Year: 2009

Porsche must drink bitter cup of VW retribution

18 May 2009

Volkswagen has suspended talks on its merger with Porsche. The luxury German carmaker owns 51% of its much larger German rival. But Porsche s pushiness has not paid off. It is weakened by debt and German politics. Volkswagen has the means to drive a hard bargain.

US investors don’t need a Shareholder Rights Act

18 May 2009

Many elements of the bill being introduced in the US Senate are laudable: say on pay, an end to staggered boards and separation of the CEO and chairman roles. But shareholders are already tackling these matters themselves. A blunt act of Congress is the wrong way to proceed.

An Ackman duo could do Target some good

18 May 2009

The activist hedge fund manager wants five seats on the US retailer s board. That s a stretch. But splitting the difference and electing him, plus one of his delegates, would bring fresh eyes to the board and benefit all shareholders.

Less to Nomura’s US expansion than meets the eye

18 May 2009

Adding topnotch equity teams isn t a bad start for the serial Wall Street wannabe s latest attempt to bulk up. But history shows that cracking the US market usually takes years, even with a major acquisition. And as Nomura knows too well, failure is more likely than success.

GM-like ultimatum might solve California disaster

18 May 2009

The state is about to vote on proposals to curb its $42bn deficit. All look set to fail. Now it needs the federal government to backstop its borrowing. That gives the feds leverage. As with GM, they should demand California make crucial changes before it gets any support.

Dividend isn’t thorniest issue for M&S’s Rose

18 May 2009

The UK retailer s boss is well known for underpromising and overdelivering. That tactic may work again this week. After reports of a 50% dividend cut, anything less drastic might sound good. But M&S faces more painful challenges to get the business right and to replace Rose.

Indian election delivers much needed stability

17 May 2009

Fears that the economic crisis would bring political chaos have proven wide of the mark in India. The world s largest democracy has given the ruling Congressled alliance a decisive victory. The next government will have a freer hand to make reforms. Investors should be relieved.

Blank’s exit from Lloyds is good for all sides

17 May 2009

The orderly departure of the UK bank s chairman helps shareholders, including the state, who will get fresh leadership to restore confidence. The government gains from solving a tricky succession. And in doing the honourable thing, Blank starts repairing his own reputation.

Property woes test Goldman conflict management

15 May 2009

The investment bank is famous for neatly managing potential conflicts when it takes multiple roles in a situation. Asking investors to pump cash into its Whitehall real estate fund while collecting fees on the bailout will be a big test of its skill at keeping the peace.

Thales coup tramples governance standards

15 May 2009

Planemaker Dassault bought 26% of the defence electronics group, but promised it wouldn t try to manage the larger company. Now it has teamed up with the French government to do just that, by unseating its CEO. That s bad for minority shareholders and for Thales business.

Barclays stays on course despite BGI u-turn

15 May 2009

The UK bank is in talks to sell asset management for $10bn, belying previous assertions that the unit is core. Capital constraints explain part of the strategic reversal. But the proceeds will fund expansion elsewhere. That s consistent with a singleminded pursuit of growth.

Eurozone shrinkage pushes up odds of deflation

15 May 2009

The pace of decline has been shocking. Germany has lost three years growth in just two quarters and the fall isn t over yet. Rising unemployment could push markets and prices down, encouraging the ECB to print more money. So deflation now could mean inflation later.

US should heed bank workout guru Seidman’s lessons

14 May 2009

The key man in resolving the US S&L crisis, William Seidman, died Wednesday. He focused on resolving troubled assets, allowed the private sector to make money and stressed the benefits of speed. His methods were almost unique in the public sector and would be hugely useful today.

Virtual goods bring web companies real money

14 May 2009

Selling nothing for something is the perfect business model. Crazy as it sounds, the sale of virtual gifts, services and other fictitious trinkets on the internet is becoming a big business. Yet while billions will be made, this madeup industry faces very real barriers.

Cuomo claims Spitzer’s mantle in Carlyle deal

14 May 2009

The LBO firm isn t implicated in New York s paytoplay scandal. But it has agreed to pay $20m, sworn off middlemen when pitching pension funds and signed up to a new code of conduct. The attorney general may reform behaviour nationwide the way Spitzer did with research.

