EMEA

France can’t afford major euro split with Germany

21 Oct 2011

Divisions over the euro zone’s bailout fund have delayed the much-ballyhooed Franco-German “grand plan”. Nicolas Sarkozy seems ready to compromise yet again to keep Angela Merkel on board. He knows the euro zone wouldn’t survive a major split between Paris and Berlin.

Europe’s bailout fund: a guide for the perplexed

21 Oct 2011

Getting more mileage out of the 440 bln euro European Financial Stability Facility is key to easing the euro zone’s debt woes. But the ECB and governments disagree about how to best stretch the fund’s finite resources. Breakingviews offers a road map through the confusion.

Spain hasn’t seen the end of its pain

21 Oct 2011

Profligate regions may push the country’s budget deficit above the 6 percent-of-GDP target. The electoral cycle isn’t helping. A minor slippage doesn’t matter much, but in the current slump, anything more than a percentage point will make next year’s goals particularly challenging.

Postponing Greek pain will be costly for taxpayers

20 Oct 2011

To get Greece’s debt under control, the private sector and EU governments have to take a haircut. If a restructuring happened now, private bondholders would bear most of the losses, according to a Breakingviews calculation. But if the euro zone delays, taxpayers will suffer more.

Gaddafi death could add momentum to Arab Spring

20 Oct 2011

The end of the former dictator allows Libya to move towards elections alongside Tunisia and Egypt. Oil wealth and a lack of compromised institutions arguably give Tripoli an easier start. Arab dictators had little love for Gaddafi, but his demise ratchets up the pressure.

Subprime CDO case tests Deutsche public relations

20 Oct 2011

A defunct lender which was bailed out by the state is suing Germany’s biggest bank over subprime losses. Deutsche disputes the suit. But claims the lender cost taxpayers $440m won’t help CEO Josef Ackermann’s already frosty relationship with German Chancellor Angel Merkel.

Markets can cope if euro zone bazooka fires blanks

19 Oct 2011

There has been talk of a full solution to the euro zone debt crisis emerging from this weekend’s EU summit. Politicians are trying to lower expectations. Europe is more like a tortoise than a hare. Investors would like more, but they won’t panic as long they see clear progress.

Sarkozy’s euro warning smacks of desperation

19 Oct 2011

As Moody’s says it might change its view on France’s triple-A ratings, the French leader warns gravely about the euro ahead of next week’s EU summit. But seven months before the presidential election, it’s his future he’s really talking about.

SAB’s $1.9 bln Turkish tie-up has double benefit

19 Oct 2011

The UK-listed brewer is swapping its Russian unit for a 24 percent stake in Turkey’s Efes. Though Russia is challenging for brewers, the combined business will have a broader base. And SAB is now in pole position if the families behind Turkey’s dominant beer-maker ever sell up.

Abu Dhabi’s airline strategy lacks coherence

19 Oct 2011

Etihad, the UAE’s official national carrier, wants tie-ups with Virgin Atlantic and Aer Lingus via minority stakes. Its ambition is to catch up with Dubai rival Emirates. Such deals may deliver tactical gains. But they won’t replicate Emirates’ impressive organic success.

Occupy Wall Street is poor vessel for discontent

19 Oct 2011

The protesters may be channelling justified public anger against high finance, but they are too intellectually incoherent to start any sort of revolution. Edward Hadas suggests the mourning over Apple’s Steve Jobs is a better cultural indicator than the Wall Street movement.

EU bank recap may be smaller than feared and hoped

18 Oct 2011

Europe’s banks have avoided another stress test. Instead, regulators may set a minimum 9 pct capital ratio, plus a buffer for troubled sovereign debt. The bill of about 100 bln euros would be easier for governments to meet. But investors may also decide it’s not as credible.

Air France-KLM will struggle to gain altitude

18 Oct 2011

The Franco-Dutch carrier is being squeezed on all sides. It has high costs, stiff competition and large debts. Market conditions are poor, too. Changes to the boardroom crew will help if they approach restructuring seriously. But investors are right to be sceptical.

UK inflation belies central bank’s claim to care

18 Oct 2011

If the Bank of England thought controlling inflationary psychology was priority number one, it would not be printing money when prices are rising at a 5.2 pct rate. But the BoE is more worried about slow growth and financial tension. Inflation is, at worst, a tolerable evil.

Bailout-free banking may be unattainable goal

18 Oct 2011

Policymakers want to stop taxpayers rescuing banks. That is the aim of the UK’s Vickers report. But regulators will still fret about letting lenders fail in a future crisis. Meanwhile, Vickers’ plan could perversely increase pressure on the state to direct lending.

Markets’ "euro bazooka" rally can’t be trusted

17 Oct 2011

Stocks, commodities and the euro have rebounded from the brink of a bear market. The fundamental hope is for a comprehensive solution to the euro zone’s problems. Investors have added to the bounce by covering short positions. But the risk of European disappointment remains high.

BP’s spill woes start to clear, but not disappear

17 Oct 2011

The $4 bln settlement with Anadarko is good news for the UK-based oil major. It may be a fraction of the $41 billion estimated cost of the spill. But with the co-owners of the infamous Gulf of Mexico well on side, BP can focus on the big-picture damages claims.

Market sends CEOs harsh message on M&A

17 Oct 2011

Investors have blown a raspberry at G4S’s $8 bln bid for ISS and related $3 bln rights issue. Europe’s first big corporate transaction since the summer was never going to be easy, and the cash-call is massive. If G4S stock doesn’t recover, opportunistic M&A will be cowed.

UK listing hands credit to Russia’s steely Evraz

17 Oct 2011

Another Russian minerals company is heading for the UK’s FTSE 100. Commodity worries and the involvement of Roman Abramovich means investors will approach with caution. But the company’s size, diversity and exposure to infrastructure spending tempers doubts about Evraz.

Rio Tinto takes bold step into aluminium rehab

17 Oct 2011

The miner’s $38 billion purchase of Alcan in 2007 was a financial disaster, and aluminium’s prospects still look poor. Rio is making some amends with a plan to sell off a third of the business. The strategy is sensible and now looks as good a time as ever to sell.