Year: 2009

History offers BofA-Merrill some crumbs of comfort

6 Apr 2009

The bank's beset by merger strife, losing star talent with more to come and in hock to the US government. The good news is that previous messy mergers, like CSFBDLJ and JPMorganChase, found their feet. But it took a while, destroyed value and their architects had to go.

Italy stands to gain from end of tax haven secrecy

6 Apr 2009

Offshore accounts are thought to be worth a third of Italy s GDP. The government has lost out big time on taxes, but it could get some back now, as pressure on tax havens mounts. A criminal amnesty and a modest tax on repatriated funds could cover two thirds of the 2009 deficit.

Inefficient Market: Animal spirits and the crisis

6 Apr 2009

The credit crisis didn t come about because animal spirits took flight, argues Edward Chancellor. Rather, the progress of events supports the view that animal spirits reflect underlying credit conditions.

Twitter: is it a fad or the future?

6 Apr 2009

The online instant update service has become a media sensation and a supposed target for the likes of Google and Facebook. Jeff Segal investigates whether the moneylosing operation is an overhyped flash in the pan or a real business opportunity.

Not all sellers are adjusting to the new M&A

6 Apr 2009

Dealmakers like the US lawyers and bankers gathered in New Orleans last week were hopeful that the expectations of buyers and sellers are aligning. But deals like IBMSun Micro s, now on the rocks, suggest such optimism is premature.

US curbs on egregious CEO pay still fragile

6 Apr 2009

Boards are cutting executive compensation slightly while referendums on pay are multiplying. Yet progress in giving investors more say could slip once the economy recovers. Changing broker voting rules in the US now would guard against that.

G20 learns the awful truth about tax havens

3 Apr 2009

No, it s not that these pesky principalities and primitive jurisdictions have been effective. Everyone knew that. The sad fact is that it s so easy to close these tax harbours. Just threaten to make them pariah states. So why did it take so long? And will the resolve stick?

G20 to bail out bank bondholders

3 Apr 2009

Although it isn't spelt out, that s the implication of one of their papers and confirmed by knowledgable people. Regulators are too afraid of the knockon effects of even subordinate debt defaults. The quid pro quo is that such debt will, in future, not count as capital.

US jobless rise portends drop in real wages

3 Apr 2009

Job losses now total 5.1m and the increase in unemployment is now topped by only one postwar recession. Only the over55s are adding jobs, forced to work by the hit to their savings. Real wages are still rising, but they are likely to drop, probably through resurgent inflation.

Rothschild’s sixth arrow lost over the Pacific

3 Apr 2009

The royal family of finance was once known for its five arrows, or commercial centres. Beijing won t be the sixth. Regulators stopped Bank of China from taking 20% of a Rothschild bank. Wicked whispers abound, but Beijing has probably done both sides a favour.

TCI exits Deutsche Börse with mixed legacy

3 Apr 2009

The hedge fund is selling out of the German exchange four years after blocking the group s bid for the LSE. TCI scored a win for activism. But its aggressive tactics tarnished hedge funds, and European shareholders are still reluctant to attack underperforming companies.

G20 deserves 7 out of 10

2 Apr 2009

The London summit hasn t solved everything. But it has made important strides in both battling the current crisis and preventing future ones. Edward Hadas and Chris Hughes grade the world s leaders on the top 10 issues.

G20 deserves better protests

2 Apr 2009

The global mismanagement of the financial system has led to a deep recession, risky policies and intellectual paralysis. There s room for a coherent alternative worldview. But the small band of demonstrators in London offered only the senseless slogans of a hippie festival.

Ping An holds key to BNP-Fortis merger

2 Apr 2009

A Belgian court has yet again disrupted the sale of the troubled Belgian bank to its French rival. The latest ruling lets the Chinese insurer make or break the deal. China s relations with France are frosty these days, so BNP won t be able to count on Beijing s support.

Will IMF use its extra $500bn booty wisely?

2 Apr 2009

Eastern Europe, in particular, needs help to avoid collapse. But to make effective use of the new war chest promised by the G20, the IMF will need to channel funds to the private sector not its natural forte. This could be a pro bono opportunity for unemployed bankers.

