EMEA

German high court spares euro zone a major crisis

7 Sep 2011

The Karlsruhe constitutional court has thrown out complaints against the region’s bailout facility, and its ruling shouldn’t overly hurt the fund’s flexibility. Disaster may have been averted on the German front, but the euro crisis is still looking for a long-term solution.

Weakening UK growth creates tax cut Catch-22

7 Sep 2011

The UK chancellor is toning down hopes for UK growth. Tax cuts, as suggested by some economists, would help growth and are desirable. But the deficit reduction plan looks behind the curve, making it hard for Osborne to justify cuts. Faster spending cuts would have helped.

Abu Dhabi’s Mubadala humbled in Carlyle IPO

7 Sep 2011

The Abu Dhabi fund may have lost up to half the value of its $1.85 bln signature investment in the U.S. private equity firm. Mubadala looks to have clawed back some of its losses on its original 2007 punt in 2010, but it’s unlikely to be enough to spare the emirate’s blushes.

UK bank upstart seeks two-step path to Lloyds deal

6 Sep 2011

NBNK is mulling an offer for the UK assets of National Australia Bank. A successful deal could give the bid vehicle an advantage in acquiring the branches Lloyds is being forced to sell. But in tough markets, convincing investors to cough up the cash looks a challenge.

U.S. mortgage suits inflict super-damages on banks

6 Sep 2011

The latest U.S. regulatory assault for mis-selling mortgage securities has dragged down bank stocks. But damages previously sought from UBS, and the performance of the underlying loans, suggest the impact of this particular banking nasty is now more than priced in.

Swiss franc defence will work – at a price

6 Sep 2011

If the Swiss National Bank keeps its promise to buy “unlimited quantities” of foreign currency, its effort to peg the franc should succeed. Given the euro’s big risks, the central bank may lose money again. But the gamble is an attempt to prevent recession and deflation.

Nigeria deals the dollar another blow

6 Sep 2011

The oil-rich African state will invest about $3 billion of its foreign reserves into China’s currency. High inflation and closed markets make the yuan a poor choice. Nigeria’s goal may be to secure investment flows: still, it is another sign of the dollar’s weakening influence.

Libya should adopt oil-wealth transparency

5 Sep 2011

The country’s new leaders must decide how to manage Libya’s oil wealth after funding reconstruction. Opaque handouts might be a tempting way to win tribal loyalties. But it would be better to copy oil-rich Norway and create a transparent and accountable sovereign fund.

Market worries and volatility will outlast summer

2 Sep 2011

Investors back from the beach will be rested for the next round of rollercoaster trading - a taste of which came on Friday. The concerns behind August’s bout still haven’t been addressed. European debt trouble, the weak U.S. economy and political conflict spell more wild rides.

How to get Spain working again

2 Sep 2011

With elections looming, political parties must come up with sensible solutions to tackle a 21 percent unemployment rate. Cutting social security contributions makes sense, but it’s harder than it looks.

ECB may need tough love for Italy

1 Sep 2011

Italian politicians seem to be flip-flopping over austerity measures. The risk is that the final package lacks credibility, or that structural reforms to promote growth are watered down. The ECB must be ready to turn up the heat by cutting back on its bond purchases.

BP needs to make unhappy TNK-BP marriage work

1 Sep 2011

There’s no easy way out of BP’s self-created mess in Russia. The oil group may be tempted to stop working with its difficult oligarch partners at TNK-BP. But a divorce would be difficult and costly. BP may be better off making the best of this troubled, yet lucrative, marriage.

Euro zone should slow down on austerity

1 Sep 2011

Portugal is the latest troubled euro member to tighten its budget another notch. But from Italy to Ireland, heavily-indebted countries need growth. As the threat of recession rises, sometimes-costly structural reforms should take precedence over fetishist austerity.

Obama’s watchdogs call AT&T’s $39 bln wager

31 Aug 2011

The No. 2 U.S. mobile company bet it could persuade regulators that buying No. 4 T-Mobile would benefit consumers. The U.S. DOJ senses a weak hand. With the industry a near duopoly, the government’s read looks right. AT&T isn’t folding but looks on the verge of a bad beat.

Exxon’s Russian coup rubs salt in BP’s wounds

31 Aug 2011

The U.S. oil group’s Arctic exploration agreement with Rosneft mimics BP’s aborted deal but without the $16 bln share swap. Instead, there’s Russian access to U.S. drilling projects. Assuming no hidden snags, Exxon could become the big winner from BP’s botched Russian strategy.

Vodafone’s Greek tie-up tests mobile M&A limits

31 Aug 2011

Vodafone is proposing a small Greek wedding. The resulting mobile-market duopoly might be hard for Europe’s competition police to swallow, even given Greece’s exceptional problems. But consolidation means big savings. A go-ahead for Vodafone here could spur larger European deals.

Europe should strive for bank funding backstop

31 Aug 2011

The European Banking Authority wants to free up bank funding markets by enhancing the euro zone’s rescue fund. That could prove politically contentious with member states tired of ever-increasing bailout liabilities. But a debilitating credit crunch would be far worse.

Greek bank M&A shows no mercy on weaker partners

31 Aug 2011

Eurobank EFG is giving less troubled Alpha the lion’s share of the value created by their planned union. The deal leaves Piraeus, the smallest of Greece’s top banks, needing a partner. NBG is the obvious candidate. But Piraeus may, like Eurobank, have to take asymmetric terms.

Qatari Greek bank bailout looks like strategic bet

31 Aug 2011

The 500 mln euro investment by little-known Qatari investment vehicle, Paramount, supporting the merger of Alpha and EFG is opportune. But the emirate might also expect to extract strategic dividends from its support of euro zone troubled banks.  

Market crash compounds Russia’s lack of appeal

30 Aug 2011

Russia’s stock market has been one of the biggest casualties of the global turmoil, again illustrating its extreme sensitivity to risk. Although investors should be poised for an eventual rebound, the latest crash underscores the diminishing allure of Russian stocks.