Year: 2009

Lloyds stalemate turning into farce

6 Mar 2009

The UK bank was meant to have agreed its badasset insurance with the government last Friday. There s still no deal, and the shares have since fallen 30%. Lloyds is right to fight for its shareholders. But with confidence in the banks shot, someone needs to bash heads together.

How Sarko sent Siemens into Russia’s nuclear embrace

5 Mar 2009

Siemens has signed up with Rosatom, the Russian stateowned nuclear agency. That will create a stronger competitor for French powerplants maker Areva, Siemens traditional partner. This wouldn't have happened without President Sarkozy s illadvised meddling.

Tough gilt auction likely to be first of many

5 Mar 2009

It was only £2.5bn of 30year paper, a smidgen of the £150bn the UK government will issue this year. But demand was unhealthily low. Investors are right to worry about the flood of debt and a government that can respond to a buyers strike by printing the money it needs.

Citi needs a Justice League board of directors

5 Mar 2009

Above all, the bank needs credible directors unafraid to ask tough questions. But given Citi s future, the board could use also the superhero powers of Buffer Woman, Distresso, Utiliton, Captain Workout and The Breaker.

China doesn’t need to supersize its stimulus

5 Mar 2009

Hopes for a bigger boost to China's mammoth $585bn spending plan proved false. That s no big deal. The existing stimulus seems to be helping China's industrial sector enough to keep mass unemployment at bay. The other goal a growth rate above 8% isn t worth pursuing anyway.

MySpace may slow but Murdoch’s in the money

5 Mar 2009

The mogul s purchase of MySpace looked kooky at the time. But it's been a lesson in good timing. Even if its headiest years of growth have passed, as some defections suggest, News Corp made it pay off.

Aviva capital fears overdone

5 Mar 2009

The insurer held its dividend after ending 2008 with a comfortable capital cushion in spite of savage unrealised investment losses. Its reward? A 30% shareprice drop. That s harsh. Aviva is well diversified, well hedged and can afford the payout.

TPG and Apollo salami slice Harrah’s creditors

5 Mar 2009

The casino company controlled by the LBO firms is asking bondholders to take yet another haircut in a debt exchange. The prices on offer look tempting relative to market. But creditors set precedents and expectations each time they acquiesce. It s time to get tough.

Investors should demand ultimate Ford family sacrifice

5 Mar 2009

The carmaker needs investors to accept losses and dilution and may come back for more. But dualclass shares grant the Fords 40% voting control. As quid pro quo, shareholders should demand they be scrapped. By agreeing, the Fords could show that all stakeholders are mucking in.

Ford raises restructuring bar for rivals

5 Mar 2009

The Motown carmaker has launched a $10.4bn debt exchange offer soon after striking a tentative deal with unions. The deal is tough on lenders, but makes Ford s governmentdependent peers look like they re dragging their heels. Ford s not out of the woods. But it s getting closer.

Google should Google this: dividend

5 Mar 2009

By 2010, the search giant should have $21bn of cash piled up. CEO Eric Schmidt says the company plans to sit on it. Google can finance acquisitions from cash flow, and it s no longer the growth stock it once was. It should return money to shareholders.

Oil majors plan to tough out cheap oil

5 Mar 2009

The precipitous drop in the oil price has not led to cuts in investments or dividends at BP, Shell and Exxon. Yet production costs are still too high for comfort. The producers expect oil to recover, or costs to fall. It looks like a reasonable bet for now.

Talf could be a steady earner for investors

4 Mar 2009

The US government s trilliondollar scheme to kickstart the assetbacked securities market poses risks for taxpyayers and will further distort the capital markets. But handing out cheap loans could be a boon for hedge funds, banks and the like.

Maybe Brazil will samba to Citi’s rescue

4 Mar 2009

At the very least, the country s biggest private bank may be of assistance. Fresh from a big merger at home, Itau is in better shape than US and European banks. Buying Banamex from Citi would fulfil its ambitions to create a regional powerhouse and bolster Citi s capital.

Europe should stand up to GM’s blackmail

4 Mar 2009

The US car maker has asked for more than E3bn from Germany and other EU countries to keep its European operations running. Governments should but won't let factories close. If they pay up, they should at least take over the business. And get started on restructuring.

