of losses by the end of 2010. Only 56% of that has been written off so far. Governments have a choice: allow loanloss water torture to slow the recovery, or start the pain flowing as soon as possible.

US plan for securitisation risk misses the point

16 Jun 2009

The market could benefit from some changes. But forcing lenders to keep 5% of what they securitise is a red herring. Subprime lenders, as well as plenty of banks that have failed, did have skin in the game. But that didn t keep them from taking outsized risks.

Web 2.0 bubble deflates as MySpace slashes staff

16 Jun 2009

Rupert Murdoch s social network was one of the few winners, earning some $200m last year. Now it s cutting 30% of its staff and looks set to lose money when Google renegotiates its partnership. The first internet bubble ended with a bang; this one could be ending with a whimper.

UK property vultures could be circling a while

16 Jun 2009

As borrowers default, the balance sheets of RBS and Lloyds are filling up with unwanted property assets. Equityrich buyout firms like Blackstone would normally be looking to buy. But postbailout, these banks don t have to sell. That will force vultures to swoop elsewhere.

Bankers revert to foolish form

16 Jun 2009

JPMorgan is accusing rivals of undercharging for capital raisings. Meanwhile, multiyear pay deals are back and bankers are flying on private jets again. Some banks greed for market share appears to outweigh the fear of weak profits, unsold shares or the lack of a real strategy.

A field guide to US financial watchdogs

15 Jun 2009

President Obama is set to announce regulatory reforms on Wednesday. While some are potentially meaningful, they may not do much to streamline a system the administration says is riddled with gaps, weaknesses and jurisdictional overlaps. Robert Cyran describes the key players.

Citigroup’s chief executive deserves more time

15 Jun 2009

Though he didn't create Citi's messes, Vikram Pandit is on shaky ground with US regulators, like the FDIC. While he's dithered a bit and botched the Wachovia deal in more ways than one removing Pandit would be unwise. BofA's Ken Lewis, now that's another matter.

Mega-bonuses could stage a quick comeback

15 Jun 2009

Payouts of $10m or more to top earners wouldn t be surprising given the pace of investment banking revenue. It ll reignite taxpayer fury. But their anger should be directed at authorities who provided aid too cheaply. Shareholders may have a more legitimate beef with banks.

Iraqi oil could be China’s consolation prize

15 Jun 2009

Sinopec's mooted £5bn bid for oil producer Addax would give the Chinese petro giant access to Kurdistan and Nigeria, where Western majors tread with caution. It s China s payoff for political isolationism but no substitute for the bigger deals that got away.