Year: 2009

Prisa faces painful negotiation with banks

21 Jan 2009

The Spanish owner of newspaper El Pais faces a looming E2bn debt repayment in March. Cutting borrowings will require sacrifices. Asset sales or an equity injection have their drawbacks, but could become unavoidable.

Parsons has much to prove as Citi’s new chairman

21 Jan 2009

The former Time Warner boss built a tottering conglomerate, too. And as a Citi board member since 1996 and lead director since last summer he s part of the old guard. Parsons must prove his worth. But at least the bank is keeping the role separate from that of chief executive.

UK bank nationalisation is no easy fix

21 Jan 2009

Plunging UK bank share prices might suggest that those advocating speedy public ownership of Lloyds and/or RBS have a point. But nationalisation is not the only way to fulfil the government's aims of reviving lending. And a twotier market is rarely a good thing in any sector.

UK must clarify bad bank details ASAP

21 Jan 2009

The latest bailout has gone down like a lead balloon in part because there are no details on the crucial bad bank making it impossible to value bank stocks. The government must fill the information vacuum rapidly before more havoc is wreaked.

Blackrock could play Batman to hedge fund Jokers

21 Jan 2009

The asset manager s fourthquarter numbers weren t great, although its base of feeearning assets kept it in the black. But its unusually broad range of asset types and hybridfee model could position it well to pounce on money fleeing hedge funds and funds of funds.

Safe haven money may start flowing to Germany

20 Jan 2009

Huge projected US budget deficits may cause investors to seek a new safe haven. With a deficit below 4% of GDP and only modest stimulus plans, Germany is an excellent candidate. However, profligate southern European economies endanger the euro and reduce Germany's attractions.

Fake smiles all round as Permira calls in $918m

20 Jan 2009

Investors pledged the cash to the buyout firm in better times. Now it s payday, but cash is scarce, and the deal Permira plans to use it for is rather unappealing. Investors have to pay up but Permira is probably as unhappy about the situation as they are.

So much for hope trumping fear – in the markets

20 Jan 2009

As President Obama marched up Pennsylvania Avenue, markets turned sharply down. The Dow Jones benchmark had its worst Inauguration Day since its creation. The performance underscores Obama's challenge righting the US financial system.

Ecclestone is unwise to start F1 revenue row

20 Jan 2009

The Formula One boss has suggested that teams should receive a reduced share of the sport s profits. He may be feeling the squeeze, but giving already financiallystretched teams another reason to follow Honda out of motorracing is counterproductive.

UK bank nationalisations are not inevitable

20 Jan 2009

Public ownership of UK banks is still a huge risk. But neither the banks nor the government want it. The catalysts would be a run, or more writedowns requiring statefunded recapitalisations. But investors who see a definite floor may yet provide capital, and save themselves.

Barclays desperately needs a confidence boost

20 Jan 2009

Investors have lost faith in the UK lender s claims on capital strength. Monday s disclosure, with a promise to tell more, was a step in the right direction. But Barclays should trust shareholders with all the facts. An outside valuation of the balance sheet would also help.

GLG-Pendragon deal hints at hedge fund future

20 Jan 2009

The USlisted fund group is absorbing the smaller eventdriven firm. Sure, the deal helps GLG rebuild assets after losses and redemptions. But more significantly, Pendragon may have seen the writing on the wall for smaller funds. The deal won t be the last of its kind.

State Street bets on hope over experience, and loses

20 Jan 2009

Its stock plummeted 50% despite evidence that the $24bnodd of assets in its conduits are still performing. That may be true, but its bosses should have realized investors have little confidence in financial firms assurances. Even the most boringlooking firms can be punished.

Governments should be wary of demanding bank lending

20 Jan 2009

Efforts to incentivise banks to lend or push them outright might seem like reasonable tradeoffs for big capital infusions. But short of nationalisation, they could create the sort of dual mandates that caused Fannie and Freddie to go wrong in the US.

Plunging pound logically reflects UK’s ugly state

20 Jan 2009

The UK s latest bank bailout has sent the pound plunging. That s logical. The UK can ill afford yet more increases in government debt. But a weak pound is also the country s only hope of coming out of recession.