US keeps market guessing on stress tests

4 Mar 2009

The government has outlined the scenario it will use to stress test the adequacy of banks capital. But it hasn t revealed how big a cushion it wants banks to have left in this adverse scenario. That may be because it doesn t know how big a cheque Congress will let it write.

Eastern Europe needs to show a united front

4 Mar 2009

The region is making an uneven attempt at tackling its crisis. Austria has agreed a bank bailout, while Poland wants to limit financial speculators. Meanwhile, some central bankers are complaining about media coverage. They d do better to decide on a common plan of attack.

Personal view: Revenue could be a good indicator of bank risk

4 Mar 2009

The G20 looks set to embrace the leverage ratio as a way to complement the Tier 1 capital ratio. But it s oversimplistic. An alternative backstop to gauge a bank s health would be to look at capital as a proportion of revenue, says Jeffrey Goldfarb.

JPMorgan Cazenove’s success creates conundrum

4 Mar 2009

The UK investment banking joint venture between JPMorgan and Cazenove is thriving. A clump of big equity deals meant revenues fell only 10% last year. The dynamics for 2009 are good. But the triumph makes it harder for JPMorgan to decide whether it should take full control.

World needs more trade credit, and fast

4 Mar 2009

The IMF has warned the downturn in global trade threatens a new chapter in the financial crisis. The problem is exacerbated by a shortage of trade finance. Governments should take notice. A boost in trade credit could keep problems in the weakest nations from getting too nasty.

US regional bank payouts highlight differing fates

4 Mar 2009

US Bancorp slashed its dividend, as did PNC last week, while BB&T increased its quarterly payout. Cutting dividends rebuilds capital and speeds the escape from Tarp. Conversely, a high dividend yield supports the stock price. But that's only for banks that can afford it.

In Vegas, the house doesn’t always win

4 Mar 2009

Ask Kirk Kerkorian. It s nearly impossible to see how the ancient financier can salvage his 54% stake in MGM Mirage. The casino operator can hardly meet interest payments. A debt restructuring that wipes out shareholders looks like the only option.

Economic nationalism toxic for Silicon Valley

4 Mar 2009

The economic downturn has renewed attempts to restrict visas for skilled immigrants to the US. Foreign workers are the lifeblood of Silicon Valley, where they found half of all startups. The US must be wary of scaring off more Googles, Intels and Ebays.

New chairman signals new priorities for UBS

4 Mar 2009

The Swiss bank installed its general counsel as chairman last year, correctly anticipating a legal onslaught. Peter Kurer did all he could in near disastrous conditions. The main battle now is political, so Kaspar Villiger, an exSwiss finance minister, looks right for the job.

True socialists should support labour reform

4 Mar 2009

It s a lesson Spain s prime minister hasn t learned. Zapatero thinks loosening tight labour restrictions would be antisocialist. But failure to reform would be worse for Spanish workers particularly those Zapatero most wants to protect: women, immigrants, and the young.

Masonite bankruptcy is taste of senior lender pain

3 Mar 2009

The KKRowned door maker says senior secured creditors will get new loans worth just 20% of their original principal, plus equity. That reflects the stretched capital structures created during the credit boom. Expect senior lenders to recoup less than anticipated elsewhere, too.

AutoZone is only a faint bright spot for Lampert

3 Mar 2009

The carparts chain is now the US hedge fund manager's largest stock holding and its business is going well. Unfortunately, it's only Lampert's biggest holding because shares in retailer Sears have plunged in value. Even more unfortunately, he's still running Sears himself.

US stimulus changes bankruptcy calculus

3 Mar 2009

A change allows companies to do exchange deals that reduce debt without taking a tax hit. The rule change will encourage restructurings outside bankruptcy and give private equity and other company owners more ways to avoid pushing a company over the edge.

StanChart’s strength belies Asia’s weakness

3 Mar 2009

The UKlisted bank has raised its dividend after growing profits and taking market share in 2008. But the economic backdrop is alarming. Trade is now drying up across Asia. Stress on corporate borrowers is increasing. Expect these and other negatives to hit StanChart this year.

Off-Target Ackman shows single-stock fund folly

3 Mar 2009

Yet another stupidity of the hedge fund bubble has been exposed. Pershing Square s blind and soupedup bet on the US retailer is down 93% three times worse than the stock s performance. This should put to rest the concept of singlestock funds.