Year: 2009

Walker does what he can for UK bank governance

26 Nov 2009

The former civil servant and current Morgan Stanley advisor has done what the government asked him to: provide solid ideas for improving bank boards. There are no radical plans for waking up dozy UK shareholders. But then again, that once mighty group hardly matters any more.

Political murders add to Filipino woes

25 Nov 2009

The Philippines hasn t had a bad crisis, thanks to money sent home by exported workers. But crony capitalism and poor governments have held back growth for decades. Monday s politically motivated murder of 50 people adds another reason for much needed foreigners to stay away.

Do US retail stocks still have room to run?

25 Nov 2009

Consumer confidence has nearly doubled from its lows and the savings rate is trending down. After buying houses and cars aided by government subsidies, Americans have gotten back to spending. But for investors, the best deals may have already occurred.

France Telecom’s Swiss merger betters UK model

25 Nov 2009

The French operator is bigger in the UK than Deutsche Telekom, but still had to settle for a 5050 joint venture. In Switzerland, it s smaller than Denmark s TDC, but if the regulator approves, FT will get 75 percent. FT gains from TDC s private equity owners desire for an exit.

Next Mexican crisis could come soon

25 Nov 2009

Fitch s ratings downgrade was a warning. Mexico s oil production is declining rapidly, its exports even faster. Nonoil state revenue is far below global norms. With tax evasion, huge inequality, political stasis, economic stagnation and an antimarket outlook, crisis looms.

WestLB shows how brinkmanship works now

25 Nov 2009

Lehman was allowed to fail. Lesson learned. The UK secretly passed cash to RBS and HBOS at the last minute in 2008. And when WestLB s savingsbank owners threatened to leave the German lender for dead, the government said no. The threat of big bank collapse concentrates minds.

Spain can’t afford to duck reform

25 Nov 2009

Spain may already be growing, sooner than many economists expected. But while the turn may be quicker, the recovery is still set to be weak. Spain s big structural problems have not been addressed. The need to reform the labour market is as great as ever.

Vietnam is like China – with an East European flavor

25 Nov 2009

Like China, Vietnam continued growing through the slump, giving output an extra fiscal stimulus boost. But Vietnam also had inflation, foreign hot money and a payments deficit. It s unsurprising it ran into problems afflicting economies elsewhere, and had to devalue.

Dubai bites the bullet on debt

25 Nov 2009

One of the emirate's big holding companies, Dubai World, is asking creditors for a standstill. That would amount to a technical default. Dubai proved it can still tap neighbour Abu Dhabi for loans, but it's right to try first to restructure the $60 bln debt.

Lloyds may be ready to try out capital markets

24 Nov 2009

A heavily discounted £13.5bln rights issue will let the UK bank avoid the state s costly insurance scheme. As the crisis fades, Lloyds can move forward, even into capital markets. That sounds risky, but a joint venture with a UK broker could be a postrecession winner for Lloyds.

UK plc suffers from small corporate bond market

24 Nov 2009

London is supposed to be European centre of financial markets. But when it comes to corporate bonds, France and Italy are twice the size. Firms of all shapes and sizes have been selling shares, but only the strongest can tap the fixedincome market. That should change.

Hershey investors should beware Cadbury bid math

24 Nov 2009

To buy the UK confectioner, the U.S. candy company would need to raise $6 blnplus of equity while still allowing the Hershey Trust to retain firm control. The financing math could work, but investors should demand serious sweeteners before handing Hershey any cash.

Informa deal machine goes into overdrive

24 Nov 2009

The UK publisher has another big deal in its sights: the German Springer. The mooted E2.5bln price sounds cheap in some ways. But even with synergies, Informa would need a massive rights issue to pay for Springer. Its acquisitive history will help it get away with such moxie.

Cameron’s forked tongue damages deficit crackdown

24 Nov 2009

The UK s probable next PM had been doing an admirable job softening up the electorate for fiscal retrenchment. But now he has spoilt the effect by promising an emergency growth budget. Even if the plan has little substance, the rhetorical uturn is unfortunate.

S&P bank capital study could fill global gap

24 Nov 2009

The ratings agency looked too kindly on structured credit dross during the boom. But it is still global and basically impartial. The new S&P analysis of banks capital adequacy could give investors a single worldwide standard and help the agency s battered reputation.

