Year: 2009

Merkel may not be able to stay tough on Opel

24 Mar 2009

The German chancellor has so far resisted calls for pouring money into Opel, GM s German subsidiary. She says she s ready to extend loan guarantees to a possible private investor. But if she can t find one, there won t be many options left.

Obama should end bonus-tax madness

23 Mar 2009

The President is uncomfortable with legislation that would retroactively tax bonuses paid by the largest Tarp recipients. He should go further and actively oppose this misguided proposal. Here are six reasons to stay away from revenge taxation.

Bailouts will hobble US economy, even if they work

23 Mar 2009

The latest bad bank plan sounds plausible. But with a huge budget deficit, massive lending support and mortgage rescues in the pipeline, lots of government money is flowing to economic losers. Throw in excessive federal borrowing, and the headwinds to a recovery are rising.

Steve Cohen’s Sotheby’s bet is no pickled shark

23 Mar 2009

The hedge fund manager has amassed a 6% stake in the auction house. Luckily for Cohen s investors, this bid looks smarter than some of his personal art indulgences like paying $8m for a poorly preserved shark in formaldehyde.

Seat PG shows how not to restructure

23 Mar 2009

The Italian yellow pages company is in dying industry. It has a E3bn debt pile. The CEO is leaving. But it wants to raise E200m of new equity in a bizarrely structured 226for5 rights issue. One big investor has already said no. Retail investors may be less smart.

Suncor surfaces from oily sludge with $15.5bn deal

23 Mar 2009

The Canadian oil company is a leveraged play on dirty, highcost oil sands. Buying PetroCanada reduces Suncor s exposure to oil price fluctuations for better and worse. Substantial savings should please shareholders, however.

No easy arb profits in HSBC rights issue

23 Mar 2009

In theory, arbitrageurs would be all over the bank s $18bn capital raising, especially as plenty of shareholders are selling their rights. The problem is, owners don t want to lend the stock to hedge funds. Regular investors may have a chance to succeed where arbs fail.

Geithner juices up subsidy for bad bank plan

23 Mar 2009

The besieged US Treasury secretary has finally delivered a plan and it appears more feasible than anything that s come before. There are still potential problems, including the government s generous provision of cheap debt. But at least it sounds like a plan, not a pipedream.

Daimler scores good deal with Abu Dhabi

23 Mar 2009

The German carmaker gets E1.9bn at a tiny discount and avoids having to turn to the German government. The emirate is betting on longterm strategic benefits. After losing on a string of financial bets, Abu Dhabi, like China, now appears to be focused on finding strategic value.

Myners shouldn’t carry can for Goodwin bonus

23 Mar 2009

Calls are mounting for the UK Treasury minister to quit because he let the former RBS boss get a £700,000 pension. But remember how that weekend last October Myners was also negotiating a £37bn rescue scheme for three big banks. Critics should get a sense of proportion.

French banker-bashing is playing with fire

23 Mar 2009

Wild populism seems to the government s main response to massive demonstrations. President Sarkozy is leading the charge against supposedly diabolical stock options. Such attacks only fan the flames of discontent. The economy could end up crippled.

India exports cricket, profits and prestige

23 Mar 2009

The country s most lucrative tournament will be held overseas because the government can t promise security it's rightly giving priority to the upcoming general elections. The foreign holiday of this revered sport is expensive, both financially and politically.

Hungary adds political to economic crisis

23 Mar 2009

The prime minister has resigned, leaving a political vacuum which could cause a disastrous collapse of the already weak forint. But Hungary seems set to address the problem fast, installing a technocratic prime minister with a mandate to cut spending and restore confidence.

Fully baked Geithner plan produces relief rally

23 Mar 2009

US stocks surged nearly 7% after the Treasury boss unveiled a plan to get toxic assets off bank balance sheets. It wasn t so much that he surprised the market with innovation. But he seems to have overcome earlier concerns about his battlereadiness, at least for now.

Barclays may not get full credit for iShares sale

23 Mar 2009

The UK bank is so anxious to agree a deal ahead of a looming government deadline that it s offering to lend 80% of the funds to a buyer of its ETF arm. Relying on such financial engineering might not cost Barclays much capital. But investors are likely to apply their own haircut.

