EMEA

Dexia’s rescuers need to answer five questions

6 Oct 2011

The Franco-Belgian bank is facing dismemberment. Its French and Belgian state shareholders want to largely keep those operations in their own countries, sell non-core assets and wind down everything else. But to do so they will need to find answers to five thorny problems.

Sovereign funds could win big with M&A lending

6 Oct 2011

Abu Dhabi has money and appears willing to use it to grease the wheels of big deals - first Hynix Semiconductor and now EMI. As Warren Buffett has shown, it can be very profitable to lend when other won’t - as long as there are generous rewards for risk-taking in fearful markets.

Hungary needs fair way to share mortgage pain

6 Oct 2011

A new law gives relief to Hungarian borrowers who took out mortgages in foreign currencies. The banks are outraged, but they should suffer for their reckless selling. Still, more burden-sharing is called for. After all, regulators were negligent and borrowers unwise.

Essar’s better prepared for a second UK IPO

6 Oct 2011

India’s Essar is considering a UK listing for its infrastructure assets. With one London IPO under its belt, and lessons on governance from that experience still fresh, it should be better prepared this time around. Now there’s the small issue of timing.

How a pan-European bank recap scheme could work

5 Oct 2011

Boosting the capital of euro zone banks is necessary to rebuilding confidence. A U.S.-style plan, where all lenders are forced to accept some equity, is probably the best approach. But given the lack of a central authority, political commitment to act together is more important.

IMF bond-buying a potential euro game-changer

5 Oct 2011

The International Monetary Fund says it might buy sovereign bonds to help the euro zone fight the contagion effects of the Greek crisis on Italy and Spain. This could work if both countries continue to reform, and once the region’s weaker banks have been shored up.

Bank debt confusion makes an unwelcome comeback

5 Oct 2011

Widening spreads on banks’ own bonds are set to flatter earnings this quarter, just as in the 2008 meltdown. The gain is ignored by regulators, and will reverse when yields tighten. But inconsistent and selective reporting makes it harder for investors to filter out the noise.

Greek bonds should suffer real haircut, not trim

5 Oct 2011

Greek private bondholders are facing a bigger loss than the 21 percent agreed in July. Recent market turmoil alone could take it to near 40 percent. But if the euro zone wants to push through a more serious haircut, it must have its contagion fire hoses ready.

Welcome to the euro zone finish

5 Oct 2011

Switzerland’s banks are subject to a “Swiss finish” because they tower over the country. Euro zone banks should require extra capital too, because the region’s lender of last resort mechanisms are dysfunctional. Think of that as justification for the next round of capital hikes.

Deutsche poorly handles predicted profit warning

4 Oct 2011

The German bank has ditched the 10 bln euro 2011 pre-tax profit target the market long discounted. Unsurprisingly, it blames depressed investment bank revenue. But it also cites a mysterious tax hit. Such opacity is unhelpful at a time of intense investor scepticism toward banks.

France and Belgium can’t assume Dexia is a one-off

4 Oct 2011

State shareholders have pledged to ease the stricken bank’s liquidity problems by guaranteeing its debt. But shaky sovereigns have less firepower than they did in 2008, and other lenders may need similar help. Euro zone banks need a more comprehensive funding solution.

Plan B for UK bank lending might just work

4 Oct 2011

George Osborne has so far resisted calls to soften his programme of spending cuts. But the UK chancellor’s so-called “credit easing” signals a major shift in his efforts to get banks to lend. As ever, though, success will hinge on whether demand for new loans actually exists.

Ermotti faces few credible rivals for UBS job

4 Oct 2011

The ex-UniCredit banker is interim CEO while the Swiss lender conducts a broader search. Hands-on experience, risk management, private banking charm and leadership are all required skills. Ermotti may not tick all boxes, but a bias for locals means there are few alternatives.

Russian infrastructure dreams sink in Sochi slush

4 Oct 2011

The spiralling cost of the 2014 Winter Olympics in the Black Sea resort illustrates the chaos endemic to Russia’s much-hyped sporting and infrastructure projects. Far from being a boon to the economy and investors, these opaque free-for-alls are a recipe for financial disaster.

Run of economic bad news could be about to pause

3 Oct 2011

If Friday’s U.S. jobs report follows a recent mini-trend, it will be time to revise economic expectations upwards, once more. But a downward turn will follow soon, unless global financial tensions ease durably. For rich countries, this “lesser depression” may have years to run.

UK reaches for wrong levers on growth

3 Oct 2011

George Osborne is under pressure to bolster UK growth by amending deficit-cutting Plan A. But the finance minister’s idea of further “credit easing” sees him cross the line into monetary territory. He would do better to adjust fiscal policy without compromising austerity.

U.S. refuge for equities comes at quite a price

3 Oct 2011

In stock markets, correlations are about the only thing going up. But while U.S. and EU equity indexes are moving in the same direction on more trading days, European shares have also slumped to a 20 pct discount to U.S. peers. That may overstate the security offered stateside.

Dexia rescue would need more than just capital

3 Oct 2011

The Franco-Belgian bank’s shares have slumped amid fears it needs a second bailout in three years. Helping Dexia cope with a big haircut to its Greek debt is the first challenge. But any package also needs to tackle its reliance on short-term funding, and its unwieldy structure.

Greece can escape death spiral

3 Oct 2011

Athens will miss this year’s budget deficit targets, thanks to global weakness and domestic austerity. Foreign creditors will call for harsher reforms. That makes economic sense, but Greek politics are tough. A larger debt restructuring may be required to turn the country around.

Qatar steals $1 bln march on European Goldfields

3 Oct 2011

The Gulf country is hungry for exposure to gold. Its offer to finance a Greek mining project will secure it at least 27 pct of the Canadian group at a snip of its mooted July valuation. But in current markets, investors will have to think hard before turning away the Qataris.