US tax enforcers find first alleged rich villain

2 Apr 2009

A Florida yacht financier has been locked up for at least a week for allegedly using the newly forthcoming UBS to dodge his obligations to Uncle Sam. Others worried about lessthancomplete financial disclosure should be ringing their accountants phones off the hooks.

US should heed IMF’s toxic warning

2 Apr 2009

Dominique StraussKahn says G20 nations haven t done enough to clean up their banks balance sheets. Progress has been made in some countries. But the real weakness remains the US, which still only has half a plan. It needs to do two things to complete the job.

UK house-price slump has further to go

2 Apr 2009

By one measure, UK house prices could be near fair value. A survey showed them rising in March for the first time in 17 months. But housing slumps usually overshoot, and need consumer optimism to turn. There s not much of that around. There could be room for another 20% fall.

Convertible market flips back to life

2 Apr 2009

After several months of silence, US companies rushed to issue convertible bonds in the last week of March. As long as balance sheets are stretched, stock volatility is high and investors think share prices have bottomed, the trend has room to run.

Enough already from Hank Greenberg

2 Apr 2009

He s right that AIG s leadership since 2005 and its bailout have been disastrous. But he thinks only someone as smart as him can manage the insurance empire. In reality, the best gloss is that he created a beast only he could control. He should admit that failure or keep quiet.

Why Motown needs harsher treatment than Wall Street

2 Apr 2009

The US has pumped much more cash into big banks but is only threatening car makers with bankruptcy. That seems harsh. But it's fairer than it looks. Sure, Detroit can point to egregious financial sector examples. But Motown s longbroken model requires a heavy hand to fix it.

US Congress beats sensible bonus retreat

2 Apr 2009

Lawmakers took note of reaction to their last bill, with its 90% tax. This one tones down the righteousness, suggests relatively thoughtful guidelines and leaves implementation to the Treasury chief. Of course, if they feel he blows it the politicians will be back with a fury.

Taylor Wimpey needs a deeper debt revamp

2 Apr 2009

The UK house builder s imminent deal with creditors may avert a shortterm covenant breach, but still leaves the group saddled with excessive debt. Unless the UK housing market makes a superspeedy recovery, TW will almost certainly need a second plan to get it on an even keel.

Wall Street milk round for MBAs runs dry

1 Apr 2009

Business school students face bleak prospects. Landing a Wall Street gig looks difficult for the same reason it s hard to place new assetbacked debt. A shrinking and cautious finance industry means lots of already seasoned assets are available at cheap prices.

Is Facebook gearing up for an IPO?

1 Apr 2009

That s the talk of Silicon Valley after booting its CFO for Netscape s former finance chief. An IPO seems risky given Facebook s model is still unproven. But the capital it raised in better times may have had strings attached that could force an offering.

UK bank rescues heighten restructuring complexity

1 Apr 2009

RBS and Lloyds are putting risky corporate loans into the UK assetprotection scheme, capping future losses. That could drive a wedge between them and other creditors if borrowers have to undergo a restructuring. It may also see fewer distressed loans sold cheaply to hedge funds.

Wall Street’s legal eagles feel pain too

1 Apr 2009

Investment bankers aren t the only ones with time on their hands. US corporate finance lawyers also have a lot less to do. With M&A and ECM moribund, some are trying to learn the bankruptcy code or taking sabbaticals. Others are simply out of a job.

UK state may not end up with majority of Lloyds

1 Apr 2009

A month ago, the UK bank s shares were so cheap that the government looked likely to end up taking common shares for its £4bn of prefs, giving it a majority. But the shares are now well above the conversion price. Ordinary shareholders could give the state some welcome help.

Running the numbers on NXP’s debt exchange

1 Apr 2009

Only a fraction of bondholders took up the exchange offer, while nearly half Freescale s holders agreed to its recent deal. It looks like NXP needed to offer a sweeter deal. Breakingviews provides a calculator to help do the debt swap maths.

Sarkozy goes for populism with G20 threat

1 Apr 2009

The French president says he ll walk out of the G20 meeting if it doesn t produce results. Most likely, Sarko just wants to boast to the French that he has got something done. That s childish. And if he s serious about this empty gesture, that s irresponsible.