London might gain from US reverse protectionism

20 Mar 2009

Americans seem hellbent on cutting their bankers down to size. Threats of a 90% bonustax on employees of statebailout recipients will drive the industry s best to consider alternatives. The City will be the first port of call, as long as the UK doesn t succumb to mob rule too.

Sony Ericsson woes could bring split-up closer

20 Mar 2009

A profit warning from the handset maker has got what was expected to be a bad year for the industry off to an even worse start. Parent Ericsson already thinks the joint venture is a drag on its networks business. The latest setback will spur thinking that it s time to get out.

Bernanke risks failing confidence test on QE

20 Mar 2009

For one brief day, the Fed chairman regained the upper hand over frightened markets. But then investors realised quantitative easing buying government debt really is a highrisk gamble. Bernanke needs to show that deflation can be stopped without letting inflation rip.

Dead zone for foreign investment expands

20 Mar 2009

Venezuela s nationalisation of the Grupo Santander unit is symptomatic. When a wellrun bank from a friendly social democrat country can t keep its assets, foreign investment has become impossible. Country by country, the Latin American dead zone is rolling back globalisation.

AIG backlash could endanger global economy

20 Mar 2009

Outrage over the $165m bonuses has turned financiers into devils and further undermined Geithner s credibility. That will make it harder for Obama to ask Congress for more funding to bail out banks. But until US banks are shored up, the whole global economy will feel wobbly.

Cisco’s Flip deal could lead to colossal flop

20 Mar 2009

At $600m, the networking giant isn t splashing out big for the maker of the popular Flip Video gadget. But it s crossing the Rubicon into the mainstream consumer electronics market dominated by the likes of Apple. This feels like mission creep.

Mediobanca shows virtue of staying out of trouble

20 Mar 2009

Cesare Geronzi, boss of the niche Italian bank, has had plenty of legal problems. But the crisis has swept away or crippled many of Mediobanca s rivals, while it rises up European M&A league tables. Geronzi is fulfilling his desire to restore this old name to its former glory.

China cools on Western capitalism

20 Mar 2009

Look at the rough treatment meted out to Coke and to Asia Aluminium s bondholders. Beijing likes markets when they help, but pragmatic nationalism rules. That probably means more protectionist spats at least until global imbalances, which give China the upper hand, are unwound.

Goldman risks biggest black eye in vulture brawl

19 Mar 2009

Buyout firms are plunging into distressed investing. Goldman is the latest to ask investors for their blessing to buy the debt of troubled companies. This could pit one private equity player against another and sometimes against itself. That s especially dangerous for Goldman.

NXP’s $1.9bn debt exchange shows signs of failure

19 Mar 2009

The Dutch chipmaker s attempt to cut debt by offering bondholders a chance to swap their notes for supersenior loans appears to have hit trouble. A mere 10% takeup at the half way stage suggests NXP s private equity owners may have to share the pain sooner rather than later.

Fed’s Treasury purchases may cut into bank profits

19 Mar 2009

One bright spot in the current mess is the relatively healthy interest margins banks earn on new loans. But the US central bank s plan to buy Treasuries has flattened the yield curve, reducing that advantage. If that lasts, it could dampen enthusiasm for lending.

Gold could be set for huge speculative bubble

19 Mar 2009

With the US and other countries monetizing budget deficits, the chance of rapid inflation has surged. The annual production of gold, the traditional hedge, is far below the world s rate of money supply growth. An inflationary panic could thus bring an explosive gold price rise.

Bonus pitchfork mob makes for lousy tax policy

19 Mar 2009

Outraged US legislators are planning punitive taxes on bonuses not just at AIG but at all recipients of government funds. The hotheaded and unfairly retroactive changes could hurt investor confidence, undermine Obama s credibility and damage the still valuable US finance sector.

Exclusive: G20 report on future of finance

19 Mar 2009

Breakingviews has obtained a copy of the blueprint for how the global financial system will be regulated. This report, due to be officially published at the London summit next month, sets out wideranging reforms to stop a recurrence of the current global financial crisis.

Will US bank test stress Kovacevich?

19 Mar 2009

Wells Fargo s chairman may already be on edge he labelled the US government s planned oneoff bank health check asinine . But his headache would really start if the stress test predicts Wells losses top $130bn. That amount of pain would force him to raise more capital.