Fiat’s clever deal revives Chrysler’s corpse

20 Jan 2009

The Italian carmaker is to take a stake in its ailing US peer, paying in technological knowhow rather than cash. This should help Fiat sell compact cars in the US and adds crucial production volumes. It also keeps the blood flowing through at least some of Chrysler s appendages.

Geithner should still get US Treasury job

20 Jan 2009

He has two charges to answer: his reluctance to pay certain taxes, and his role in questionable bailouts to date. Set against those his capabilities and experience and the failure even by his critics to suggest anyone better. He s imperfect, but he s still the best candidate.

New York Times’ Slim deal worth its fat price tag

20 Jan 2009

The media group is paying a 14% interest rate and giving warrants on a $250m loan from the Mexican magnate. It looks expensive, but it may be cheaper than going to a bank. The deal also has fewer tripwires than a typical loan. The catch: Slim is now senior to the Sulzbergers.

UK broadcasting needs private-sector solution

20 Jan 2009

The industry is bracing itself for a shakeup as regulators outline ways to plug the funding gap caused by publicservice broadcasting obligations. More state funding, or siphoning cash from the BBC, is not the answer.

FSA capital clarification eases bank pressure

19 Jan 2009

The UK regulator has said there is no new elevated benchmark for minimum capital. It expects Tier 1 ratios to slide back as recession losses bite. The clarification is welcome, but overdue: banks should not be trying to build up a cushion against a cushion they have already.

Asia will be hit hardest by refinancing crunch

19 Jan 2009

Western banks helped Asian firms run up debt during the credit boom. But when $115bn of corporate borrowing falls due this year, economic troubles and lenders' problems back home mean companies may find they're on their own.

UK on the risky road to quantitative easing

19 Jan 2009

The latest bank rescue plan includes £50bn of support from a type of money creation the Bank of England buys assets with cash raised from new Treasury debt. The next step is straight printing. The authorities should be wary: quantitative easing could spawn inflation later.

UK bank bailout dodges critical questions

19 Jan 2009

The latest rescue brings welcome liquidity measures, but stops short of requiring UK banks to mark toxic assets to reasonable levels. Without this, and without the vital detail of how much the new asset guarantees cost, the scheme is incomplete.

Italian banks should not resist recapitalisation

19 Jan 2009

Conservative lending has enabled Italian banks to argue they are sheltered from the credit crunch. But dire economic forecasts from the Bank of Italy make it harder for the country s lenders to argue they can muddle by with relatively weaker capital positions than European peers.

Lloyds, Barclays may struggle to escape Bailout II

19 Jan 2009

The UK banks stand out as capital refuseniks. Lloyds refused to swap its government preference shares for equity. Barclays is aloof of the whole thing. But they may find it harder now to cherrypick from the government s large menu of support measures.

RBS’s mega loss isn’t the last of the red ink

19 Jan 2009

The UK bank s £28bn of losses and goodwill hits look like a kitchensinking from a new boss. But RBS muddied itself in every grimy pit: ABN, Iceland, LyondellBasell, even Madoff. Its exposure to so many messes, as asset prices fall, means there are probably more losses to come.

Latest US bailout: Tarp 1.0 meets Super-SIV?

18 Jan 2009

The huge governmentbacked bad bank under consideration in Washington sounds like a cross between the flawed original Tarp and the SIV rescue that never got off the ground more than a year ago. It just might help cleanse bank balance sheets, but it s also laden with problems.

Superfast broadband is a dubious recession-buster

16 Jan 2009

The UK is mulling rolling out a fibre network as part of its stimulus package. But fibre is expensive and won t create many jobs. Demand is as yet unproven and industry is willing to spend at its own pace. The UK could probably get a better bang for its borrowed bucks elsewhere.

Obama will need his old dogs to learn new tricks

16 Jan 2009

His economics team is short on new faces, and his $825bn stimulus bill looks like a massive version of oldschool Keynesianism. Yes, his picks can hit the ground running a big plus. But to salvage the US economy, Obama must ensure they don t just run in the same old directions.

Good riddance to UK’s shorts ban

16 Jan 2009

The controversial bar on shortselling financial stocks was lifted on Friday, yet bank shares promptly rose in appreciation of the BofA bailout. They fell dramatically while the curbs were in place. It s an indication that heavyhanded interference with the market doesn t work.