Year: 2009

Waning supply helps underpin oil price rise

13 May 2009

Oil prices have rocketed about 70% in three months. With demand still declining, that owes much to a revival of investor spirits. But there's something else: supply capacity, especially from Opec, is shrinking. With demand recovery in mind, that's a reason to bid up the price.

Crisis makes simplicity harder for ING

13 May 2009

The Dutch bancassurer is making strides cutting risk and getting its house in order. But that couldn t prevent a disappointing Q1 loss. ING has more work to do in managing its exposure to market ructions and economic headwinds.

EU’s idea of a stress test falls short

13 May 2009

The EU s national regulators are planning to conduct stress tests on their banking systems, just as soon as they agree on a common methodology. But these tests wouldn t be bankbybank and the results wouldn t be published. So it s hard to see the point.

History suggests stocks have not yet hit bottom

12 May 2009

The sharp rally has made most investors breathe easier, but this might not be the end of the equity woes. The market s fall looks more like the 1929 US stock market collapse. That pattern and the scale of the economic imbalances point to an even lower low than in March.

Ingenious Dreier out-scammed Madoff

12 May 2009

Sure, Madoff s $65bn fraud was more than 100 times bigger. But he only had to fake his own books. The NY lawyer forged real companies documents, impersonated their people and conned big name hedge funds like Fortress. Such elaborate chicanery should ve been easier to detect.

Microsoft’s debt offer matters – to Microsoft

12 May 2009

The software giant is set to issue nearly $4bn of bonds. It doesn t need the cash, not with a $170bn market capitalisation, prodigious cash flows and no debt. But the rapturous reception of Microsoft s first ever bond issue says more about the company than the credit markets.

Credit hedgers not all villains in GM saga

12 May 2009

Some fear hedged bondholders will oppose the US government s deal because they can reap gains on CDS contracts by tipping the carmaker into bankruptcy. But they probably hedged before GM s trouble became acute meaning they re not just opportunistic speculators.

Even China can’t live on stimulus alone

12 May 2009

Beijing can tell its workers to build, but it can t tell its customers to buy. Exports fell 22% in April. If trade doesn t return, China might run out of holes to dig before its consumers are ready to take up the slack. Maybe that s why it s bankrolling Uncle Sam's recovery too.

Germany can’t dodge bad bank dilemma

12 May 2009

With elections looming, politicians understandably want a scheme that s easy on taxpayers and tough on shareholders. But banks won t accept a deal they can t afford. If the government wants to boost lending, it may have to supplement the bad bank scheme with capital injections.

Porsche should come clean on its VW options

12 May 2009

The chairman of Volkswagen wants Porsche to deal with its debt problems before the planned merger of the two German automakers goes ahead. He s right. Porsche is E9bn deep in debt, with some sort of options to buy another 20% of VW. It should disclose the details.

UK bank insurance scheme must address conflicts

12 May 2009

The government's asset protection scheme has restored confidence to Lloyds and RBS. But the support package creates several potential conflicts of interest that will need rigorous policing if taxpayers are to be protected, says George Hay.

Dubai: no green shoots in the desert

12 May 2009

The crisis came late to the emirate, where the mood was frothy until eight months ago. Dubai still has gargantuan debts and a real estate slump that is far from over. But recent support from cashrich neighbour Abu Dhabi at least suggests Dubai will survive to see a recovery.

Bank chiefs should justify paying back Tarp

12 May 2009

Throwing off the government yoke seems like a nobrainer: no more retroactive political meddling, for starters. But Tarp is cheap capital and removing it often means diluting shareholders. Paying it back may still be the better move. But bank bosses should spell out why.

Private equity memories shorten for iShares

11 May 2009

Buyout firms are queuing to gatecrash the £3bn deal CVC struck for Barclays exchangetraded fund arm. Sure, iShares leads a highgrowth market and there s vendor financing. But that was all true three months ago, when the auction started. These suitors look a little braver.

Stress tests provide sort-of blueprint for US reform

11 May 2009

The examinations forced various regulatory bodies to cooperate. And comparing banks against each other mitigated the Lake Wobegon effect, where everybody in isolation is above average. However it's structured, that's what a revamped prudential oversight regime should do.

