Year: 2009

Bank shareholders finally grumble for more pie

20 Nov 2009

Until now, they ve largely shrugged at how much of revenue firms pay staff. At last, some Goldman investors are carping for lower bonuses and higher retained earnings to drive up the share price. The added political storm makes it a perfect time for banks to revisit the model.

BA pension trustees face dilemma in Iberia tie-up

19 Nov 2009

Contrary to popular belief, the UK airline s pension scheme is not ringfenced and could pose a threat to Iberia s cashpile in their proposed merger. The pension fund trustees will have to play current negotiations with BA carefully if they do not want to scare Iberia away.

State-held UK banks become private-equity stars

19 Nov 2009

Banks often turn dud loans into equity investments. It s a little trickier for RBS and Lloyds, which are set to become the biggest privateequity firms in the land. For shareholder value, joint ventures with pros look good. But their state investor may have different ideas.

Manure ménage à trois is gift that keeps on giving

19 Nov 2009

It s hard for investors or the media to do more than turn their noses up at the threeway scrum between North American fertilizer groups. But the $9bnworth of bids has helped Wall Street banks, lawyers and PR firms keep the lights on. Its passing will leave a fee void.

Shorting needs sensible disclosure not prohibition

19 Nov 2009

The UK regulator is to have new powers to restrict short selling. The prospect of the authorities directly intervening in the market is alarming. If shorting poses a threat, an intelligent disclosure regime should suffice to ensure an orderly market.

Russian support wouldn’t help Rusal IPO much

19 Nov 2009

A Russian lender chaired by Vladimir Putin may take a stake in Rusal when the metals giant floats. With Rusal owing E4.5bn to the state bank, this would amount to a partial debtforequity swap. But Kremlin involvement could also make the IPO a tougher sell.

Cazenove puts bygone UK brokers to shame

19 Nov 2009

The £2bn value JPMorgan is placing on their joint venture implies the storied UK firm s bankers are worth £3m each. That s far more than those at Warburg, Schroders or Fleming commanded. The Cazenove name will survive for now but this generous deal may not preserve its legacy.

Is Barney Frank turning into a bull-market banker?

19 Nov 2009

The influential US congressman wants to keep on standby the FDIC s bank debt guarantee programme, saying it made a profit for the federal government . With FDIC still on the hook, that sounds a bit like the book profits now, worry later attitude on Wall Street before the crisis.

M&S CEO choice heralds more adventurous era

18 Nov 2009

Marc Bolland wasn t hired because he helped turn around a troubled retailer, although Marks & Spencer might still need help in the recovery department. The exHeineken executive s main goal is to push the UK retailer s brand at home and abroad exciting but risky for investors.

Cadbury carve-up looks a long shot

18 Nov 2009

Hershey of the US is reportedly mulling a joint bid for the UK confectioner with Italy s Ferrero. Incumbent bidder Kraft should not feel too threatened and Cadbury shareholders should not start pricing in an auction.

US inflation risk now outweighs fear of deflation

18 Nov 2009

The headline CPI rose more than expected in October. Prices are within 1% of their 2008 peak. Stripping out food, energy and housing costs, inflation is running close to 3%. As the deflation menace now is remote for the US, monetary policy should be adjusted accordingly.

Celebrity investors no guarantee of future results

18 Nov 2009

Every Asian IPO candidate wants a Goldman Sachs or a George Soros on the register. China s Minsheng Bank, Sands Macau and Longfor all boast famous names. Such endorsements may help bankers and firstday investors, but do less for the companies themselves, and for the markets.

Are US regulators now racing to the top?

18 Nov 2009

That's one interpretation of a spike in enforcement actions and ballyhooed initiatives by the likes of the SEC, the OCC and the Fed. With legislation in Congress that could gut their authority, they seem to be trying to outregulate one another.

Leon Black should prepare for limp public debut

18 Nov 2009

His buyout firm Apollo plans to leave the shadowy confines of GSTrue for the bright lights of the NYSE. That may grant Black greater liquidity and access to capital. But given Apollo's challenges, he should expect a lowlier rating than Henry Kravis and Steve Schwarzman command.

Norman brings ITV debacle towards respectable end

18 Nov 2009

The turnaround maestro has been named chairman of the troubled UK broadcaster. The choice is a surprise, but a happy one. Norman faces a tough job, but investors should take comfort from his record at Asda and Energis and his ties to the Conservative party.

