Switzerland

UBS lockout underlines woeful capitalist tale

31 Oct 2012

For traders, it may make sense to merit a six figure salary one day and be barred from the office the next. For the rest of the world, it looks like banking at its worst: where money alone justifies brutal employee relations. The Wild West approach is unsuited to the new times.

UBS could charge rivals for cutback benefits

30 Oct 2012

The Swiss bank’s retreat from fixed income trading may eventually increase returns for its own shareholders. But competitors will gain right away from the reduction of capital in the business. By rights, they should all compensate UBS for making the sacrifice.

UBS euphoria overdone

30 Oct 2012

The Swiss bank says its restructuring will boost returns and capital. Investors agree: UBS’s market cap is up SFr 4.4 bln ($5 bln) since the plan emerged. But the stated SFr 3.3 bln one-off charge ignores the real costs of transformation, most of which are hostage to fortune.

Financial shrinkage gets helping hand from UBS

29 Oct 2012

The Swiss bank has found that it can’t make bond trading pay. That will be tough on employees and a slow exit would be costly for shareholders. But the pain is just collateral damage from the financial sector’s deleveraging, a steady process which is making the world less dangerous.

UBS rethinks the impossible

27 Oct 2012

The Swiss bank is going where no bank dares tread with a bold strategy to wind down fixed-income trading. It will be a costly and slow task - that’s why rivals tend to think it can’t be done. But if UBS thrives as a mega-boutique, others could follow. And the system benefits too.

Credit Suisse keeps on finding more costs to cut

25 Oct 2012

The Swiss bank led peers last year with a 3 bln Swiss franc cost reduction plan. That programme is well under way, but returns are still squeezed. So it has announced another 1 bln of cuts. With unrelenting pressure for more capital, investment banking remains a tough business.

Xstrata is a warning on boards that give up value

2 Oct 2012

An acceptable deal with Glencore doesn’t exonerate the miner’s directors from charges they lack spine standing up for shareholders. The failure to push Glencore to the pain barrier sooner has roots in the same weakness that sanctioned excess pay for CEO Mick Davis time and again.

Xstrata reaches tidy compromise on messy deal

1 Oct 2012

The miner is right to back Glencore’s latest offer. It is getting a better premium from the commodity trader, plus board domination. Retentions for top staff make sense with Glencore’s Ivan Glasenberg running the show. The tie-up faces challenges, but shareholders should say yes.

Markets struggle with true values for Xstrata, BAE

20 Sep 2012

Shareholders try to find the right price in deals, but their perspective is too financial and short term. Besides, no price is right if a tie-up is basically wrong - overleveraged, undermanaged or self-destructive. Both Glencore-Xstrata and EADS-BAE might fail this basic test.

Calculator: Market skeptical on Glencore-Xstrata

11 Sep 2012

Glencore’s new offer for Xstrata is recommendable, yet the companies’ shares are pricing in only a 60 pct chance of deal success. Uncertainty about the Qataris and anti-trust issues are big factors. But the chaotic course of the deal may have raised merger arbs’ risk aversion.

Xstrata should accept revised Glencore pitch

10 Sep 2012

The merger is now a $35.5 bln takeover at a modest premium. The tie-up is riskier since Xstrata CEO Mick Davis would exit after six months, although Chairman John Bond would stay. Xstrata investors will want more. But it’s hard to see a realistic alternative offering better value.

Glencore-Xstrata mess makes bankers look powerless

7 Sep 2012

The deal’s basic set-up proved surprisingly vulnerable. Pay squabbles wasted weeks. A rejig has now come at a comically late stage. The tie-up’s many banks may be giving duff advice; more likely, they are bit players in Ivan Glasenberg and Mick Davis’s CEO-led production.

Glenstrata drama is no way to do M&A

7 Sep 2012

Ivan Glasenberg’s curveball on Glencore-Xstrata shows bad form in deal making. Halting a shareholder vote after markets opened makes Glencore’s boss look more trader than statesman CEO. A solid deal may be imminent. But the messiness of it all should give investors pause.

Unequal competitiveness trips up Europe

6 Sep 2012

In the World Economic Forum’s competitiveness league, Switzerland remains number one, despite the strong franc. The top 10 includes north European countries, the U.S., and the UK. But Italy is at 42nd - and Greece 96th. The gap casts troubling light on the euro zone’s struggle.

Glenstrata deal gap is harder than ever to bridge

29 Aug 2012

Xstrata investors are digging in. Yet Glencore has less scope to up its offer after the miners’ interims. Without the retention bonus row, the obstacles may not have got so big. Xstrata’s hold-outs need to believe in its standalone value: that’s probably all they’ll be left with.

UBS’s tax bogeyman rears ugly head again

15 Aug 2012

A German regional leader says the bank is helping clients dodge an upcoming German/Swiss tax treaty, which UBS denies. The Swiss lender already had to fork out $780 mln in 2009 for breaking U.S. tax laws. A wider political struggle could be bad for the bank - and Swiss secrecy.

Julius Baer reinvention not as cheap as it looks

13 Aug 2012

The Swiss bank is paying a skinny 1.2 pct of assets for Bank of America’s non-U.S. private banking operations. Throw in restructuring costs and extra capital, though, and the $1.5 bln tag looks richer - especially for a business that’s unprofitable and hardly growing.

Xstrata figures sustain hope for sweetened merger

7 Aug 2012

The miner’s first-half results were worse than last year, but better than expected thanks to cost cutting. The resilience may harden Xstrata shareholders’ expectations of improved merger terms from Glencore. But it is still far from a done deal.

Facebook costs UBS some of its new friends

31 Jul 2012

The Swiss bank worsened an already tough quarter by losing 350 mln Swiss francs on the social network’s IPO. UBS has boosted its capital and is once again attracting wealthy clients. But the risk of further nasty surprises in its investment bank casts a shadow over its recovery.

Investment banking job cull is long overdue

23 Jul 2012

Faced with slumping income and tough regulation, the industry is bracing for another round of cuts. That won’t be easy: to make savings, banks will have to ditch business lines or redesign structures. But with shareholders antsy and no rebound in sight, they have little choice.