SABMiller finds traditional recipe for growth

14 May 2009

The intrepid beer giant just opened a brewery in Sudan. Such expansions are helping, but more conventional techniques brought most of the resilience in a tough year. Tight cost control and hefty price increases worked wonders and that was with ingredient costs at record highs.

Can another ex-McKinsey broker run Morgan Stanley?

14 May 2009

That s a question for the Wall Street firm s board as it mulls a successor for John Mack. Brokerage boss James Gorman is an internal frontrunner. But he'll have to do better than Phil Purcell, who had a similar pedigree, to win over the investment bankers. Rob Cox explains.

Wheels of justice could grind Countrywide’s boss

14 May 2009

Prosecuting financial crimes is difficult. US securities law is complex and open to interpretation; defendants have pricey lawyers. Of highprofile cases, only those that capture the public s anger tend to result in convictions. Countrywide s Angelo Mozilo might play this part.

Bumper US share deals put sellers in a quandary

14 May 2009

May s recordsetting pace for secondary sales proves some investor appetite has returned. But rushing to market risks swamping demand and hurting pricing while waiting too long leaves sellers prey to bad economic news that could close the window.

KBC’s third bailout taxes Belgium’s finances

14 May 2009

The troubled financial group will get government guarantees on E20bn of toxic assets after announcing a E3.6bn loss in the latest quarter. Belgium has also rescued the local operations of Dexia and Fortis. It looks like the black hole of European banking.

BT kitchen-sinks one of its problems

14 May 2009

The British telco reckons a £1.3bn charge on Global Services will be the last. BT will restructure the sick unit. It's also mulling a faster rollout of fibre and will pay a shrunken dividend. But the pension review isn t finished; the outcome could yet spook investors.

Accounting tricks can’t hide huge US need for cash

14 May 2009

The Obama administration wants to keep some bailout spending off its books more than $500bn for the IMF, part of the Tarp cost, and the Fannie and Freddie bailouts. This could improve budget deficit optics, but it won t change the borrowing need and that s the real test.

Apologies without penance fall a little flat

14 May 2009

The heads of Allied Irish and Candover are the latest to say sorry unreservedly and immensely. No one can look into the hearts of disgraced bosses, but some regrets do seem tainted by psychobabble and spin. What is needed is better behaviour, to keep away future humble pies.

US regulation revamp could let insurers slip leash

14 May 2009

The systemic risk and resolution schemes for big institutions under consideration in the US increase the odds that the federal government will end up regulating insurance, supplanting state watchdogs. Unfortunately, that has the potential to increase the industry s risk.

Regulators further fetter Intel’s quasi-monopoly

13 May 2009

Dominance hasn t led to growth. Despite selling 80% of all microprocessors, Intel s revenues have expanded a mere 1% a year since 2000. Customers just aren t shelling out for new, faster chips. And more antitrust problems witness the EU s E1bn fine will add to its headaches.

US credit card law has silver lining

13 May 2009

Banks are lobbying furiously against legislation that would restrict a host of common practices. They say it will force them to cut credit to weak borrowers. But they re already doing so. And if it makes banks manage their credit risks more intelligently, that s a good thing.

Obama should keep politics out of pay regulation

13 May 2009

He s right to want bank pay to reward longterm performance rather than big shortterm bets. But micromanagement of dollar compensation, say and headline grabs like the punitive bonus tax Congress tried with AIG are bad policy. Broader, commonsense rules are the answer.

Credit Suisse’s life swap should be lucrative

13 May 2009

The investment bank has a product that lets UK pension schemes protect against retirees who live unexpectedly long lives. CS is taking on a risk that s hard to hedge away. But it has one advantage. Nervous scheme managers have only one alternative a costly buyout.

Obama’s derivatives revamp has troubling loophole

13 May 2009

Overall, the plan is reasonable. Centrally clearing standardised products, requiring dealers hold sensible capital and demanding more disclosure makes sense. But unless bespoke products can be brought to heel, banks may focus on more profitable but riskier complex instruments.

Default by Aston Martin owner tests Islamic finance

13 May 2009

Investment Dar, the Kuwaiti firm that bought the luxury carmaker, has suspended payments on its $3.5bn debt. Sharia law provides no precedent for what happens next. Credit Suisse has proposed a restructuring. Dar s creditors might lose badly if they put up too much of a fight.