Risky finance: Barclays CDOs in Ruritania

11 May 2009

Arrests at a bank based in an Italian tax haven, along with the seizure of its consumerfinance subsidiary, raise uncomfortable questions about Barclays decision to sell CDOs to the lender, writes Nicholas Dunbar.

Ford launches smart union arbitrage with $2bn stock sale

11 May 2009

The US carmaker s shares have tripled in less than two months, allowing the carmaker to raise cash to pay its healthcare liabilities without diluting its shareholders as much as originally feared. That should please bondholders, too.

HSBC’s rights issue looking wise after Q1

11 May 2009

The bank s latest results look good even though they are flattered by gains on its own debt. The wholesale performance is especially impressive. But with higher bad debt charges countering resilient revenues, HSBC must be glad to have bagged £12.5bn from March s rights issue.

Tui board needs urgent shake-up

11 May 2009

A dissident shareholder in the German group is seeking a boardroom overhaul at this week s AGM. The register may be dominated by Tui customers who also sit on the board. But that s all the more reason for independent shareholders to protest at Tui s poorperforming management.

New US antitrust chief sticks nose in bank regulating mix

11 May 2009

The stress tests enshrined 19 financial institutions as too important to fail. Banks may decry the resulting regulation, but this status confers huge advantages in attracting deposits. This is the cue for Obama s new DOJ watchdog to enter the fray.

How do you say debauch in Chinese?

11 May 2009

The authorities in Beijing don t like what they see in Washington and London. Governments that print money to buy their own debt often end up devaluing the technical term is debauching their currencies. The Chinese are right to worry, even if they don t hurry a crisis along.

US unemployment may blow up stress test parameters

8 May 2009

The rise in joblessness matches only one postwar recession, and is following the worst case stress test track. Since stress test loss calculations were based on backwardlooking data, if unemployment soars into uncharted territory there could be some nasty surprises.

Art makes poor hedge against inflation

8 May 2009

Last week s auctions at Sotheby s and Christie s were bad but far from dreadful. Many observers credit wellheeled collectors prepping their vaults for inflation. History suggests art prices rise during inflationary times. But unpredictable trends make art a poor hedge.

Carphone Warehouse feasts on Tiscali scraps

8 May 2009

The British broadband operator has agreed to buy most of its Italian rival for £255m in a firesale, a year after Tiscali was put on the block. Founder Renato Soru gets nothing and Tiscali s lenders are left to fight over the remains. Carphone s patience has won it a bargain.

RBS rightly accentuates the negative

8 May 2009

The statecontrolled UK bank has made some baby steps to recovery. But RBS isn t being seduced by the investment bank s strong firstquarter results. Instead, management took pains to emphasise how much borrowers are suffering. Shareholders don t seem to have got the message.

Fannie and Freddie still the biggest zombies

8 May 2009

Fannie lost a whopping $23bn in the first quarter amazingly, less than in the previous two periods. The US Treasury will keep it solvent and has quietly doubled its combined commitment to Fannie and Freddie to $400bn. Both should be delisted and put on the government s books.

Toyota’s cash lessens pain of huge losses

8 May 2009

The Japanese carmaker burned up $6.9bn in the fourth quarter, hit by a strong yen and the US tumble. This year is set to be worse: a 20% sales drop and an $8.5bn loss. But a tank full of cash and good technology should get Toyota across the chasm to thrive on the other side.

Strong US regional banks should eat the weak

7 May 2009

Some local heavyweights FifthThird, SunTrust, Regions and KeyCorp fared poorly in the stress tests. Even if they recapitalise they ll be weakened creatures. It s in the interests of regulators to encourage healthy banks like US Bancorp, PNC and BB&T to take them over.

Irony of stress tests: banker fee bonanza

7 May 2009

Wall Street could feast on $3bn of fees 12 times what they earned on financial stock issues so far this year by underwriting governmentmandated equity issues. Bored bankers at Merrill may finally have reason to applaud their new bosses missteps.

SocGen still in the woods

7 May 2009

Société Générale reported a surprise E300m loss and E1.5bn of writedowns, just one day after domestic rival BNP Paribas beat expectations with a E1.5bn profit. The deep recession means the retail business won t soon replace the once stellar corporate bank as profit booster.