Dubai needs to do more than play musical chairs

23 Nov 2009

Several of the architects of the debtladen emirate s hapless financial expansion have been replaced. The display of accountability is welcome. But the changes appear to mark a return of the old guard. To restore confidence, Dubai really needs to bring in more outside voices.

BBVA faces pay-to-play dilemma in China

23 Nov 2009

The Spanish bank has little choice about exercising a E1.1 bln option on more shares in partner China Citic. A larger holding should ensure continued goodwill. Such warm feelings may be more worthy than worthwhile. As these investments mount, so will the pressure for returns.

News Corp launches search-revenue trial balloon

23 Nov 2009

Rupert Murdoch wants search engines to pay for News Corp content. Microsoft's Bing, which recently also agreed to pay Twitter, might oblige. But Murdoch needs other publishers on board. With Google's traffic still alluring, that won't be easy.

Obama should dine with Singh more often

23 Nov 2009

The first state dinner hosted by the US president is for the Indian PM. China, America's second largest trade partner after Canada, usually gets the higher profile. But USIndia trade is more balanced. The US should ensure it doesn't neglect the world's most populous democracy.

China’s banks ready for grown-up capital rules

23 Nov 2009

The regulator may start to focus on Tier1 capital ratios, and ask banks to raise them. That sounds promising especially if it means an end to heavyhanded and not very effective lending quotas. Besides, most lenders would already pass all but the most onerous tests.

What’s on boom-time Wall Street bosses’ minds?

23 Nov 2009

Sure, pay is right up there. And the ability to sell their stock holdings might fuel excessive risktaking, as a Harvard study suggests. But investment banking bosses are also driven by power, prestige and, in bubbles, a belief that they know best. That is hard to guard against.

BoE misses trick on pricking bubbles

23 Nov 2009

The UK central bank has fallen into an alltoocommon trap of focussing on capital surcharges as a way of preventing future financial parties getting too rowdy. Capital buffers certainly need strengthening. But so does liquidity. Yet again, funding is being virtually ignored.

ECB trims a few extremes of cheap money

23 Nov 2009

The eurozone s central bank has tightened the rules for banks using assetbacked securities to tap clean funds. It may also stop offering cheap oneyear money next year. The goal is to ease back on some exceptional liquidity provision. But a real exit strategy isn t coming soon.

Hershey’s advantage over Kraft: irrational owner

22 Nov 2009

With fewer resources and synergies from a deal, Hershey would need to stretch so precariously to buy Cadbury it could risk its controlling trust s raison d être. Still, never underestimate a shareholder whose priorities differ from those of, say, Kraft holder Warren Buffett.

Treasury readies market solution for TARP warrants

22 Nov 2009

So far, the US has negotiated privately to sell back them back to banks. Now it is starting an auction process to bring in a market price for other warrants, including JPMorgan s, it got when it injected funds. It s a sensible move but the Treasury could still get flak.

CDS market looks forward to renaissance

20 Nov 2009

George Soros, for one, reckons credit derivatives should be banned. But despite powerful enemies, structural imperfections and a role in AIG's downfall, CDS trading has survived the crisis. Market reforms are on the way. Along with history, that suggests a comeback is likely.

New EU president must act fast to assert himself

20 Nov 2009

Herman Van Rompuy lacks the star power that other candidates for the first president of the EU Council may have had. But the former Belgian PM has a chance to make the job an effective one, if he wastes no time showing he can stand up to the FrancoGerman entente.

American could be more immediate prize for BA

20 Nov 2009

British Airways may hear before Christmas what it will need to do to get a deal with American Airlines approved. That could bring more shortterm benefits than the Iberia deal provided regulators on both sides of the ocean don t force BA to give up too many slots at Heathrow.

Lower overdraft fees aren’t a free gift

20 Nov 2009

U.S. bank regulators and politicians are forcing banks to rein in this big source of profits. Consumers should be pleased but not excited. Financial institutions are likely to find other ways to charge customers or lend less. UK customers will have to live with the status quo.

Gartmore price range sounds aggressive

20 Nov 2009

The UK fund manager is worth 800 million pounds at the midpoint of the mooted price range for its forthcoming IPO. This sounds reasonable if the recent strong performance can be repeated. But that's a big ask. Investors should push for a conservative valuation.