Bank of England still fears a Japan-like UK

18 Nov 2009

The central bank s Monetary Policy Committee was split earlier this month. The chief economist worries about bubbly asset prices. But for other members, postbubble deflation is the main fear. Japan s weak growth and spiralling debt shows the danger.

UK’s new fiscal rules are more fudge

18 Nov 2009

The government plans legislation to cut the deficit in half in five years. That s a worthy enough goal. But Brown probably won t be PM in five years and the law won t carry any sanctions if the target isn t met. There s a better way to provide fiscal credibility.

Only time can restore Goldman’s old aura

18 Nov 2009

Its $500m plan to support 10,000 US small businesses alongside Warren Buffett is praiseworthy. But $16.7bn in accrued pay and continuing rumblings of bailout favouritism risk making it look nothing but a PR gesture. Public opprobrium will fade; Goldman just has to tough it out.

Not everyone can do a Canon

17 Nov 2009

The Japanese group is offering a juicy 70% premium for the Dutch Océ. That makes bids for Cadbury and Dragon Oil look paltry. But merger arbs shouldn t get their hopes up. Canon has good reasons to be generous. Others needn t and won t rush to follow its example.

British Land’s merits look underplayed

17 Nov 2009

The UK commercial property group s results are the latest evidence of the realestate recovery. With the sector trading above book value, British Land s sticky rental contracts make it relatively attractive. If it spends its £1bn war chest wisely, that should be reflected.

Cable & Wireless demerger comes to life

17 Nov 2009

The UK telco has clarified management and the carveup of pension liabilities for its forthcoming separation. It is also launching a £200m convertible to smooth the transition to separate capital structures. At last, this longawaited demerger looks credible.

Threat to independent FASB is danger to investors

17 Nov 2009

A US congressman wants bank regulators in charge of accounting standards. That suits those bankers who blame marktomarket accounting for the 2008 meltdown. But accounting merely exposed mistakes banks had made. Investors need independent standards, not regulatory coverups.

UBS drinks from death well for new life

17 Nov 2009

The Swiss bank has been stabilised and new boss Oswald Grübel is now setting targets. He reckons UBS can get back to its 2006 profit levels in three to five years. But the rebound hinges on fixed income, which buckled the bank. No wonder investors are wary of pricing in success.

Can a poison pill be good for shareholders?

17 Nov 2009

Restrictions to thwart takeovers usually benefit managers, not shareholders. Mead Johnson may be an exception. The baby formula maker should make a tasty target. But the technicalities of Mead s ongoing splitoff from BristolMyers mean it may make sense to delay any auction.

Lazard opts for culture carrier to replace Wasserstein

17 Nov 2009

Ken Jacobs may not be as prolific a dealmaker as Bruce Wasserstein was or even as Gary Parr is today. But he has long been part of the glue that binds the historically fractious firm. Naming him as CEO is a sensible move to assure continuity.

Ousted GMAC boss should consider silver lining

17 Nov 2009

Al de Molina must feel aggrieved to lose his job. But his replacement, Michael Carpenter, oversaw Kidder Peabody s demise and helped build the monster that became Citigroup. If he can make a comeback, de Molina, whose main fault seems to be outspokenness, should have no trouble.

Central banks shouldn’t ignore asset prices

17 Nov 2009

A few years ago, monetary authorities claimed bubblepricking was not their job. Despite the worst recession in decades, the Fed s Kohn still believes that. He should think again. Rapidly rising asset prices are usually a reliable sign the financial system isn t working right.

China pot calls US kettle black on carry trade

16 Nov 2009

A top regulator called ultralow US rates a global risk. True, but China s own pegged exchange rate generates a flood of dollars, which helps keep US yields down. And a big domestic stimulus is pushing up Chinese asset prices. The US has no monopoly on inwardlooking policies.

Vivendi beats Telefónica in Brazil – at a price

16 Nov 2009

The French media group won control of Brazilian telecom upstart GVT. It will pay $4bn to enter the redhot market, having raised its offer by a third to beat out Spain s Telefónica. Brazil is an attractive market and Vivendi has telecom experience, but the price still looks high.

GM’s loan repayments are a PR stunt

16 Nov 2009

But they are still welcome. Sure, the carmaker is still losing money. But it s a much healthierlooking company with a surfeit of cash and paying back the US, Canadian and German governments will cut costs. Returning all taxpayer aid, though, remains a pipedream.